On March 19^th, 2018, Petrobras, a state-controlled company of the energy sector, announced that it would close its nitrogen fertilizers factories in the states of Bahia and Sergipe until the end of the first semester. The decision was postponed until October, when President Michel Temer decided to create a work group to discuss alternative solutions, in order to mitigate the discontentment from the agricultural sector.

But in August 2018, Petrobras confirmed that the decision would not be postponed a second time, a declaration that is in line with the company’s decision to focus its investments in the oil and gas industry, which it considers less risky and more profitable. In 2017, the Bahia factory registered a loss of approximately R$ 200 million, which is equivalent to US$ 63 million, whereas the Sergipe factory had a loss of R$ 600 million, approximately US$ 188 million.

The closing of the factories would increase the country’s need to import urea. The component is the main source of nitrogen for the Brazilian agricultural industry, accounting for 57% of the consumption in Brazil. Petrobras informed that it will invest in the Port of Aratu in order to support the import of nitrogen fertilizers.

Petrobras’ decision represents an opportunity for other countries to boost their exports of nitrogen fertilizers to Brazil. Fertilizers and agrichemicals accounted for 56.9% of the total of Brazilian imports from the UAE in 2017, and Brazil is the destination of almost 20% of UAE fertilizers exports to the world. The agricultural sector has led Brazil’s recent economic recovery, having grown 13% in 2017, whereas overall GDP growth was 1% in the same year.

Source: Valor Econômico, G1, C&O Agro, and other publications