Mônica Bergamo: War in Ukraine affects agriculture, and minister says she already has ‘plan A and plan B’

The Ministry of Agriculture is already carrying out a survey of the multiple and varied problems that Brazil may face because of Russia’s war against Ukraine.

Imports of fertilizers and wheat may be affected. The export of soybeans, other grains and meat to Russia and Ukraine is also a cause for concern.

“The ministry assesses that, like the whole world, we will suffer impacts. But it is still not clear how big they will be”, says the minister of Agriculture, Tereza Cristina. “It takes tranquility and caution. We have many alternatives, and we are already studying all of them. We have plan A and plan B,” she said to the column.

The first and most immediate obstacle is the importation of fertilizers, essential for agriculture. Brazil acquires 85% of the volume applied to crops abroad.

Russia accounts for about 30% of the country’s supply. Belarus, an allied nation of Vladimir Putin, for about 20%.

Brazil was already facing problems buying fertilizers from Belarus — the potassium chloride, produced by the country, is one of the fertilizers most used by Brazilian farmers in soybean and corn crops.

Belarusian exports, however, have been the target of US and European sanctions, which began to apply after the 2020 presidential election of dictator Aleksandr Lukachenko.

Belarus does not have an outlet to the sea and its products were shipped through the ports of Lithuania – which, allied with the West, closed its doors to the activity.

In November last year, Minister Tereza Cristina traveled to Russia to try to get around the problem and increase the guarantee of fertilizer supply, preventing them from being out of stock in Brazil – which could impact the price of food for this year’s crop.

The sanctions applied by the US and the European Union to Putin’s country, however, now threaten that supply. Brazil is not obliged to follow the measures, but they can affect the flow of goods.

Tereza Cristina says that, if the trade in fertilizers from Russia to Brazil becomes unfeasible, there are alternatives. “Potassium is the biggest problem. But we can buy it from Canada, Israel, Chile, Oman”, she continues.

She also mentions Morocco and Iran — a country to which she recently traveled and which made a large supply of fertilizers to Brazil.

The Iranians, however, also suffer sanctions, which makes the logistical import operation difficult.

Ships from sanctioned countries, for example, cannot be supplied by Petrobras. In 2019, the state-owned company refused for 50 days to supply fuel to two Iranian vessels, fearing it would violate US law. The impasse was only resolved after a determination by the Federal Supreme Court (STF), which ordered the supply.

Another problem already seen by the ministry is that of wheat — Brazil imports 60% of everything it consumes. And a part of that volume comes from Russia.

Most of the purchases, however, are made in Argentina, and the same in the US and Canada. The alternative could be to increase imports from these countries.

With the possibility of cutting Russian supply, however, the price of the product should increase – with an impact on Brazilian inflation.

A third, and no less important, problem is the export of Brazilian soy to Russia.

With the sanctions, Russian ships may have difficulty transporting the product, which could affect sales.

Russia imported 768,200 tonnes of soybeans in 2021, or US$343.2 million. The oilseed is the main product exported to the Russians.

The country also buys proteins from Brazil, especially chicken. Last year, 105.8 thousand tons were shipped, or US$ 167.1 million.

_{with BIANKA VIEIRA and MANOELLA SMITH}