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Brazil may feel fertilizer pinch more than U.S.

U.S. farmers face sky-high fertilizer prices as the spring planting season approaches, but their supply may be more assured than that of Brazil growers in the wake of economic sanctions on Russia, said three university economists. Brazil imports 85% of its fertilizer, with Russia ordinarily supplying one-fifth of it.

“Supply in the United States should be less of an issue as the United States has robust domestic production,” said economists Joana Colussi and Gary Schnitkey of the University of Illinois, and Carl Zulauf of Ohio State University. Only 9% of U.S. fertilizer imports come from Russia. “However, U.S. farmers are likely to face higher prices because of the global interconnectedness of the global fertilizer industry.”

Russia is the world’s largest fertilizer exporter. Its invasion of Ukraine “substantially elevates the risk of disruptions in the global fertilizer trade,” wrote Colussi, Schnitkey and Zulauf at the farmdoc daily blog. “Given the geopolitical consequences of the conflict, these disruptions could play out over many years.”

Brazil and the United States are competitors in many agricultural commodities, including corn, cotton and soybeans. Each imports more than 90% of its potash fertilizer, with Canada as the leading source. Brazil also imports the lion’s share of phosphate and nitrogen, with Russia as a key supplier; the United States is far less reliant on imports of those products. Even so, “price increases in the world market are likely to translate into similar price increases in the U.S. market,” said the economists.

Prices for most major fertilizers were higher in mid-March than a month earlier, before the invasion, according to data compiled by DTN/Progressive Farmer. Urea fertilizers were at record highs, hitting $603 per ton for 28% nitrogen content and $704 per ton for 32% nitrogen.

Up to $250 million in grants were expected to be awarded by the end of this year for expansion of U.S. fertilizer production, said the USDA last week. The grants will be aimed at new and innovative producers and products that reduce greenhouse gas emissions and encourage greater precision in fertilizer usage.

The Fertilizer Institute (TFI), a trade group, said it “welcomes initiatives to strengthen domestic fertilizer production,” including the USDA grant program. TFI was among the partners in the USDA-EPA “Next Gen Fertilizer Challenges,” an effort to reduce the adverse environmental effects of fertilizer production and use while improving crop yields.

On the same day the USDA announced its grant initiative, Brazil launched a plan to reduce imported fertilizers to 45% of consumption, from the current 85%, by 2050. The Brazil plan includes support for private companies to expand production and a new tax policy on the sector. Brazil imported a record 41 million tonnes of fertilizer in 2021, partly because more land is being put into production.

Produced with FERN, non-profit reporting on food, agriculture, and environmental health.
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