Imports and production of fertilizers in Brazil

According to the IFA (International Fertilizers Association), fertilizers are any solid, liquid or gaseous substances containing one or more plant nutrients. Generally speaking, they come in four types: minerals, animal manure, crop residues and compost. Mineral fertilizers are the most important, as they have the greatest economic expression among these existing types.

In Brazil, mineral fertilizers play a very important role, as they contribute to Brazil continuing to grow its production of foods such as soy, corn and sugarcane, for example, year after year. Due to the quality of the Brazilian soil, which according to the FAO (United Nations Food and Agriculture Organization) is classified between moderate to good, the use of NPK nutrients (acronym for the macronutrients Nitrogen, Phosphorus and Potassium) is fundamental to guarantee the supply of the agro market.

Figure 1 – Mineral fertilizers are key inputs for Brazilian agribusiness. Source: Getty Images.

Due to a series of factors, Brazil is a major importer of fertilizers. The product is the 4th main (disregarding containers) in terms of volume handled in Brazilian ports and the main one in terms of import volume. In 2021, the ports in Brazil moved 38,9 MM tons of fertilizers (84% of the country's demand). This volume is only smaller than iron ore, soybeans and oil (crude oil) in this period (Figure 2). The main suppliers for fertilizers imported by Brazil in 2021 were China (6,2 MM ton – 16%), Russia (5,9 MM ton – 15%), Canada (3,3 MM ton – 8%) and Morocco ( 2,7 MM ton – 7%). This import volume represents a 20% growth compared to 2020 (32,3 MM ton). If we consider the 10-year period between 2011 and 2021, the compound annual growth rate (CAGR) of fertilizer import volumes is 9%.

Figure 2 – Volume handled in 2021 per commodity, in tons. Source: ANTAQ. Analysis: ILOS.

And in 2022, these import volumes continue to rise. According to data from ANDA (National Association for the Diffusion of Fertilizers), between January and May 2022, Brazil imported 14,3 MM ton, a growth of 16% compared to the same period of 2020 (12,4 MM ton) . In general, import volumes of fertilizers increased in the second half of the year, in preparation for planting and harvesting the following year. However, the growth in imports observed in the first months of 2022 is influenced not only by the growth observed year after year, but also by the anticipation in the purchase of these products, since the war between Russia and Ukraine may impact the supply of this input to the agricultural production in the country and, therefore, as a preventive measure, the market has been anticipating and building up stocks in preparation for the next production cycles.

Figure 3 – Record import volumes in the first five months of 2022. Source: ANDA.

The government has sought to implement measures to encourage domestic production and reduce the dependence of the Brazilian market on fertilizer imports. In addition, there are investments to increase the production capacity of the national industry, as in Serra do Salitre, in Minas Gerais. However, the importation of fertilizers will continue to have a very high importance for agribusiness, for a series of reasons: i) being a return freight (it takes advantage of the reverse path of Brazilian agribusiness exports); ii) very competitive players in countries such as China, Canada and Morocco, with abundant mineral resources, integrated logistics and low costs; iii) shortages and costs associated with local production of certain nutrients (mainly potassium); and iv) investments in the expansion and modernization of port terminals, which increase efficiency and encourage the importation of these products.

The management of risks associated with these imports, such as the war between Russia and Ukraine, will be a constant theme in discussions about fertilizers in Brazil in the coming years, in order to guarantee the growth of agribusiness production, without increasing costs and reducing competitiveness of Brazilian exports. O XXVII International Supply Chain Forum will have a Supply Chain Flow track, which will bring specialists to discuss the management of risks and uncertainties in the flows of supply chains. It will be an excellent opportunity to discuss and understand these topics with the top executives in our sector.

References:

- International Fertilizer Association (IFA)

– Food and Agriculture Organization of the United Nations (FAO) – Global Soil Health

– National Waterway Transport Agency (ANTAQ) – statistical yearbook

– National Association for the Diffusion of Fertilizers (ANDA) – Sector research

– Rural Channel (06/02/2022) – Fertilizer imports grow more than 16%

– CNN Brazil (08/06/2022) – Fertilizer imports by Brazil increase 440% from 1998 to 2021

– Gazeta do Povo (08/03/2022) – What does the government plan to increase fertilizer production propose