Latin American farmers are facing a challenging road ahead if the United States decides to impose secondary sanctions on buyers of Russian exports, particularly fertilizers that are essential for cash crops like Mexican avocados and Brazilian soybeans and corn.
Brazil, a major agricultural powerhouse, heavily relies on imports from Russia to meet about a third of its fertilizer demand, amounting to $3.7 billion worth of imports last year. With limited alternative sources to fill the gap if these imports are disrupted, experts and industry players are expressing concerns about the potential impact on the country’s agriculture sector.
The outbreak of war in Ukraine in 2022 prompted stockpiling of Russian fertilizer in the region, causing prices to briefly soar before trade normalized. While there have been plans to increase domestic fertilizer production in Mexico and Brazil, progress has been slow due to the availability of relatively cheap Russian imports.
Shipments of Russian fertilizers to Brazil, the world’s largest producer of soybeans, sugar, and coffee, increased by nearly 30% in the first half of this year, according to the Russian Fertilizer Producers Association. However, NATO Secretary General Mark Rutte has singled out Brazil as one of the countries that could be significantly impacted by sanctions for conducting business with Russia.
Lucas Beber, vice president of the Brazilian grain farming group Aprosoja, warned that potential sanctions targeting Russian fertilizer imports could make soybean and corn production economically unviable in Brazil.
Mexico, another key player in the agricultural sector, imported over $580 million worth of fertilizers from Russia last year, making it the country’s largest supplier. Potential U.S. sanctions could pose a significant challenge for Mexican farmers, particularly affecting the availability of urea, a widely used fertilizer in crops like corn, sorghum, wheat, and avocados.
Raul Urteaga, a former director of international affairs for Mexico’s agriculture ministry, cautioned that the disappearance of Russian imports could lead to a decline in fertilizer quality, weakening avocado production and driving up prices for U.S. consumers. Given that the U.S. accounts for over 80% of Mexico’s total avocado exports, valued at more than $3 billion last year, any disruptions in fertilizer supply could have far-reaching consequences.
Russia also serves as a top fertilizer supplier for Colombia, a key producer of fruits, flowers, and coffee destined for the U.S. market. Government data indicates that Russia supplies approximately a quarter of Colombia’s fertilizer imports.
The World Bank has highlighted fertilizer costs as a contributing factor to food inflation in Central America, exacerbating a cost-of-living crisis that has fueled migration to the north.
Even fertilizer companies that have already severed ties with Russian suppliers, like U.S.-based Mosaic, are apprehensive about further trade disruptions with one of the world’s top three fertilizer producers. Eduardo Monteiro, Mosaic’s country manager in Brazil, expressed concerns about geopolitical tensions delaying sales to Brazilian farmers for the next crop cycle, potentially compromising timely fertilizer deliveries for major crops like soybeans.
Despite the challenges, Russian fertilizer producers remain optimistic about increasing their global market share to 25% by 2030, focusing on sales to developing BRICS nations such as Brazil, India, and China.
As Brazil and Mexico work towards reducing their dependence on foreign fertilizers through domestic production initiatives, the road ahead is marked by obstacles such as funding constraints, costly resources, and infrastructure challenges. However, efforts to bolster local fertilizer production could help mitigate the impact of potential sanctions on Russian imports in the long run.
In conclusion, the agricultural landscape in Latin America is at a crossroads as the region navigates the uncertainties of global trade dynamics and geopolitical tensions. The resilience and adaptability of farmers and policymakers will play a crucial role in safeguarding food security and economic stability in the face of evolving challenges.
