The lack of adequate transportation infrastructure in Brazil has been a bottleneck for thesoybean producers for many years. Moreover, the costly inland transportation incurredfrom this bottleneck has resulted in a loss in competitiveness for Brazil compared toother exporting countries, especially the United States. If transportation costs arereduced by introducing improved infrastructure, Brazil is expected to increase itscompetitiveness in the world soybean market by increasing its exports and producerrevenues. On the other hand, the United States and other significant soybean competingexporting countries are expected to lose market share as well as producer revenues.This study uses a spatial equilibrium model to analyze transportationinfrastructure improvements proposed by the Brazilian government vis-à-vis enhance thenation's soybean transportation network. The analyzed transportation improvements are:(i) the development of the Tapajós-Teles Pires waterway; (ii) the completion of the BR-163 highway; (iii) the construction of the Mortes-Araguaia waterway; (iv) the Ferronorterailroad expansion to Rondonópolis and the linkage between the city of Rio Verde toUberlândia; and (v) the Ferropar railroad expansion to the city of Dourados. The modelspecifies the Brazilian inland transportation network and the international ocean shipments. The model divides Brazil into 18 excess supply regions and 8 excess demandregions. The competing exporting countries are the United States, Argentina, Rest ofSouth America (Bolivia, Paraguay, and Uruguay), Canada, and India. The importingcountries are composed of China, European Union, Southeast Asia, Mexico, and theRest of the World.Results suggest these proposed transportation improvements yield potentialnoteworthy gains to Brazil with producer revenues increasing more than $500 millionand exports increasing by 177 thousand metric tons. Consequently, the world soybeanprice declines by $1.16 per metric ton and producer revenues and exports in the UnitedStates fall by 63 thousand metric tons and $104.89 million, respectively. Although theabsolute gains in price, revenues, and exports for Brazil are considerable, they onlyrepresent in relative changes 1.48, 2.35, and 0.32 percent, respectively. Similarly, theloss in price, revenue, and export value for the United States is also low, declining by0.23, 0.23, and 0.12 percent, respectively.
