Storage infrastructure for grain value chains




Business Model Description
Investment into field-side cold or non-cold sustainable silos used for storing export grains. Silos could be built/owned/operated, or built and leased by experienced operators
Expected Impact
Contribute to agricultural price stability by lowering transportation costs and food waste, increase food security and contribute to the income of the farming population
How is this information gathered?
Investment opportunities with potential to contribute to sustainable development are based on country-level SDG Investor Maps.
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Country & Regions
- Brazil: Mato Grosso
- Brazil: Mato Grosso do Sul
- Brazil: Piauí
- Brazil: Maranhão
- Brazil: Bahia
- Brazil: Tocantins
- Brazil: Goiás
Sector Classification
Food and Beverage
Development need
Sustainability Development Report 2019: score of 62.1 on SDG 2 (Zero Hunger), of 60.9 on SDG 15 (Life on Land), and of 91.7 on SDG 13 (Climate Action), with 'Significant challenges remaining' subscores prevalent across indicators (1)
Policy priority
The current administration has made supporting the agriculture sector and boosting its export competitiveness a key government priority (2) (3). Increasing the grain storage capacity, irrigation projects, environmental preservation and empowering agribusinesses have been marked as priorities.
Gender inequalities and marginalization issues
For some crops, smallholder farmers constitute 70% of the food market in Brazil. A large proportion of this is family farming, which can support poverty reduction and food security. Within this outlook, women provide a significant proportion of the agricultural workforce. Approximately 30% of the total rural workforce in Brazil is female. (25)
Investment opportunities introduction
There are various credit lines and incentive programs at discounted interest rates to support investments in agriculture. The participation of foreign entrants was also facilitated through a recent policy announcement (4) (5)
Key bottlenecks introduction
Infrastructural deficiencies, especially in logistics, negatively impacting the competitiveness of freight costs, low levels of land-use efficiency and dependence on imported fertilizers (26)
Food and Agriculture
Development need
Although agribusiness represents 22% of Brazil’s GDP, 1/3 of all employment and 40% of exports (6), it is also responsible for the consumption of approx. 70% of the water in rivers, lakes and aquifers in Brazil. (7) Despite Brazil’s NDC commitment to restore and reforest 12M ha of forests by 2030, unsustainable livestock production is a key driver of deforestation (8) (9)
Agricultural Products
Pipeline Opportunity
Storage infrastructure for grain value chains
Investment into field-side cold or non-cold sustainable silos used for storing export grains. Silos could be built/owned/operated, or built and leased by experienced operators
Business Case
Market Size and Environment
Brazil has a grain storage capacity deficit of 75 million tonnes
Indicative Return
10% - 15%
20% - 25%
Investment Timeframe
Short Term (0–5 years)
Commercializing Brazil made silos typically takes 6 months for steel, 12-18 months for concrete (15)
Ticket Size
USD 1 million - USD 10 million
Market Risks & Scale Obstacles
Business - Supply Chain Constraints
Capital - CapEx Intensive
Capital - Limited Investor Interest
Impact Case
Sustainable Development Need
Brazil’s grain storage capacity of 84% is far below the FAO recommended 120% (16), creating systemic risk for farmers and cooperatives seeking to store bumper crops during low price periods, and exposing them to predatory freight pricing (40-70% trucking rate hikes) (17)
Gender & Marginalisation
Agribusiness is maintained largely by family farming and smallholder farming in Brazil. Women also provide a significant proportion of the agricultural workforce (25). Thus, the systemic risks of low storage capacity are borne by these groups.
Expected Development Outcome
Reduce transport costs by staggering commercialization, since freight costs are highest at harvest times (18)
Minimize the environmental impact of grain production, as better storage leads to a higher proportion of grain making it to markets
Gender & Marginalisation
Limit producer costs and risk, such as grain deterioration from inadequate storage conditions for the farming population including smallholder farmers and women (18)
Primary SDGs addressed

2.3.2 Average income of small-scale food producers, by sex and indigenous status
2.a.1 The agriculture orientation index for government expenditures
Agriculture orientation index 0.18 (24)
An AOI larger than 1 means the agriculture section receives a higher share of government spending relative to its economic value. An AOI smaller than 1 reflects a lower orientation to agriculture. (24)
Secondary SDGs addressed



Directly impacted stakeholders
Corporates
Indirectly impacted stakeholders
People
Planet
Corporates
Outcome Risks
If not ventilated properly, silos can produce nitrogen and carbon dioxide, presenting environmental (emission) and physical (explosion) risk
Gender inequality and/or marginalization risk: There is a risk that smallholder farmers may be unable to afford the storage services and facilities
Impact Risks
Gender inequality and/or marginalization risk: Stakeholder participation risk- Smallholder farmers may be unable to or unwilling to store their crops in the silos
Impact Classification
What
The outcome is likely to be positive, important and intended because grain storage could increase farmer incomes
Who
Small and mid-scale grain producers are underserved due to a lack of grain storage facilities
Risk
The model is proven and technology for grain silos is readily available and affordable
Impact Thesis
Contribute to agricultural price stability by lowering transportation costs and food waste, increase food security and contribute to the income of the farming population
Enabling Environment
Policy Environment
(Strategy for Openness, Expansion and Promotion of Brazilian Agribusiness in the International Market 2019-2022): has been established as an action plan by the Federal Government to increase Brazil competitiveness in the international agribusiness markets. (27)
Investment in grain storage benefits from growing political momentum, with Minister of Agriculture specifically calling for investment in storage in March 2019 (19)
Financial Environment
Financial incentives: Various credit lines such as the Program for Construction and Storage Facility Scaling from BNDES (PCA), with an interest rate of 5.25-6% (3) & Constitutional Funding Facility for the mid-West (FCO), with an interest rate of 7.5%. (21)
Financial incentives: Incentive Program for Technological Innovation of Agricultural and Livestock Production (INOVAGRO), with an interest rate of 6.5% in Mato Grosso (15) & Pronaf Mais Alimentos is a credit line by the Bank of Brazil, with an interest rate of 2.5-4.6% (21)
Financial incentives: Programa de Investimento em Logistica Phase 2 is starting in 2019, with US$ 30 billion in planned disbursements (22)
Regulatory Environment
(Law 9,973): Grain storage is highly regulated through Law 9,973 from 29 May 2000 and a 2013 amendment, detailing required characteristics of storage facilities such as sanitary, humidity and temperature to ensure produce quality (20)
Marketplace Participants
Private Sector
Investors suchs as Banco Bradesco, Banco Votorantim and Safra. Corporations such as Kepler Weber and GSI. Comfrio is the main player in cold storage in Brazil
Government
The National Supply Company
Non-Profit
Organizations like SICREDI, the Financial Cooperatives initiative in Brazil
Target Locations

Brazil: Mato Grosso
Brazil: Mato Grosso do Sul
Brazil: Piauí
Brazil: Maranhão
Brazil: Bahia
Brazil: Tocantins
Brazil: Goiás
References
- (1) Bertelsmann Stiftung, 2019, https://dashboards.sdgindex.org/#/BRA
- (2) RVTV, 2019, https://rvtv.com.br/2019/01/28/jair-bolsonaro-em-davos/
- (3) Estado de Minas, 2018, https://www.em.com.br/app/noticia/internacional/2018/11/09/interna_internacional,1004516/agronegocio-ganha-forca-no-governo-bolsonaro.shtml
- (4) Notícias Agrícolas, 2019, https://www.noticiasagricolas.com.br/videos/agronegocio/237445-investidores-estrangeiros-e-urbanos-poderao-financiar-producao-agricola-no-brasil.html#.XRKyQutKipo
- (5) Notícias Agrícolas, 2019, https://www.noticiasagricolas.com.br/noticias/politica-agricola/237412-entenda-o-plano-safra-1920-e-o-financiamento-estrangeiro-atraves-de-certificados-do-agro.html#.XRKzLutKipp
- (6) PwC, 2013, https://www.pwc.com.br/pt/publicacoes/setores-atividade/assets/agribusiness/2013/pwc-agribusiness-brazil-overview-13.pdf
- (7) Dalberg interviews, 2019
- (8) Forest Declaration, 2017, https://forestdeclaration.org/goal/goal-4/
- (9) Chain Reaction Research, 2018, https://chainreactionresearch.com/report/cattle-driven-deforestation-a-major-risk-to-brazilian-retailers/
- (10) Sociedade Nacional de Agricultura, 2017, https://www.sna.agr.br/dll-preve-expansao-dos-investimentos-em-armazenagem-e-irrigacao-para-2018/
- (11) Ministério da Agricultura, 2019, http://www.agricultura.gov.br/noticias/expectativa-e-colher-234-milhoes-de-toneladas-de-graos
- (12) World Bank, 2017, http://documents.worldbank.org/curated/en/268351520343354377/pdf/123948-WP-6-3-2018-8-39-22-AriasetalAgriculturalgrowthinBrazil.pdf
- (13) Gepros, 2017, https://revista.feb.unesp.br/index.php/gepros/article/download/1598/755
- (14) Globo Rural, 2019, https://revistagloborural.globo.com/Noticias/Economia/noticia/2019/03/kepler-weber-reverte-prejuizo-e-registra-lucro-liquido-de-r-287-mi-no-4-tri.html
- (15) Universidade Tecnológica Federal do Paraná, 2014, http://repositorio.roca.utfpr.edu.br/jspui/bitstream/1/5868/1/CM_COECI_2014_1_05.pdf
- (16) Conab, 2018, https://esalqlog.esalq.usp.br/upload/kceditor/files/2017/SILA15/8%20-%20DEISE%20FASSIO%20-%20Situa%C3%A7%C3%A3o%20da%20armazenagem%20brasileira%20e%20sua%20rela%C3%A7%C3%A3o%20com%20as%20perdas.pdf
- (17) African Journal of Agricultural Research, 2016, https://academicjournals.org/journal/AJAR/article-full-text-pdf/5F3093560244
- (18) Aprosoja, http://www.aprosoja.com.br/storage/site/downloads/comunicacao/publicacoes/armazena-mt59959f5f8f8a7.pdf
- (19) Ministério da Agricultura, 2019, http://www.agricultura.gov.br/noticias/tereza-cristina-diz-em-nova-york-que-agronegocio-brasileiro-precisa-de-mais-investimentos-em-infraestrutura
- (20) Casa Civil, 2000, http://www.planalto.gov.br/ccivil_03/LEIS/L9973.htm
- (21) Banco do Brasil, 2019, https://www.bb.com.br/pbb/pagina-inicial/agronegocios/agronegocio---produtos-e-servicos/credito/investir-em-sua-atividade/pronaf-mais-alimentos#/
- (22) Blog Logística, 2015, https://www.bloglogistica.com.br/mercado/governo-apresenta-nova-fase-do-programa-de-investimento-em-logistica/
- (23) Conab, 2018, https://esalqlog.esalq.usp.br/upload/kceditor/files/2017/SILA15/8%20-%20DEISE%20FASSIO%20-%20Situa%C3%A7%C3%A3o%20da%20armazenagem%20brasileira%20e%20sua%20rela%C3%A7%C3%A3o%20com%20as%20perdas.pdf
- (24) SDG Tracker, 2021. https://sdg-tracker.org/
- (25) Vox Lacea, 2016. https://vox.lacea.org/?q=blog/perspectives_rural_women_brazil
- (26) Brazilian-American Chamber of Commerce INC, 2018. https://brazilcham.com/wp-content/uploads/2018/12/agriculture-report-1.pdf
- (27) Presidency of the Republic of Brazil, 2017. http://www.brazil.gov.br/about-brazil/news/2017/07/government-strategy-will-expand-brazilian-agribusiness-exports
- (28) KeplerWeber, 2021. https://www.kepler.com.br/produtos/silos-1