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Superpowers divided over Russian fertilizer sanctions

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(Bloomberg Opinion) — The world’s agricultural superpowers are divided over whether to apply sanctions to Russian fertilizer at a time when rising prices threaten to further fuel food inflammation.

Brazil, the largest exporter of all kinds of agricultural products, from soybeans to coffee and sugar, and the main importer of fertilizers, advocates keeping crop nutrients free of sanctions in the name of food security. The United States, on the other hand, is leaning toward upping the ante against Russia.

“Sacrifices may be necessary to deal with the unjustified war that Russia has decided to start,” US Agriculture Secretary Tom Vilsack said Wednesday during a virtual event organized by the Food and Agriculture Organization of the United Nations. FAO).

While sympathizing with those struggling to find affordable fertilizer, Vilsack said action needs to be taken as Ukrainian democracy is under siege. The US Department of Agriculture has attempted to cushion the impact of rising costs through efforts to reduce nutrient use in crops.

However, the US is also a big fertilizer importer, supplying almost all of its potash needs from Canada, said Alexis Maxwell, an analyst at Bloomberg Green Markets. About a third of the nitrogen used in the US comes from abroad, mainly from the Middle East and Russia. As for phosphate fertilizers, shipments come from Saudi Arabia and Australia.

But no other country is more dependent on foreign products than Brazil. The South American country imports more than 85% of the fertility demand, and the dependence on super-imports is 90% in potash and nitrogen. Russia, the main supplier, and Belarus, which is subject to economic sanctions, together account for 28% of the total.

“Restricting fertilizer consumption can harm crop yields, increase inflation and threaten food security,” said Brazilian Agriculture Minister Tereza Cristina. “We can create a bigger problem by making world hunger worse.”

The minister is holding a series of meetings with authorities from fertilizer-producing countries to ensure supply for the country. Canpotex, a joint venture that markets potash for Nutrien Ltd. and Mosaic Co. outside of North America, aims to increase sales to Brazil.

Nutrien announced late on Wednesday that the company will bump potash production capacity to about 15m tonnes in 2022, an increase of almost a million tonnes compared to previous expectations. Most of that volume is expected to be produced in the second half of the year.

However, adding to Brazil’s problems is the possibility of a work stoppage at one of Canada’s largest railways. Canadian Pacific Railway Ltd. issued a notice saying it plans to block employee access early Sunday if the union and company fail to negotiate a settlement or agree to binding arbitration. The disruption is poised to create more uncertainty in fertilizer markets just as farmers need key nutrients to plant spring crops.

Agricultural leaders from nations that are part of the Inter-American Institute for Cooperation on Agriculture, IICA, supported Brazil’s proposal during Wednesday’s meeting, including Uruguay and Paraguay. Vilsack represented North American products.

original note:

Fertilizer sanctions divide agricultural superpowers as costs rise (1)

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