Nov 17, 2021

Scarcity of Inputs Could Impact 2022/23 Crops in Brazil

Author: Michael Cordonnier/Soybean & Corn Advisor, Inc.

Farmers in both the U.S. and South America are concerned about the sharp price increases in agricultural inputs such as fertilizers and chemicals caused by a lack of raw materials needed to manufacture these products, export restrictions in producing countries such as China, Russia, and India, supply chain disruptions, and logistical problems caused by a lack of containers and ships, etc.

These concerns are more acute in Brazil compared to the U.S. because Brazil is so highly dependent on imported inputs. More than 60% of the ingredients in agricultural chemicals and 70% of those used in fertilizers come from abroad making Brazil one of the largest agricultural producers so highly dependent on the import of inputs.

Many of originating countries have instituted export quotas to guarantee domestic supplies for their own farmers. Additionally, the scarcity of containers and ships makes logistical bottlenecks even worse.

For Brazilian producers, there are still some fertilizers and chemicals in the Brazilian market, but with tighter supplies and higher prices. Therefore, the 2021/22 soybean and first corn crop should be OK as far as inputs are concerned. The situation is more worrisome for the safrinha corn which will be planted in January and February and the 2022/23 soybean crop which will be planted starting next September and October.

Predicting the future is difficult even in the best of times, it is especially difficult in these volatile times with an ongoing worldwide pandemic. Maybe these supply chain disruptions will start to ease, maybe they will get worse, who knows.

The President of the Technical Commission of Cereals, Fibers, and Oil Crops for FAEP/SENAR in the state of Parana, is advising farmers not to rush out and purchase inputs regardless of price. He is advising farmers to have patience because he and other specialists in Brazil feel the input situation will start to show improvement in 2022.

One thing is certain, Brazil is too dependent on inputs from abroad and they must develop a national strategy to become as self-sufficient as possible, at least for fertilizer production. If not, they could be "held hostage" for years to come to the whims of the international marketplace and the currency exchange rate.