Raphael Machado
Given the predominant role of agriculture in the Brazilian economy, it is clear that fertilizers have become a strategic resource on which the country depends.
The long and painful process of Brazil's deindustrialization, which began in the 1980s, coupled with favorable commodity prices, ensured that the primary sector (agriculture and mining) accounted for a larger share of GDP than industry in 2021 for the first time in decades. This situation has not been reversed; in fact, it has worsened.
As of 2023, agriculture represented 33% of Brazil's GDP and 42% of its total exports. For instance, data from April 2024 shows an agricultural trade surplus of $13.9 billion, while other sectors collectively presented a deficit of $4.8 billion. In other words, agriculture has been the main factor maintaining a positive trade balance in Brazil's economy.
Given the predominant role of agriculture in the Brazilian economy, it is clear that fertilizers have become a strategic resource on which the country depends, not only to ensure its domestic supply but also to sustain its overall economic functionality.
However, despite being a strategic resource, Brazil is not self-sufficient in fertilizers. Worse still, over the years, it has become increasingly less self-sufficient. In 1996, Brazil imported 50% of the fertilizers used in agriculture. By 2016-2017, only 25% of the fertilizers used in Brazilian agriculture were domestically produced. By 2022, this figure had dropped to just 14%, with the rest being imported mainly from Russia, Canada, China, the United States, and Morocco.
The decline in self-sufficiency can be attributed, at least in part, to poor policy decisions by previous governments that negatively impacted the fertilizer industry.
In 2017, shortly after Michel Temer assumed the presidency, Petrobras decided to exit the fertilizer market. Following this decision, several factories were closed based on purely commercial considerations. Particularly after the impeachment of Dilma Rousseff, the Brazilian government deepened its policy of treating Petrobras as a profit-driven company, akin to any publicly traded private corporation, rather than as a strategic entity fulfilling a broader national role.
Consequently, Petrobras decided to close or sell off unprofitable fertilizer factories and halt all projects for constructing new fertilizer plants. At the time, Petrobras operated three fertilizer industrial complexes: one in Bahia, one in Sergipe, and another in Paraná. The two in the northeast were shut down during Temer's administration and later leased to the private company Unigel during Bolsonaro's government, which ultimately closed them in 2023 under Lula's administration. Meanwhile, the factory in Paraná was directly closed by the government.
There were also plans for constructing additional industrial facilities, including another one in Sergipe, one in Minas Gerais, one in Mato Grosso do Sul, and one in Espírito Santo. All these plans were abruptly abandoned around the same period.
The narrative that the fertilizer factories were unprofitable masks the underlying policy of Petrobras adopting "market pricing" for all its oil-related businesses instead of implementing subsidies. Naturally, this policy impacted the cost of raw materials for fertilizer production, making it cheaper to import fertilizers rather than produce them domestically.
Given Brazil's pivotal role in global agriculture-where the country accounts for nearly 10% of the world's agricultural production-this situation posed a potential food security risk not only for Brazil but also globally. This is true despite the mitigating effects of increased fertilizer imports, particularly from Russia and Belarus.
Nevertheless, for reasons of sovereignty and due to fears of potential disruptions in fertilizer shipments stemming from the ongoing conflict in Ukraine, the Bolsonaro government launched the National Fertilizer Plan, establishing action targets to revitalize the sector and reduce the country's vulnerability.
Fortunately, there was a productive continuity between the final year of Bolsonaro's administration and the new Lula government, as the National Fertilizer Plan was revised, expanded, and began yielding results as early as 2023.
Starting in 2023, construction resumed on fertilizer factories in Mato Grosso do Sul, Espírito Santo, and Minas Gerais. Previously halted factory projects were also restarted, and private enterprises began opening more plants across the country.
Agrion and INNTEQ established factories in Minas Gerais, while GeN Fertilizantes opened one in Pará, and Paranafert inaugurated another facility in Paraná. Meanwhile, the Russian giant EuroChem launched a major mining-industrial complex in Minas Gerais in 2024. These are just a few examples, as several other factories are under construction or in planning stages.
Additionally, domestic companies such as Vale Fertilizantes and Mosaic Fertilizantes expanded their production capacities and formed strategic partnerships with technology startups, integrating artificial intelligence and automation into production and distribution management.
Even so, it is too early to observe significant changes in Brazil's fertilizer production. On the contrary, there was a slight decline in production between 2023 and 2024, primarily because most new projects or resumed initiatives are still in the early stages. Thus, noticeable changes are expected to appear in statistics from 2025-2026.
Naturally, these efforts can be complemented by partnerships with Russia through agreements to establish factories in Brazil with technology transfer. Such a partnership could enable the BRICS nations to control a significant portion of the global agricultural cycle.