FocusNew import policy in Argentina could hit fertilizer trade

20 January 2012 15:49  [Source: ICIS news]

By Lauren Williamson

BUENOS AIRES (ICIS)--The Argentine government has proposed a policy to restrict imports but fertilizer market participants say the specifics of the policy remain ambiguous and it is too early to determine the extent of the impact it might have on trade.

The policy, as explained by fertilizer market players, requires all buyers to seek government approval before concluding business or before shipments arrive in Argentina’s ports.

The request for approval of the transaction is made through government forms and the government is supposed to provide an answer within 15 working days.

“We haven’t even seen any forms yet,” said Pablo Pussetto, commercial manager for the Profertil plant in Argentina during an industry conference in Buenos Aires, Argentina.

Profertil produces 1.1m tonnes/year of granular urea fertilizer and is a key supplier to the local and regional markets.

On average over the last three years, Argentina has exported around 200,000 tonnes/year of urea. Most of this is granular urea exported to Brazil via river transport, generally in the November-February months.

However, Argentina also imports fertilizer, particularly during high agricultural periods when local production cannot satisfy domestic demand or when the country has faced gas supply problems which have impacted local production.

But perhaps a bigger problem that could arise from the new import policy is the impact on Argentina’s phosphate consumption.

Seventy percent of soils in Argentina are phosphate deficient. While local producers, like US headquartered Mosaic and Bunge, do produce single super phosphate (SSP), 250,000 tonnes/year and 180,000 tonnes/year, respectively, the local market has a strong appetite for monoammonium phosphate (MAP), which is optimal for soybean crop applications. South American-based buyers say this makes imports very important and they have concerns about the new laws.

“I don’t see how this new policy will work,” one buyer said. “I don’t think the government even knows how this is supposed to work, but I will say it won’t be good [for the farmers].”

Other traders lamented that the new policy, if effectively enforced, could cause port delays and increase costs for shipping, demurrage and storage – costs which will ultimately have to be passed on to the end-user.

The import restrictions, which are imposed upon all retail goods, are the government’s attempt to keep more US dollars in the country and support local producers.

While several traders agreed the policy could have a damaging effect on Argentina’s agricultural sector, they noted that right now the sector is facing a more pressing problem: the country is enduring one of the worst droughts in 40 years.

So ultimately, the question of whether, or when, the new import policy might take a toll on the fertilizer market is a secondary concern.

If Argentina does not receive heavy rains in the coming few weeks, expected crop yields will be diminished, and decreased farmer revenue will have an even more immediate and obvious impact on how much fertilizer is bought and consumed for the next season.

By: Lauren Williamson
+44 (0) 20 8652 3214

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