Transportation Developments in South America and Their Effect on International Agricultural Competitiveness

Abstract

Argentina and Brazil have emerged as major U.S. competitors in world grain markets. The effect of recent and planned transportation infrastructure improvements on their international competitiveness is to be determined. Existing and planned transportation system improvements in South America that increase transportation and logistical efficiency on export-grain corridors are identified, and with the use of spatial models of the international corn and soybean economies, the effect of the enhanced transportation efficiency on international competitiveness is evaluated. Results show that the transportation system improvements yield noteworthy gains in South America, with producer revenues increasing by more than $1 billion per year and annual exports increasing by 3.3 million metric tons. As a result of South America’s improved transportation infrastructure and its increased exports, world grain prices decline and projected exports and producer revenues in the United States are reduced.