Brazil: A Growing Market

Characterized by large and well-developed agricultural, mining, manufacturing, and service sectors, Brazil’s economy outweighs that of all other South American countries, and Brazil is expanding its presence in world markets. Despite slower growth in 2011, Brazil overtook the United Kingdom as the world’s seventh largest economy in terms of GDP. Brazil is the first global producer of coffee (about 30%), sisal, oranges, sugar cane (some 30 percent of global production), mate, and cashew apple, the world’s second-largest soybean grower (trailing the USA) and the third-biggest corn producer. Forecasts indicate Brazil will outpace US production of many key commodities by 2020/21 including cotton, soybean, corn and wheat because of burgeoning yield gains. Brazil is the largest exporter of alcohol, sugar, orange juice, soybeans, and tobacco. Brazil is an agricultural superpower which accounts for approximately 8 percent of the world fertilizer consumption.



One of the challenges of increasing world food production is the fact that most quality arable land is already in use. While there’s great scope for developing new sites, particularly in former Soviet countries, such as Ukraine and Kazakhstan, and in Africa, the challenges of political instability and woeful infrastructure limit the realization of this potential. That makes particularly interesant the Cerrado region in Brazil, where the 100 million hectares of available land represents 60 per cent of the world’s spare capacity – although this country, too, faces issues around infrastructure. SLC Agricola is one of Brazil’s largest landholders, with roughly 300,000 hectares. It’s located in a western region and the company has been gradually bringing it into production. In the past 12 months, the nation’s farm prices have risen 19 per cent. The demand for fertilizers is high, last year Brazil’s supply of DAP and MAP reached near-record levels, and in the current year consumption is expected to surpass the record set in 2007. During the last decade government policy drove a sharp increase in biofuels production, an additional promoter of fertilizer demand. Brazil has the potential to fill the growing world demand for ethanol based on its vast arable land area, robust productivity, and Brazilian ethanol’s status as a low carbon renewable fuel. Cultivated sugarcane area has expanded rapidly from 4.3 million hectares in 1990, to over 10 million hectares in 2010. Sugar was Brazil’s most valuable export crop in the 1950s and 1960s. In the mid-1970s, emphasis switched from sugar to ethanol production to meet domestic fuel needs, and, with the current boom in renewable fuels demand, Brazil has become a large-scale ethanol producer and exporter. Brazil is currently the second largest ethanol producer behind the United States.



In spite of some local production, potash is a weak point in the Brazilian scenery, as it imports 91% of its potash consumption, which amounted to 7.5 million tonnes of KCl in 2011, 44% higher than 2010, from Russian, Belarusian, Canadian and German producers, in descending order. In terms of global consumption, China, the United States, Brazil and India represent 59% of the total, with Brazil alone representing 13% of the total. The only local potash mine is leased to Vale, is located in Taquari-Vassouras, state of Sergipe and has been producing some 0.65 million tonnes annually. Vale production represented some 37% of the total phosphate consumption in Brazil, with imports representing 35% of total supply. Their phosphate products are mainly sold to fertilizer blenders, and in the high-concentration segment, their production supplied more than a third of the total Brazilian consumption, being their main products MAP and TSP. In the low-concentration phosphate nutrients segment, their production represented approximately 49% of total Brazilian consumption, with products like SSP and DCP. Last year their produced more than 7.3 million tonnes phosphate rock in different mines, including Bayóvar, in Perú. They also produce ammonia, urea, nitric acid, and AN.

Brazil is the 4th largest fertilizer market in the world and is growing above average.