The field pressed the yellow button in the face of a possible drop in the production of corn and wheat due to a complex panorama in the fertilizer market. The rise in prices of inputs due to the war in Ukraine and the fear that the Central Bank’s dollars will not be enough to import them triggered the alarm of the agribusiness sector and agricultural entities; a true roller coaster for a key agricultural input. With fine numbers in hand, the Rosario Stock Exchange (BCR) warns that, if the dollar drought materializes, up to US$4.5 billion of 2021/22 production could be lost, in the most pessimistic scenario. Concentrated in a few hands, the national industry shows itself unable to make the leap and avoid imports.
In terms of fertilizers for crops, the installed capacity at the national level is not enough to supply domestic demand, so 80% is imported. In 2021, Argentina consumed some 5.6 million tons of fertilizers, of which 4.5 million were imported and the rest domestically manufactured. Imports amounted to US$2.28 billion, more than double that of 2020, a rise generated exclusively by price increases. Agriculture anticipated possible problems and sent messages to politics in the midst of the renegotiation of the agreement with the IMF, which may affect the availability of foreign currency.
The possible limitations on fertilizer imports due to lack of dollars could generate falls in agricultural production due to low yields, affecting production, especially corn and wheat, the crops with the highest fertilization. Only in the sum of these two, it is estimated that there would be declines in exports in the face of a moderate lack of fertilizers for a value of between 3,300 and 4,600 million dollars in a critical situation.
“A possible limitation on fertilizer imports will not result in foreign exchange savings, but will lead to greater losses in agro-industrial production, lower exports and, therefore, a lower liquidation of foreign exchange at the national level,” explains the work of the Stock Exchange. Commerce of Rosario (BCR), which raised it strongly at Expoagro 2022. As he learned letter Pin the last two weeks, the Government was giving availability to be able to import.
Apart from this sign of normalization, the situation was complicated by international prices. The war that is taking place in Europe impacted the values of urea, the most used fertilizer in the world, with increases that reached 800 dollars per ton, a rise of almost 200 dollars so far in the war. It is a double risk for the Government: more costs means demanding more dollars from the Central Bank’s wallet and they can be transferred to products and food.
Russia is the world’s leading exporter in volume, with a special focus on nitrogenous fertilizers such as urea. In this sense, there is uncertainty about the availability of the product, which, if it is scarce, would increase the values even more. As if that were not enough, the production of fertilizers in the European Union (EU) also depends on gas imports from Russia.
In Argentina there is a particular case. Profertilthe partnership in equal parts between YPF and the canadian Nutrien Ltd., the only urea producer in the country, has a contract with Techint to double its current production of 1.3 million tons of urea per year, but everything remained in stand by. It transpired that it is due to complications from the gas pipeline from Vaca Muerta, although the firm denied it and maintains that it is still under analysis, although without a certain date. There are other less widely used fertilizers, but they have an entire industry centralized in just two hands: Bungewith its Buenos Aires plants of Campana and Ramallo, and TFAa joint venture between the Association of Argentine Cooperatives (ACA) and Bunge with facilities in Puerto General San Martín, in Gran Rosario. All these companies make up Fertilizar Asociación Civil, a low-profile organization that also boasts the power of lobby in these hectic weeks.
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