Business Maverick

Business Maverick

Fertilizer Sanctions Split Farm Superpowers as Food Prices Surge

Soybean plants on a farm during the rainy season in Canarana, Mato Grosso state, Brazil, on Wednesday, Jan. 12, 2022. Photographer: Dado Galdieri/Bloomberg

The world’s agricultural superpowers are divided over whether Russian fertilizers should be sanctioned as surging prices threaten to further stoke food inflation.

Brazil, the top exporter of everything from soybeans to coffee and sugar and the biggest importer of fertilizers, argues for keeping crop nutrients sanction free in the name of food security. The U.S., on the other hand, leans toward upping the ante against Russia.

“Maybe sacrifices are necessary to address the unjustified war that Russia has chosen to start,” U.S. Agriculture Secretary Tom Vilsack said during a virtual event organized by the United Nations’ Food and Agriculture Organization on Wednesday.

While sympathetic to those struggling to find affordable fertilizers, Vilsack said it’s necessary to take actions as Ukraine democracy is under siege. The USDA has been trying to cushion the impact of higher costs via efforts to reduce the use of crop nutrients.

Gauge of global food costs has jumped to a record

To be sure, the U.S. is also a major fertilizer importer, bringing in nearly all its potash needs from Canada, according to Alexis Maxwell, an analyst at Bloomberg’s Green Markets. About a third of nitrogen used in the U.S. comes from abroad, largely the Middle East and Russia. On phosphate fertilizers, shipments come from Saudi and Australia.

But no other nation relies more on foreign products than Brazil. The South American nation ships in more than 85% of its fertilizer demand, with the dependency on imports exceeding 90% in potash and nitrogen. Russia, the main supplier, and Belarus, which is also under economic sanctions, account for a combined 28% of the total.

“Restraining fertilizer consumption may hurt crop yields, boost inflation and threaten food security,” Brazilian Agriculture Minister Tereza Cristina said. “We can create a bigger problem by worsening global hunger.”

She is in a series of meetings with authorities from fertilizer- producing nations to secure supplies for the country. Canpotex, a joint venture that markets potash for Nutrien Ltd. and Mosaic Co. outside North America, aims to increase sales to Brazil.

Agriculture leaders from nations that are part of the IICA (Inter-American Institute for Cooperation in Agriculture) supported Brazil’s proposal during Wednesday’s meeting, including Uruguay and Paraguay. Vilsack was representing producers from North America.

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