Brazil launched the fertilizer plan in early March to reduce the share of fertilizer it sources from imports, amid concerns on global market rising prices and restrictions on major global producer exports.
The plan projects different scenarios to reduce nitrogen, phosphates and potash imports dependency by 2050.
Camila Dias: Hello and welcome to ‘Market Talks’- a series of podcasts presented by Argus addressing the events impacting the commodities and energy sectors in Brazil and around the world. My name is Camila Dias, Argus Brazil Country Manager. In today's episode, I talk to Renata Cardarelli, reporter for the Argus Brazil Grains and Fertilizer publication, about Brazil’s government intention to reduce fertilizer imports. Welcome, Renata.
Renata Cardarelli: Hello, Camila. It is a pleasure to be here.
CD: Renata, Brazil’s government launched a national fertilizer plan. What is its main goal?
RC: Brazil launched the fertilizer plan in early March to reduce the share of fertilizer it sources from imports to around 40pc by 2050, down from nearly 85pc. In the best scenario, the reduction in phosphate dependency will decrease from around 70pc currently to near 25pc, but the plan also considers a more conservative scenario, in which dependency could drop to around 35pc. For nitrogen, external dependence is expected to fall by between 61-71pc by 2050, depending on the scenario, according to the plan. For potash, dependency could decrease from around 98pc to 40pc in the period.
CD: Renata, what was the fertilizer volume delivered in 2021 to the Brazilian market?
RC: Official data on 2021 deliveries are yet to be released, but market participants estimate between 45.5 and 46 million tonnes will have been delivered. The estimate for 2022 is that final deliveries will reach 46.5-47.5 million tonnes. There are growing concerns on 2022 fertilizer imports, amid rising prices on the global market and restrictions on major global producers exports. According to the sector’s national association Anda, Brazil has fertilizer stocks until the end of May. In Mato Grosso state, farmers secured around 50pc of the fertilizers needed to plant the 2022-23 soybean crop, down from over 60pc a year earlier.
CD: Should the plan have an immediate effect on reducing Brazilian fertilizer imports, Renata?
RC: Well, Camila, the plan includes short-term and long-term actions. The launch of the so-called “Caravana Embrapa FertBrasil” is among short-term actions. This caravana seeks to share information and technology with Brazilian farmers to increase efficiency in the application of fertilizers. The aim is to reduce fertilizer usage in the 2022-23 crop by 20pc, which could generate savings of up to $1 billion, according to the agriculture ministry. At this moment, Brazil intends to keep what minister Tereza Cristina has been calling “fertilizer diplomacy”. The minister has traveled to and met fertilizer-producers to strengthen trade relationships. Representatives of Brazilian and Iranian companies signed an agreement earlier this month to barter 400,000t of Iranian urea for the same volume of Brazilian soybean and corn. The minister also visited Canada to discuss the supply of fertilizers with the government and companies in the sector.
CD: Regarding long term, what are the main points to reduce external dependence on nitrogen, Renata?
RC: When it comes to nitrogen, Camila, the main point for the expansion of Brazilian production is the raw material. The expansion of nitrogen production follows the increase in the supply of natural gas, used to synthesize urea. Brazil is still in the early stages of opening up the natural gas market, and the development of this market is essential for the local fertilizer industry. New agents in the natural gas segment are expected to add competitiveness and liquidity to new contracts. Brazil also intends to enable bilateral agreements with its neighbors, Bolivia and Argentina, until 2025 to access natural gas from these countries.
CD: What are the main points for reducing phosphates and potash external dependence, Renata?
RC: For phosphates, the ministry counts on deposits Brazil has been mapping with exploratory potential to reduce dependence on imports. During the national fertilizer plan launching event, representatives of Brazilian government pointed out that the country’s lower house is analyzing a project bill which legalizes mining on indigenous lands. The project is criticized by environmental and social advocates, who raise discussions on the indigenous rights. The most concerning fertilizer in terms of demand and supply is potash, as Brazil imports around 96pc of its needs. The minister said “perspectives are good in the long-term” on potash availability.
CD: How does the government intend to enable the national fertilizer plan in terms of investments?
RC: To increase production and installed capacity, Brazilian government aims to encourage international investments by enabling financial incentives and reducing redtape. Among private investments, for example, the government seeks to attract at least $10 billion to increase nitrogen production – and output of raw material – by 2030 and the same amount each decade until 2050. Brazil intends to discuss at the Organization for Economic Co-operation and Development, OECD, ways of attracting international and national investors to the fertilizer market. All projects to develop and increase fertilizer production require long-term planning and investments in infrastructure.
CD: Thanks a lot, Renata.
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