In Brazil we observe 3 important impacts of the Ukraine crisis. The first impact is the increase in the price of a barrel of oil, directly putting pressure on the price of fuel and the entire production chain that depends on vehicles powered by diesel or gasoline.
The second impact is on the future use of heavy vehicle fleets powered by renewable fuels such as alcohol or electric vehicles. The rising price of oil and diesel fuels, as a result of the Ukraine crisis, may persuade more people to purchase alcohol or electric vehicles, which would be a good thing for the environment.
The third impact is dangerous particularly because Brazil depends on the import of fertilizers for its agricultural sector. According to data from the National Association for the Diffusion of Fertilizers (Anda), in 2020 the Brazilian market consumed 40.6 million tons of fertilizer. Of these 32.9 million (81%) came from abroad. Currently, according to data from EMBRAPA – Brazilian Agricultural Research Corporation, 50% of the input comes from Russia and Belarus. And, with the Russian market closed because of the sanctions provoked by the war in Ukraine, Brazil has a problem of reasonable proportions to solve.
“The fertilizer crisis, caused by the war between Russia and Ukraine, is being used as a pretext to make mining in indigenous lands more flexible.” This is what Márcio Santilli, founding partner of the Instituto Socioambiental (ISA), said, after the President of the Republic, Jair Bolsonaro, once again defended the approval of the bill that authorizes mining in these areas as a solution to reduce dependence on imported inputs.
The good news is that research by the Federal University of Minas Gerais shows that Brazil has reserves that could guarantee the supply of potassium through to 2100. According to professor Raoni Rajão, from the Department of Production Engineering at UFMG, two thirds of the reserves are concentrated in the states of Sergipe, São Paulo and Minas Gerais. Among those in the Amazon, only 11% overlap with Indigenous lands
The government’s current challenge is quite different. In fact, the problems faced by the Brazilian fertilizer market are the concentration of the sector in the hands of few companies, the lack of investment in new technologies, great waste, logistical deficiencies and the indexation of the price to the exchange rate variation of the US dollar.
This Post was submitted by Climate Scorecard Brazil Country Manager Carlos Alexandre de Oliveira