Thursday, September 16, 2010

Analysis: Brazil transport woes pose challenge for next leader

The narrow two-lane highway that winds hundreds of miles through Brazil's farm belt has long unpaved stretches that turn to mud during the rainy season. Trucks carrying soy, cotton and corn sometimes have to wait weeks to load at congested ports.

Jaime Binsfeld, head of grain sales for an agricultural trading firm in the farming city of Lucas do Rio Verde, says the cost of transporting corn to port often eats up 60 percent of the revenues his company gets for selling it.

"Brazilian farmers have major advantages, but we've got a huge bottleneck: logistics," Binsfeld said.

Brazil's next president, who will be elected in October, must address the country's woeful infrastructure for the economy to keep growing at or near its strong pace of recent years. But heavy bureaucracy, slow environmental licensing and fiscal constraints mean that the ambitious investment plans put forth by leading candidates may well fall short.

The clear front-runner, ruling party candidate Dilma Rousseff, has vowed to invest more than $550 billion between 2011 and 2014 not only to improve Brazil's agricultural export capabilities but also prepare the country to host the 2014 World Cup and 2016 Olympic Games.

But it's unclear how Rousseff will overcome the same legal and financial obstacles faced by her former boss and Workers' Party colleague, outgoing President Luiz Inacio Lula da Silva.

Even with 75 percent popularity ratings and a fragmented opposition, Lula has been unable to overhaul cumbersome regulations and significantly improve Brazil's infrastructure.

His government has set aside hundreds of billions of dollars on a flagship investment program to boost the country's infrastructure but critics say it has been too slow in carrying out the projects, which are often been insufficient to meet Brazil's rapidly growing needs.

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