1. Challenges for the corn supply chain in Brazil: from investments in logistics infrastructure to regulation of biotechnology Profa. Dra. Andréa Leda R. Oliveira Agribusiness Management Scholol of Applied Sciences University of Campinas andrealeda@fca.unicamp.br Prof. Dr. José Maria F.J. Silveira Institute of Economics University of Campinas jmsilv@eco.unicamp.br University of Campinas Scholol of Applied Sciences Laboratory of Agribusiness Ravello, Italy June 18-21, 2013

2. How the new logistics projects in Brazil will be affected by segregation between GM and nonGM crops? What are the main impacts? How these impacts would affect the competitiveness of maize in the international market? Questions Challenges Methodology Results Conclusions Questions

3. Agricultural Areas: frontier regions booming Adoption of GM crops in Brazil: rapid growth 10 years: GMO areas increased approximately 12 times 2002: 3.0 million ha 2012: 36.6 million ha GM maize: 53% of maize area in 2010. Challenges

4. Territorial extension and load transport, selected countries. Notes: 1) Total territorial extension minus areas covered by water 2) Does not consider air and pipeline transportation. Source: CIA World Factbook (2010) for territorial extension; Bureau of Transportation Statistics (2010), International Transport Forum (2010) and CNT (2013) for transport matrix apud OLIVEIRA, 2011. 17.0 9.2 8.5 9.2 7.6 Territorial extension — land 1 (million km 2 ) Russia Australia Canada USA Brazil 88% 49% 21% 48% 41% 61% 2% 11% 50% 4% 13% Rail Road Waterway Russia (2009) Australia (2008) Canada (2006) USA (2008) Brazil (2012) Transport matrix 2 55% 35% 9% Challenges Transportation in Brazil

5. Logistical Challenges in Brazil Challenges

6. The capacity to offer differentiated products (traceability and segregation grains) with greater efficiency and lower costs will be a significant competitive factor between grain producing countries. Brazilian Logistics System: attempts to arrange transportation of standardized product and big volumes. New challenges: meeting the demand for differentiated products that require adjustments in the current logistics system. Challenges

7. Spatial Equilibrium Model Methodology

8. MCP Methodology

9. Model Flowchart Tests for non GMO Supply Regions Demand Regions International Demand Export Ports Transhipment waterway port roadway railway waterway maritime Methodology

10. Roadway Railway Waterway Sea Port Water Port Corn production Map Legend SUPPLY REGIONS

11. Scenario 0: trade flows are made based only on transportation costs. Scenario 1 (Full Segregation): Costs of strip and PCR (Polymerase Chain Reaction) tests were added. The strip tests varied according to the quantity of transfers/transhipment points according to the transportation route. PCR tests were made in the storage before shipment, at the port of shipping for export and also on the ship, total 3 PCRs. The costs of testing and storage were obtained through interviews with the main traders and laboratories in Brazil. Methodology

12. The “full segregation system” generated a negative impact of 4.5% on trade. Analyze the losses U.S. dollars, reaching almost US$718 million. This amount represents 28% of foreign exchange generated by exports of Brazilian corn in 2011. Tests and storage expenses: US$506 million International trade reductions: US$212 million Scenario 0: 100% of exports were made by intermodal routes. Scenario 1: only 29% of corn destined for foreign markets were made by intermodal options. 71% of intermodal routes are no longer competitive, giving priority to highways and increasing the transportation costs. >>>> impacts in the new projects >>>> Results

13. Conclusions Using the MCP model proposed for the transfer of Brazilian corn, it was possible to verify the effects of the implementation of the Cartagena Protocol. With segregated storage and tests to identify the GMO´s throughout the routes there is an increase of the cost of transport. This causes a reduction in production, resulting in a fall in commercialization, especially of the international market that demanded the largest number of tests, reflecting a decrease in competitiveness of Brazilian corn. Also, another deficiency identified was the reduced numbers of laboratories to perform the tests.

14. Conclusions The Cartagena Protocol also imposed an increase in the opportunity cost by adopting a new technology. At the present time, Brazil faces the challenge of reducing its deficit in storage and transportation capacity, a process which is being based on increased efficiency from agility and taking advantage of scale economies and scope. The imposition of identity conservation systems on a large scale would not only mean diverting the resources necessary to accompany the Brazil’s agricultural production growth rate, but also create uncertainties as to the type of investment that should be made.

15. Challenges for the corn supply chain in Brazil: from investments in logistics infrastructure to regulation of biotechnology Profa. Dra. Andréa Leda R. Oliveira Agribusiness Management Scholol of Applied Sciences University of Campinas andrealeda@fca.unicamp.br Prof. Dr. José Maria F.J. Silveira Institute of Economics University of Campinas jmsilv@eco.unicamp.br University of Campinas Scholol of Applied Sciences Laboratory of Agribusiness Ravello, Italy June 18-21, 2013 THANK YOU...

16. Results