Brasília – The Federal Government should present, up to the end of June, detailing of the National Fertilizer Plan, a consolidation of the proposal elaboration by the Ministry of Agriculture, alongside other ministries, for reducing foreign dependence of the country in the sector. In an analysis of the fertilizer market on Friday (17), the Brazilian minister of Agriculture, Reinhold Stephanes, said that a ten-year target has been established to reach self-sufficiency.
"It has been shown that Brazil has reserves and significant deposits to make the country self-sufficient. What we need, in some cases, is better knowledge of the reserves and, in others, a little more research. In other reserves, in fact, what needs to happen is the revoking of the license, both for research and for production, for those who got the permission but did not explore," said the minister.
In the detailing, the modes of exploration chosen by the government should be defined, as should dates for tenders in the case of entry of private companies in exploration, and the repealing of licenses of those who do not explore the reserves. Stephanes said that some answers should be defined in the meeting he should have in up to 15 days with the minister of Mines and Energy, Edison Lobão.
The country currently imports on average 73% of the most used fertilizers. The production of nitrogenated products is done by Petrobras and, according to Stephanes, dependence on imports, currently at 51%, could be solved in five years. According to agronomist Ali Saab, a Strategic Management advisor at the Ministry of Agriculture, Petrobras has already announced investment of US$ 2.2 billion for the establishment of a new urea factory.
In phosphorus and potassium, which together with nitrogenated products compose the list of three main fertilizers used in crops, the Brazilian dependence on imports is greater, at 75% and 91%, respectively, and the exploration is in the hands of private companies. For this reason, the time to reach self-sufficiency should be greater, from six to eight years for the former and up to ten years for the latter.
In the case of potassium, considered the most serious for the ministry of Agriculture, the country imported around 6.5 million tonnes last year, with expenses of US$ 5 billion by producers. The problem is that most of the production is in just four countries and is controlled by three multinational companies, which end up specifying the price of the end product no matter what changes take place in the economy.
The country, which is the world’s second largest agricultural producer, is also among the most vulnerable. In a global overview presented by the minister today, taking into consideration fertilizer output by large producing countries in relation with their consumption needs, whereas Brazil produces 35% of its needs, the situation of France is slightly worse (29%), but other contenders are far more privileged, such as Argentina (77%), the United States (81%), China (97%) and Germany (140%).
The Brazilian fertilizer industry is worth US$ 15 billion. Around US$ 300 million are paid as soon as the product arrives at the ports in the country, with the Additional Freight Charge for the Renewal of the Merchant Fleet. Expenditure due to lack of infrastructure and time spent in Brazilian ports are estimated to generate losses of US$ 140 million.
Presently, all fertilizers are in a list of exceptions and do no pay the Common External Tariff (TEC) imposed on products imported from countries outside the Mercosur. The Brazilian dependence started gaining importance and attention in government discussions when food prices rose steeply, early last year, driven by high production costs, especially for fertilizers, which, in some cases, saw cost increases of more than 100% within a year.
“What has changed is the fact that the government made the political decision of acknowledging that this as a strategic issue, one of vulnerability, and that the government needs to take over and set a policy for fertilizers,” asserted Stephanes.
*Translated by Mark Ament and Gabriel Pomerancblum
