Brazil’s agriculture sector is set to break records again. Soybean production is expected to surpass 170 million tons this year, up from 150 million tons last year. This continued expansion cements Brazil’s position as a global agricultural powerhouse but also exposes some familiar cracks in the system.
While soybean production has surged by more than 700% over the past 30 years, the broader economy has grown at a far more modest 2% per year since the introduction of the Real Plan in 1994—coincidentally, the same year I arrived in Brazil.
This disparity has left the country’s infrastructure struggling to keep up with agricultural expansion. High interest rates, inadequate storage capacity, inefficient transportation networks, and bottlenecked ports continue to erode margins and drive up costs for farmers and exporters.
The challenge is no longer just about producing more—it’s about moving and storing crops efficiently to preserve both profitability and sustainability.
One of our portfolio companies, goFlux, is tackling this challenge head-on with an AI-powered logistics platform designed to optimize grain and agricultural input transportation. By improving efficiency, providing financing solutions, and integrating carbon offsets, goFlux is helping modernize a sector still grappling with outdated logistics.
Below, Rodrigo Gonçalves, founder and CEO of goFlux, shares his perspective on why this year will be particularly painful for those trying to move Brazil’s record soybean crop at harvest time.
This Year Will Hurt...
Rodrigo Gonçalves
CEO | Founder | Logistics | Technology | Innovation
Well, my friends, 2025 is already shaping up to be a historic year. We are on the verge of breaking multiple records and undergoing a paradigm shift that, if not planned, will certainly be forced upon us.
The combination of impactful factors we are witnessing is entirely unprecedented. We have always viewed the harvest as a logistical and infrastructure challenge, but what this year is about to teach us, we have yet to learn.
And from the looks of it, we will learn the hard way. I have covered these topics in previous letters, but now we are seeing these factors materialize—with some subtle yet crucial differences.
We are expecting a record harvest, which is excellent news! However, this record harvest is coming with the slowest harvesting pace of the past five years. As of this writing, about 17.5% of the crop has been harvested, compared to 24% last year and an average of 21% over the past five years.
In other words, we are about to see a massive volume surge at the start of operations, pressured lineups, and demurrage costs hurting exporters.
At this moment, we are already seeing freight surges in some regions—partly due to the desperation of ships waiting for cargo and partly because the overall environment is sheer chaos. The tug-of-war between major trading companies and railways over take-or-pay charges is creating ripple effects because the trucking market knows this increases demand for long-haul truck shipments, such as from Sorriso to Santos.
Additionally, the fire at the soybean meal conveyor belt in Rondonópolis at the end of January further reduced railway shipping capacity, pushing even more cargo onto trucks.
If all of this merely led to an increase in freight prices due to demand, it would be manageable. The real issue is that the sheer volume of crops—unprecedented for the sector, combined with fewer railway shipments, increased domestic demand due to the rapid growth of corn ethanol production, and our chronic lack of storage infrastructure to regulate supply flow, is creating a severe shortage of trucking capacity.
This means we are not just talking about higher freight costs, but an actual lack of capacity, which is far more serious and difficult to resolve.
I mentioned that multiple factors are putting pressure on the market, but one crucial factor is losing strength—and that’s very bad news.
The U.S. dollar is now below R$6.00 (currently R$5.78). Remember that on December 17, 2024, it hit R$6.26, creating expectations of higher exchange rates during the harvest, which would have improved profitability and balanced the freight vs. soybean price ratio.
With the dollar at R$5.78, soybeans in Mato Grosso are below R$110 per sack, and we are not even in peak harvest yet. Once the supply increases, prices are likely to drop further. If freight prices reach today’s estimated levels, road freight costs will exceed 25% of the product’s value in some key routes, compared to a historical average that never exceeded 16%.
This cost inversion creates a serious impact on the profitability of soybean exports.
All other cost-driving factors remain strong. Interest rates have risen again, and Petrobras chose the perfect moment (sarcasm intended) to announce a diesel price hike—right before the largest harvest in history. In short, this year is going to be a stress test for the industry, as the saying goes.
The impacts are certainly not limited to soybeans. Fertilizer logistics are already suffering from higher freight costs and a lack of capacity. When soybean freight rates spike, it is common for transport companies to forgo return trips carrying fertilizers to avoid operational inefficiencies and losses. Fleet operators are signaling that seed and pesticide freight costs could rise by more than 30%, indicating that fixed costs will be passed down the supply chain.
The sugar, ethanol, and biofuels sectors face a similar outlook, with some key differences. The rising demand for corn transportation for ethanol production and DDG (Distillers Dried Grains) for animal feed is creating a huge new market for freight transport. While this is great news for the economy, it also creates a brutal capacity challenge in road logistics—one we are not prepared for.
On the positive side, we are slowly seeing some companies take a more strategic approach. They are using data analytics to optimize pricing and develop better relationships with transportation providers, improving service levels and mitigating volatility.
This is essential in a highly volatile market with tight margins. If these efforts were more widespread, they could prevent many of the losses we are sure to see this year.
However, the norm in our industry is to learn through pain. And from the looks of it, 2025 is going to hurt a lot of people.
Kieran Finbar Gartlan is an Irish native with over 30 years of experience living and working in Brazil. He is Managing Partner at The Yield Lab Latam, a leading venture capital firm investing in Agrifood and Climate Tech startups. All views, opinions, and commentary expressed are strictly his own.