In November, several Russian and Brazilian media outlets wrote that Brazil was exploring the possibility of increasing fertilizer supplies from Russia. Later it became known that Brazilian Minister of Agriculture, Livestock and Supplies Teresa Cristina visited Russia to discuss the issue.

The editorial team of Made in Russia talked to Victor Sheremetker, Russia's trade representative in Brazil, to find out what prospects domestic producers have in strengthening their positions on this market and what additional measures may contribute to an increase in exports from Russia. Read more in our article.

DEFICIT IN THE FERTILIZER MARKET

The impetus for the increase of Russian imports was the situation on the world fertilizer market, the trade representative explains.

"Experts attribute the resulting shortage of nitrogen fertilizers to the rising cost of their production: natural gas prices have risen sharply and, consequently, the prices of nitrogen fertilizers have increased," he said, adding that the cost of urea, for example, is now three times higher in key markets compared to the beginning of this year.

Since September 2021, he said, requests to the Russian trade mission from Brazilian business circles interested in buying fertilizers in Russia have increased significantly.

"We are studying the demand on the part of Brazilian companies and cooperatives, and we are constantly in contact not only with representatives of the Russian and Brazilian agrarian departments, but also with representatives of Russian companies producing mineral fertilizers in Brazil," Sheremetker continued.

Already in early October, Brazilian President Jair Bolsonaro reported about the rising cost of fertilizers. The shortage of these products in the world markets, as the head of state pointed out at the time, may provoke a food crisis and food shortages in Brazil next year. He reminded that since March 2021 the country's government has been working on this issue, and in December this year the authorities must present a plan of emergency measures to ensure Brazil with fertilizers. According to this package of measures, by 2050 Brazil's dependence on imported fertilizers should decrease from 85% to 60%.

A week after the announcement, however, Brazil's Minister of Mines and Energy, Bento Albuquerque, held a meeting with representatives of major Russian fertilizer producers during Russian Energy Week.

In mid-November, Brazilian Minister of Agriculture, Livestock and Supplies Teresa Cristina visited Moscow for several talks. In the future, according to the minister, the situation may lead to higher prices for the products of national agricultural producers.

SUPPORT MEASURES ARE NEEDED.

Russia has been the main supplier of fertilizers to Brazil for many years, the trade representative said. For example, some of the largest Russian producers - Phosagro, Eurochem, Uralchem, Akron and Uralkali - have been working here for a long time.

"In order to continue and increase the supply of fertilizers from Russia to Brazilian consumers, the Brazilian government should consider reducing tariff protection on mineral fertilizers," the trade representative said.

Urea-ammonia mixture, for example, is currently subject to a 4% duty, he explained.

"Although the duties are small, in the current environment of rising nitrogen fertilizer prices, zeroing them would have a positive price effect for Brazilian farmers," Sheremetker added.

RUSSIAN FERTILIZERS IN BRAZIL

Russia is steadily increasing its presence on the Brazilian market, the trade representative said, citing data from Comex Stat, a statistical portal of Brazil's Ministry of Economy. Over the past five years, our country has almost doubled its share in value terms. For example, in 2016, Russia supplied 4.2 million tons of products worth $985 million to Brazil, and in 2020 - 7.6 million tons worth $1.8 billion, the trade representative specified.

This trend will continue in 2021: in the first ten months of supply of mineral fertilizers from Russia to Brazil has already exceeded the total volume of exports at the end of last year: 7.7 million tons worth 2.6 billion dollars.

Brazil imported 34.2 million tons of fertilizers worth eight billion dollars last year, of which a fifth (22%) came from Russia.

MARKET DISTRIBUTION

Overall, Brazil imported approximately 11.5 million tons of nitrogen-containing fertilizers worth $3.3 billion in the first ten months of 2021. The largest share, 23%, came from Russia, which exported 2.6 million tons worth $765 million. China came in second place with 2.4 million tons worth $408.5 million shipped to Brazil (the country accounts for 21% of the Brazilian market). Qatar is in the third place with 1.5 million tons worth $529 million, its share is 13%.

Russia also holds the leading position in supplies of potassium fertilizers, says Russia's trade representative in Brazil. Over the ten months the Brazilian agrarians bought 10.7 million tons of fertilizers from other countries. And 28% was brought from Russia - 3.1 million tons for one billion dollars. This figure was beaten only by Canada, which exported 3.4 million tons of potassium fertilizer to Brazil. The third largest supplier is Belarus (two million tons of production, 417 million dollars). This country accounts for 18% of the Brazilian market of such fertilizers.

Over the past ten months, Brazil imported 8.8 million tons of mixed fertilizers for 4.3 billion dollars. We are talking about products that contain two or three nutrients: nitrogen, phosphorus and potassium.

As Sheremetker specified, the main suppliers in this segment were Morocco (2.2 million tons, worth 1.2 billion dollars). This African country accounts for a quarter of the market. Almost the same market share (23%) is occupied by Russia, which supplied two million tons of mixed fertilizers worth more than $ 862 million during that period, said the trade representative. China occupies the third place, supplying 1.9 million tons of fertilizers to Brazil for the amount of 914.4 million dollars.

During the same time, Brazil imported 2.8 million tons of phosphate fertilizers, worth more than $725 million. More than a third (36%) of Brazil's market for such fertilizers is occupied by Egypt. About one million tons worth $173.5 million were imported from that country. China accounts for a quarter (24%) of the market and Morocco for 15%.

Made in Russia // Made in Russia

Author: Ksenia Gustova