Tereza Cristina will say in Ottawa that guaranteeing supply to Brazil is strategic for planet’s food security
11/03/2022
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Tereza Cristina — Foto: Denio Simoes/Valor
Agriculture minister Tereza Cristina embarks on Friday for a new round of negotiations with fertilizer exporters. This time, the destination is Canada, the main supplier of potassium chloride to Brazilian producers. She will meet with Canadian executives in Ottawa and is expected to convey the message that guaranteeing the supply of fertilizers to Brazil at this time is strategic for the planet’s food security.
The trip a few days after leaving the position at the head of the ministry is seen by people close to the minister as an extra and personal effort by Tereza Cristina to try and secure the supply of inputs for Brazilian farmers and strengthen the partnership with Canada.
Since last year, she has been in contact with Canadian potash companies and has tried to make them expand exports to Brazil by at least 500,000 tonnes.
On Sunday, the minister will meet with executives from Brazil Potash, a company controlled by the Canadian investor group Forbes & Manhattan. The subsidiary has the concession for the Autazes deposit, in Amazonas, whose exploration remains blocked by environmental questions. In full operation, the project can supply 25% of the national demand for potash, according to the National Fertilizer Plan.
On Monday, the meeting will be at Canpotex, a joint venture between Nutrien and Mosaic. The fertilizer giants exported 3.7 million tonnes of potassium chloride to Brazil in 2021 and make 85% of the product in Canada.
The mission, however, will not be easy. The fertilizer agenda is basically of the private sector, and the government has no power to regulate purchases or enter into trade agreements. The minister’s role will be to strengthen partnership ties. It will place Brazil as a reliable customer that can increase potash purchases.
Main customer of the product that leads the Canadian trade balance, Brazil supports the expansion plans of Canadian potash exporters. This does not mean, however, that the offer will be broadly expanded to the point of filling possible deficiencies with the closing of the supply channels from Russia and Belarus. Production growth capacity is limited.
These are multi-billion dollar investments that do not take immediate effect. The Canadian private sector will also assess the risk of making high investments considering the possibility of the market “turning around” again. An eventual normalization of the geopolitical scenario in Eastern Europe in the short or medium term could flatten potash prices, which are currently rising sharply, and put countries competing in exports back into play.
Meanwhile, the federal government launches this Friday the National Fertilizer Plan with the purpose of reducing Brazil’s 85% dependence on other countries, mainly Eastern Europe. This is not the first attempt and three other programs with the same purpose have existed in the past.
The plan is a “modern mapping,” in the words of a senior executive in the industry. “The work has been well conducted. But there is no miracle that can be done. One has to look at whether exploration is feasible,” he said. Although Brazil has enough minerals for local production, there are issues such as the quality of the mines and sensitive points such as their location.
The availability of natural gas – the raw material for nitrogen products – at a viable cost is also challenging.
Structural issues such as logistics, as well as taxes, are mentioned by sources consulted by Valor – and addressed in the government’s plan. The document mentions the need for convergence with the National Logistics Plan and other public policies such as the New Legal Framework and the New Gas Market Program (in the chapter that mentions feasibility strategies for nitrogen plants).
Source: Valor International