São Paulo – Brazilian farmers should be better trained in coming years and, with this, should also demand more from their fertilizer suppliers. The forecast is by the partner and director at Agroconsult Consultoria e Projetos, André Pessôa, who gave a talk on Monday (27) during the 2nd Brazilian Fertilizer Congress, in the city of São Paulo. Favoured by the global scenery, with good prices and demand for soy and maize, as well with good perspectives for production of sugarcane, farmers should become more demanding with fertilizer producers. The meeting was promoted by the Brazilian National Fertilizer Association (Anda).
Production of soy in Mato Grosso, for example, should generate profitability of R$ 1.463 (c. US$ 720) per hectare in the 2012/2013 crop, and R$ 1.296 (c. US$ 640) in 2013/2013, and R$ 714 (c. US$ 350) in 2014/2015, R$ 622 (c. US$ 300) in the following crop and R$ 560 (c. US$ 275) in the following crop, the latter already considering adjustments in global demand. “Imagine what it will be like in five years’ time if farmers continue earning like this. Credit would become an option, and no longer oxygen,” said Pessôa, stating that it will be a challenge for the fertilizer industry to make money with these clients.
“Quality products and services must be sold,” he said, referring to delivery times and logistics, among others. “Farmers should move around wearing turbans. Each farm will be an oil well,” he joked, making a comparison with Arab oil producers. Agroconsult forecasts show that, from demand of 28.42 million tonnes of fertilizers in 2011, the country should start consuming 34.8 million tonnes in 2017. Around 70% of this volume should come from soy, maize, sugarcane and cotton crops. These cultures present good perspectives for production in Brazil and growing global demand.
According to Magnus Berge, the senior executive at CRU Fertilizer Week, a company that works in events and publications in the fertilizer area, Brazil currently answers to 6% of the global fertilizer market, only behind China, which answers to a quarter of the demand, India, the United States and the European Union. Different from other markets, which use more phosphorus and potassium, Brazil uses more nitrogen. In a panorama plotted for the supply of urea, a source of nitrogen, Berge admits that there should be regular and constant growth of demand in the area over the next five years and the prices should end above the 2008 levels.
In terms of phosphates, in turn, Berge believes that demand in Brazil should grow 5% over the next five years and that global production should remain stable up to 2017. He mentioned some new production projects, like in Saudi Arabia, by Ma’aden, and in Brazil too, but stated that despite the growth in domestic production, the country should continue as an important importer of phosphates. “Due to quality. And it may be cheaper to buy abroad than here,” said the executive. In the area of potassium, in turn, there is currently a super capacity in industry, as well as new production projects, like in Russia. He stated that, due to this, product prices should remain stable over the next five years.
Brazil and the US
In the scenery of problems in crops worldwide, Brazil presents itself, in coming years, as a good destination for world fertilizers. Pessôa believes that North American farmers, for example, may review their use of fertilizer in the next crop. He believes that they may, in the next crop, only replace what the plants extracted, and not develop a traditional volume of fertilisation. “They will focus more on how much was extracted in this crop and with replacement” said the director and partner at Agroconsult. He pointed out, however, that only late this year or early next year will there be certainty as to how much fertilizer they will use.
Pessôa recalls, however, that this lower use of fertilizer will not be made for economy. “But due to the lower extraction this year,” he said. The specialist recalls that 80% of the losses of farmers in the United States will be covered by insurance.
The lower US crop, in fact, is one of the factors for good performance of Brazilian agriculture. The low offer of the product and the lack of North Americans in the global market is increasing prices and opening markets for Brazil in other countries. Added to that there is growth of consumption in developing nations like Russia, China, India and Brazil itself. “As they are developing countries, the turn much of their income to food,” said Pessôa. The global demand for pork and chicken, for example, should grow over 2% over the coming five years.
*Translated by Mark Ament
