Camila Fontana: Hello everyone. We are back with Market Talks, a weekly podcast series on the commodities and energy sectors. I am Camila Fontana, deputy bureau chief of the Argus office in Brazil, and I invite you to join this discussion on sustainable fertilizers with Bruno Castro, one of the experts behind the Argus Brazil Grains and Fertilizers publication.
Bruno, Brazil currently imports about 80pc of the fertilizer needs to support agribusiness, and the national fertilizer plan was launched by the government here in 2022 to precisely to boost domestic production including sustainable fertilizers. So, before we dive into the topic of sustainability, it is worth giving an overview of this public policy and domestic production.
Bruno Castro: Hello, Camila. That is right. To talk about sustainable fertilizers in Brazil, we need to understand how domestic production is currently going. Although Brazil is the fourth largest fertilizer consumer in the world, accounting for around 80pc of global consumption, 85pc of the products used in Brazilian crops are imported. It is also important to highlight that Brazil has a large reserve of raw materials for phosphates and potash products, especially in the Amazon and Minas Gerais states.
To change the scenario in 2022, Brazil approved a plan to increase domestic production so that it meets between 40pc and 50pc of domestic demand by 2050, the so-called national fertilizer plan. It’s main short and medium-term actions aim to reactivate complete or even expand production units. In the medium term, domestic production is expected to increase by almost 10mn tons per year by 2029, according to Argus estimates.
This volume is mainly nitrogen-based products at Petrobras plants, since the natural gas is poured by the state-owned company is a session for e-real production. This strategy of expanding domestic production would also reduce Brazil's exposure to exchange rate fluctuations and geopolitical conflicts, such as the significant price rise in 2022 when the conflict between Russia and Ukraine began, given that Russians are a major supplier of fertilizers to Brazil.
The same has been seen recently with the escalation of tensions in the Middle East. Both Iran and Israel are nutrient suppliers to the Brazilian markets with the Iranian supplying around 13pc of Brazil's urea in part this year.
CF: And what are sustainable fertilizers?
BC: Well, in addition to increasing domestic production of traditional chemical and mineral fertilizers, Brazil wants to increase organic and organomineral products supply as well as the reuse of solid waste.
In the Brazilian market today, the main categories of sustainable products are the organic fertilizers, which are those generated from animal our plant sources; the organominerals, which are the result of the mixing of one or more fertilizers; water soluble, which dissolves easily in water and are applied through irrigation or foliar application; the bio stimulants which increase crops growth and resistance; and finally the low or zero carbon fertilizers, which are those produced from renewable energy sources.
Currently, sustainable fertilizer chain in Brazil represents only a small portion of consumption. But the national plan indicates that there is potential for growth.
CF: What is the growth potential of the segment in Brazil? Do we have any data on that?
BC: The increasing production costs, especially with traditional fertilizers, should encourage farmers to seek added value and productivity through sustainability awards.
This was the analysis of industry experts and the ministry of agriculture’s representatives at an event promoted by Argus in São Paulo, Brazil. Of the 872 companies that produce or import fertilizers to Brazil, approximately 54pc operate with organic products and 44pc operate with organomineral products, according to a study carried out by the Brazilian Association of Plant Nutrition Industries, Absolo.
Only 1.2pc operate with bio stimulants. The national plan estimates that investments in organic and organomineral fertilizers could multiply local production by six by 2050, but it does not specify current production volumes. To make Brazilian producers more competitive, the plan recommends a reform to equalize taxes on national and imported green products and to standardize state and municipal legal frameworks.
CF: Well, a lot of energy is needed to produce fertilizers and if it is going to be sustainable, the energy needs to be clean. So, how does the government's plan address this issue?
BC: Well, Camila, that is right. Fertilizer production consumes a lot of energy and to make the final product sustainable, the energy matrix has to be renewable.
In the sense, the plan suggests bilateral agreement with Brazil's neighbouring countries in South America, like Bolivia, Argentina, Chile, and Uruguay, to diversify supply and integrate regional and natural gas markets, since natural gas is an essential raw material for nitrogen-based fertilizer production. Another strategy to increase the supply of gas in Brazil is the production of biomethane within the scope of RenovaBio. A Brazilian policy approved in 2024 that seeks to promote biofuel usage.
The final product of this decomposition is a gas fuel that can be used to generate electricity and also can be injected into gas pipelines to supply fertilizer factories.
CF: Thank you, Bruno. Argus will be monitoring the evolution of the sustainable fertilizer market and you'll be back soon on Market Talks to share updates with our listeners. Thank you to everyone who tuned into our podcast today. All episodes are available on our website argusmedia.com and our major streaming platforms.
We'll be back next week with another edition. See you then.
