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Brazilian Fertilizer Sector to Invest US$ 13 Billion over Five Years
Sep. 2, 2013
As Brazilian farmers prepare for another growing season, attention in has turned once again to the fact that Brazil imports approximately 70% of its fertilizer needs. The way to reduce those imports of course is to produce more fertilizers domestically. At a recent meeting of the Third Fertilizer Congress, fertilizer companies indicated that they intend to invest US$ 13 billion over the next five years to increase domestic fertilizer production in Brazil. The meeting, which was held on August 26th in Sao Paulo, was sponsored by National Fertilizer Distributors Association (Anda) and attracted more than 400 people from the fertilizer sector and the general public.
The need for additional domestic fertilizer production came to the forefront recently when Vale pulled out of a partially completed fertilizer project at Rio Colorado in Mendoza, Argentina. With the Vale project no longer viable, it forced the fertilizer sector in Brazil to reevaluate their future production plans during the fertilizer congress.
If all of these proposals are carried out to completion, the domestic fertilizer production in Brazil would increase from 3.348 million tons in 2013 to 6,973 million tons in 2018 reducing imports from 74% of the total to 54% of the total. The production of nitrogen would grow from the current 0.825 million tons to 3.99 million tons reducing imports from 76% to 46%. Phosphorus production would increase from 2.24 million tons to 4.1 million tons reducing imports from 57% to 22%. Potassium production would increase from 0.278 million tons to 0.72 million tons reducing imports from 94% to 87%.
One of the problems in Brazil is the fact that the local tax structure favors imported fertilizers over domestically produced fertilizer. Fertilizer executives feel the tax structure is exactly the opposite of what the country needs if it want to significantly reduce fertilizer imports. Brazil currently imports approximately 70% of its needs while China imports 7% of its needs, India imports 43%, and the United States imports 36%.
The main entry point for imported fertilizers into Brazil is the Port of Paranagua in southern Brazil. Long wait times to unload fertilizer at the port drives up the cost of the product which is then driven even higher when it has to be trucked vast distances into the interior of the country. When the 2012/13 crops were being planted a year ago, a work slowdown at the port delayed imports to such an extent that some farmers in Mato Grosso had to delay planting until they received their needed fertilizers.
The Brazilian government has long recognized the fact that they cannot be so highly dependent on the volatile international; fertilizer market so they have set a goal of being self-sufficient in fertilizer production by the year 2020.
Source: Soybeans&Corn Advisor
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