fertilizers
Economy

Brazil expenditures with Russian imports more than doubled year on year

Jun, 30, 2022 Posted by Gabriel Malheiros

Week 202226

President Jair Bolsonaro said that on June 27, he spoke by phone with Vladimir Putin about food and energy security. According to Reuters, Putin told Bolsonaro that Russia will observe the fertilizer supply contracts dispute the country’s ongoing war with Ukraine. Russia is the main supplier of fertilizers used in Brazilian agriculture. The continuous purchase of fertilizer helps explain why Brazil’s expenditure on Russian imports has more than doubled this year.

The commercial route linking Brazil and Russia changed after the war. The country of Vladimir Putin, for example, has grown distant from Brazilian coffee beans.

With skyrocketing freight prices and logistical difficulties created by the pandemic, coffee sales to Russia shrank 43% year on year, demoting the country from the sixth to 13th position among the largest importers of Brazilian coffee.

However, on this side of the Atlantic, we have never seen so many Russia-flagged vessels docking in Brazilian ports. Most of them come fully loaded with fertilizers.

“Confronted with war rumors, Brazil purchased large volumes in advance in the early months of the year, culminating in a larger-than-usual amount of fertilizers being brought to the country in the first five months. Prices were rising owing to factors such as the pandemic and logistical disruptions aggravated by the war,” explains Maisa Romanello, a specialist consultant at Safras & Mercado.

Since the federal government began keeping records, Brazil has never spent so much on Russia. The amount disbursed was US$ 3.41 billion between January and May, more than double last year when spending amounted to US$ 1.66 billion.

“Generally speaking, Brazil buys more from Russia than it exports. The Brazilian trade balance usually stays in deficit as the country imports large amounts of commodities, fertilizers, natural gas,” says Rodrigo Fagundes Cezar, an international relations professor at FGV.

The months of conflict have placed Russia among the protagonists of Brazil’s trade relations. In the ranking of partners, the country went from 12th to 5th place, behind Germany, Argentina, the United States, and China.

In order to Brazil safeguard its position as one of the most important food producers in the world, it heavily relies on the use of imported inputs from Russia, say international relations experts.

“Brazil has been looking for different trading partners to purchase fertilizers, but demand remains high, with Russia accounting for one-fifth of global chemical and mineral fertilizers shipments. So, even if Brazil creates alliances with Canada and Iran to explore other options, Russia remains a significant trading partner for Brazil’s fertilizer purchases, as well as those of other countries such as the United States,” stresses Rodrigo.

See below the track record of Brazilian fertilizer imports from Russia from January 2021 to April 2022. The data below was provided by Datamar’s DataLiner platform.

Russian Fertilizer Imports to Brazil | January 2021 – Abril 2022 | WTMT

Source: DataLiner (click here to request a demo)

Supply shock, a risk every war brings, would not disrupt economic activities in Brazil only. Russia is the largest fertilizer exporter in the whole wide world.

In addition, Russia and Ukraine account for almost a third of the global supply of wheat, which has also become more expensive. Part of the food inflation comes from the soaring international price of fertilizers and other agricultural products.

“The rise in the price of fertilizers has greatly impacted agricultural production costs, right? So, this is one of the factors that indeed does explain the increase in food prices, in addition to inflation and other cost increases,” informs Maisa.

Source: G1/Jornal Nacional

To read the full original article, please go to: https://g1.globo.com/jornal-nacional/noticia/2022/06/27/gastos-do-brasil-com-importacoes-da-russia-mais-que-dobraram-neste-ano.ghtml

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