An application of the spatial equilibrium model to soybean production in Tocantins and neighboring states in Brazil

Abstract

In the production chain of soybeans in Brazil a sizable part of the corresponding cost structure is the result of logistics costs. Given the location of its production sites, distant from the ocean, the optimization of the transportation costs is essential for preserving competitiveness. Using nonlinear programming, this study proposes a spatial multimodal and temporal equilibrium model. The applicability of the model is tested with a case study regarding the exports of the soybeans produced in three states in the northern part of the Brazilian cerrado region. In the state of Tocantins, the effects of infrastructure investments in the competitiveness of the production are described through four proposed scenarios, while the basic scenario compares the three states. The data are treated using the GAMS/MINOS program. The study asserts that soybean production will be more competitive if warehousing facilities are used extensively and when the project hydroway becomes operational.