Fertilizer sales in Brazil continue at a slower pace in 2015

The importation, sale and delivery of fertilizers thus far in 2015 in Brazil continues at a slower pace than in 2014. Fertilizer sales have been slow due primarily to the 25% devaluation of the Brazilian currency since the first of the year. Since approximately 70% of the fertilizers used in Brazil are imported, a devaluation of the currency makes the imported fertilizers more expensive. Brazilian farmers are trying to hold down their cost of production as much as possible due to low commodity prices and reducing their fertilizer usage is one way to do that.

 

According to the National Fertilizer Distribution Association (Anda), there were 14.9 million tons of fertilizers delivered to Brazilian producers between January and July of this year, which is 7.7% less than last year at this time. Fertilizer imports during the same time are also down 9.5%.

 

The fertilizer company Heringer reported that their sales fell 3.9% during the second trimester with soybeans and coffee registering the biggest declines. Fertilizers used for soybean production declined 17.3% and fertilizer sales for coffee production declined 21.4%. The decline for soybeans is noteworthy because the soybean acreage is expected to increase 3-5% in 2015/16.

 

Fertilizers can account for as much as 30-35% of the cost of producing soybeans in central Brazil where the cerrado soils are generally infertile. If a farmer has been diligent in this fertilizer program and has built up a high level of fertility in his soil, he is able to reduce his fertilizer applications for one growing season and not experience much of a decline in soybean yields, if the weather cooperates. Therefore, it is a common practice in Brazil for soybean producers to trim their fertilizer applications during times of low commodity prices.

 

The Brazilian government realized years ago that being so heavily dependent on imported fertilizers is not good for the ever-expanding agricultural sector. Therefore, in 2010 they set a goal of being self-sufficient in fertilizer production by the year 2020, but progress toward that goal has been slow and uneven. Some progress has been achieved and this year domestic fertilizer production increased 5% during the first seven months of 2015 to 779,000 tons.

 

Achieving their goal of self-sufficiency in fertilizer production by the year 2020 is not going to be met, especially now that the country has slipped into a recession that could last for two years.