Freight costs erode corn profitability for farmers in Mato Grosso do Sul

Corn producers in the Brazilian state of Mato Grosso do Sul are facing severe pressure on their margins, with logistics costs potentially consuming up to 60 percent of the grain's sale value. Heavy reliance on road transport and long distances to export ports are the main drivers of this imbalance. The situation highlights the urgent need for more efficient freight alternatives in the region.

Freight costs stand as one of the biggest competitive challenges for corn production in Mato Grosso do Sul. In certain areas of the state, transportation expenses can account for up to 60 percent of the gross revenue generated by the sale of the commodity, sharply reducing the net margin available to farmers.

The problem stems largely from an almost exclusive dependence on road transport for moving grain to market. With major export ports located on Brazil's southern and southeastern coast, the long distances involved drive up freight rates and put producers in Mato Grosso do Sul at a disadvantage compared to regions with access to railways or waterways.

This logistical imbalance directly compresses the net price received by the producer, which is the amount left after freight costs are deducted. In periods of lower international corn prices, such as the current market cycle, the impact becomes even more acute and can make part of the state's production economically unviable.

Experts point to investments in multimodal infrastructure, including railway expansion and greater use of the Paraguay Waterway, as key solutions to reduce road dependency and improve the long-term competitiveness of the region's grain output on global markets.