July 24, 2008


Brazil government to study impact of fertilizer costs


Brazil will create a working group to study the impact of high fertilizer costs on producers and alternatives to increase fertilizer production in the country, the local Estado news agency reported Wednesday (July 23).


The decision to create a working group was made Wednesday during a meeting between Agriculture Minister Reinhold Stephanes and the Presidential Chief of Staff Dilma Roussef. Its first meeting is scheduled for next week.


The Agriculture Ministry has been studying the recent rise in fertilizer prices since last year, when prices rose by 40 percent or more, depending on the fertilizer type. The high costs are cutting into farmers' profit margins in rural Brazil.


The Agriculture Ministry last year blamed the major fertilizer companies, including Bunge Ltd. subsidiary Bunge Fertilizantes for not expanding its production capacity enough for fertilizer raw materials. Bunge has invested millions in new fertilizer capacity and mining over the last year.


Stephanes said he would like state-run oil and gas company Petrobras to invest in nitrogen fertilizer, a derivative of natural gas. As the prices of natural gas rise, so does the cost of nitrogen fertilizer.


Estado reported Stephanes as hopeful that Petrobras could help increase nitrogen supply in Brazil. Brazil imports 50 percent of its nitrogen fertilizer needs.


Stephanes said mining giant Companhia Vale do Rio Doce was exploring a potassium mine in the northeastern state of Sergipe which could double or triple production, Estado reported.


Brazil is dependent on major fertilizer ingredients such as potassium and phosphates, and is second only to the US in terms of world grain and soy production.

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