This article was originally published by Dialogo Chino and republished with authorization.
Farmer Claudio Zeni’s attention is divided between global geopolitics and tending to his 15-hectare property in Capitão Leônidas Marques, in the southern Brazilian state of Paraná, where he plants soybeans, corn, and wheat, and raises 25 oxen.
“We keep one eye on the crops and the other on the global scenario. After all, those in agriculture depend on the import of fertilizers. We know there is a shortage of these products on the international market,” he says.
Although Brazil is one of the largest agricultural producers in the world, its supply chain is truly global, with the nation importing almost 84 percent of its fertilizers in 2021.
However, global supplies, which already began to dwindle at the end of last year due to multiple international factors, could become scarce in the event of a protracted war between Ukraine and Russia — the top fertilizer supplier to Brazil and other Latin American countries.
Shortages caused the prices of chemicals used in fertilizers to surge in Brazil last year. Potassium chloride rose 185 percent, urea increased 138 percent, and monoammonium phosphate increased 103 percent, according to the Brazilian Confederation of Agriculture and Livestock (CNA).
“Brazil is already being hit hard. In many cases, the products that are available have doubled in price,” says Mr. Zeni.
One of the main risks of the crisis is food price inflation. “The impacts here are the increase in production costs, the reduction in farmers’ profit margins, and passing on these increases to the consumer’s table,” says Maísa Romanello, a fertilizer specialist with Safras & Mercado, a Brazilian agribusiness consultancy. The federal government also already predicts higher domestic food prices.
Restricted Russian supply
Russia, the country’s main global fertilizer supplier, accounted for 22 percent of Brazil’s imports of these products in 2021 — a total of 9.27 million tons — according to the Development, Industry, and Foreign Trade Ministry (MDIC). But last November, Russia imposed nitrogen export quotas to safeguard its domestic supplies.
Coal, natural gas, and oil are essential resources in fertilizer production. Many of these products are made by gasifying coal and combining it with nitrogen at high temperatures to form chemical compounds such as ammonia and urea — which form the basis of many fertilizers — or by burning natural gas directly. Fossil fuels also power numerous manufacturing plants.
These fuels reached price peaks between early and mid-2021, causing a significant cost increase for fertilizer producers and input manufacturers. The U.S. Dollar...
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