Fertilizers: production/import/export volume and their impacts on IPPA-CEPEA

By João Carlos Prats Ramos (Probolsas scholar) and Daniel Christian Henrique

Brazil is currently the fourth largest consumer of fertilizers in the world, and has been used in all conventional agriculture in the country. Taken from the fact that the country has agribusiness as its flagship for trade balance maintenance, coming to be one of the world players that balances the supply of agricultural commodities in the world, the relevance of fertilizer is unquestionable considering its action for the sustainability of agribusiness. This chemical element is necessary to increase agricultural productivity in different crops, ensuring the necessary nutrients for grains, fruits and vegetables, as well as to minimize environmental impacts (ANDA, 2021).

The fact that the strong need for the use of fertilizers for a quality harvest allows variations in volume in production, import and/or export that come from national and international variables can generate fluctuations and volatilities in their prices and consequently impact on the IPPA index (Producer Price Index of Agricultural Products Groups), calculated by CEPEA/USP. 

Cepea researchers point out that there was a maintenance of IPPA/Cepea in the first quarter of 2022 and this is a stability in real terms, with agricultural prices running through nominal increases and at high levels in the face of the constant highs observed since mid-2020. These increases are mainly justified by the exchange rate devaluation and the alignment between global demand and supply of agri-food products, due to supply reductions that climate variations have generated around the world. In addition, this scenario was further deepened in the face of the consequences of the war between Russia and Ukraine (AVISITE, 2022). 

The war in Ukraine, therefore, exposed the national dependence of fertilizers imported from Russia and Belarus, accounting for almost a third of the total used in Brazilian agribusiness, 22% from Russia and 6% from Belarus, according to the Ministry of Economy. They are also commonly known as NPK – acronyms for the chemical elements nitrogen, phosphorus and potassium (ANDA, 2022; DW, 2022). The federal government is still even looking at a 10% expansion in its demand for imports of these eastern European insums as well as holding negotiations to expand Canada's imports to 400,000 tons (GAZETA DO POVO, 2022). 

The focus of this scientific report is, therefore, to investigate the interrelationship of dependence on export, import and production values of npk in tons to the Brazilian territory on the IPPA-Grãos and IPPA-Hortifruticolas indices of CEPEA/USP. The Methodology of The Self-Regressive Vectors (VAR) was addressed in which all time series were collected and organized for the period between January 2013 and December 2021. It was observed that the variables were stationary, procedures of necessary differentiations, lags, approval p-values in the equations developed in the autoregressive vectors, impulse-response function and variance decomposition. A differentiation was performed in all variables to obtain parking by the ADF - Dickey-Fuller Increased test, according to p-values in the following table:

Five predictive equations were developed by the autorregressive vectors, exposed in sequence, aligned with the FIR graphs from the p-values approved in the vectors and tables of variance decomposition.

Equation 1 - IPPA Grains

Variance Decomposition:

CONCLUSIONS FOR IPPA-GRAINS 

1. An increase in the IPPA-Grains index strongly increases the index itself for up to three months

2. An increase in the import volume of fertilisers, increases the index by up to three months

3. An increase in the volume of fertilizer exports, decreases the index more sharply for up to four months

Equation 2 - IPPA-Hortifruticolas

Variance Decomposition:

CONCLUSIONS FOR IPPA-HORTIFRUTÍCOLAS 

• An increase in fertilizer export volume strongly reduces the IPPA-Horticultural index for up to three months

EQUATION 3 - FERTILIZER EXPORT

Variance Decomposition:

CONCLUSION: 

• An increase in fertilizer production increases fertilizer exports for up to three months.

EQUATION 4 - IMPORT OF FERTILIZERS

Variance Decomposition:

CONCLUSION: 

• An increase in fertilizer production volume increases the volume of fertilizer imports for up to three months

EQUATION 5 - FERTILIZER PRODUCTION

Variance Decomposition:

CONCLUSIONS: 

1. An increase in fertilizer production volume increases the volume of fertilizer production itself by up to two months

2. An increase in the volume of fertilizer exports generates an increase in fertilizer production from the first month, until the end of three months

References: 

ANDA. 8⁰ Congresso Brasileiro de Fertilizantes. Disponível em: http://anda.org.br/wp-content/uploads/2021/12/ANAIS-CBFE-2021-arquivo-menor.pdf . Acesso em: 19 maio.2022.

ANDA. Principais indicadores do setor de fertilizantes. Disponível em: https://anda.org.br/wp-content/uploads/2022/03/Principais_Indicadores_2021.pdf. Acesso em: 05 maio.2022.

ANDA. Pesquisa setorial. Disponível em: http://anda.org.br/pesquisa_setorial/. Acesso em: 05 maio.2022.

AVISITE. Com quedas para grãos, pecuária e HF e forte alta para café, IPPA se estabiliza no 1º tri de 2022. Disponível em: https://www.avisite.com.br/com-quedas-para-graos-pecuaria-e-hf-e-forte-alta-para-cafe-ippa-se-estabiliza-no-1o-tri-de-2022. Acesso em: 20 maio.2022. 

BBC. Guerra na Ucrânia: por que o Brasil depende tanto dos fertilizantes da Rússia? Disponível em: https://www.bbc.com/portuguese/brasil-60596334. Acesso em: 22 maio.2022.

DW. Guerra expõe problemas de fertilizantes importados da Rússia. Disponível em: https://www.dw.com/pt-br/guerra-exp%C3%B5e-problemas-de-fertilizantes-importados-da-r%C3%BAssia/a-61170951 . Acesso em: 19 maio.2022. 

EXAME. Com a guerra na Ucrânia, vai faltar fertilizante no Brasil? Disponível em: https://exame.com/brasil/com-a-guerra-na-ucrania-vai-faltar-fertilizante-no-brasil/. Acesso em: 22 maio.2022. 

IPPA-CEPEA. ÍNDICES DE PREÇOS AO PRODUTOR DE GRUPOS DE PRODUTOS AGROPECUÁRIOS - CEPEA/ESALQ - NOMINAIS. Disponível em: https://www.cepea.esalq.usp.br/br/ippa.aspx. Acesso em: 07 abr.2022.

GAZETA DO POVO. Acordo com Canadá pode ampliar importação de fertilizantes em 400 mil toneladas. Disponível em: https://www.gazetadopovo.com.br/economia/acordo-canada-pode-ampliar-importacao-fertilizantes-400-mil-toneladas-brasil/. Acesso em 26 maio.2022.