Brazilian Co-ops Band Together to Get Cheaper Fertilizer

Fertilizer The high cost of fertilizers is the Achilles heel of Brazilian agriculture at the moment. Seeking more competitive prices, 21 cooperatives in the state of Paraná, which answers to 25% of national grain production, have decided to join forces and establish the National Consortium of Agricultural Cooperatives (Coonagro).

The new group was officially launched last Friday, September 26, at the head offices of the Union and Organization of Cooperatives of the State of Paraná (Ocepar), in the city of Curitiba.

Together, the 21 cooperatives have 60,500 members and generate 27,000 direct jobs. In 2008, they should post combined revenues of 10 billion reais (US$ 5.4 billion), or 54% of revenues by all 80 agricultural cooperatives in the state of Paraná, which total to around 19 billion reais (US$ 10.3 billion).

According to Nélson Costa, adjunct superintendent at Ocepar, the group is going to seek potential suppliers in the domestic and foreign markets from which to purchase the necessary raw material for fertilizer production. "Countries such as Morocco, Russia, Ukraine, Canada and China will be prospected," said Costa.

One of the first practical measures to be taken will be to mix up the fertilizers, hiring infrastructure from companies that already own factories, and thus further reduce costs. The consortium is going to coordinate and develop methods for purchasing, formulating, manufacturing, distributing, selling and importing agricultural inputs, fertilizers, defensive products, corrective products, among other agricultural products.

The Coonagro is the result of studies conducted by the Ocepar as early as 2003 and of the federal government's decision, this year, of seeking a solution to the problem of dependence on the foreign fertilizer market.

"This is an important moment to the history of cooperatives in Paraná, as they join forces in an effort that should bring many benefits to their members," stated the president at Ocepar, João Paulo Koslovski, making mention to a meeting promoted in February 2007 by the minister of Agriculture, Reinhold Stephanes, who posed the challenge of seeking a joint solution to the cooperatives.

Minister Stephanes stated that the creation of the Coonagro is a solution aimed at reducing production costs of inputs and dependence on large multinational companies that control the sector.

"The consortium will be allowed to purchase large volumes, until Brazil becomes self-sufficient in fertilizer manufacturing, which may take up to seven years to happen," he said.

The minister claimed that there are reservoirs in the state of São Paulo that might be explored, but environmental issues render them unusable. He also asserted that the government is studying a way of reverting the Petrobras' concession for the right to explore a potassium reserve in the state of Amazonas to Canadian company Falcon.

In the opinion of the president at the Coonagro, Frans Borg, who was unanimously chosen to head the Consortium, the effort is a watershed in the history of cooperatives in Paraná.

"Market concentration is a reality in the global economy, and cooperatives cannot remain passive in the face of this distortion. A response was needed, and the establishment of the Consortium is a key initiative for us to be able to overcome this serious problem, which impacts gravely on farmers' production costs," he claimed.

According to Borg, the first challenge was formalizing the consortium. "Now, we must plan the framework and set the rules of the game," he said. "I believe we will be able to start working in 2009. First we are going to focus on fertilizers. Further on, we are also going to work with other inputs and sales of commodities," he stated.

The Coonagro is going to have its own office in Curitiba, and will count on the structures of all its associated cooperatives. "We are going to have a stripped down structure that is going to operate to the benefit of cooperatives, as if it were a brokerage firm," explained Borg.

Despite having been created solely by cooperatives based in Paraná, the consortium will be open to companies, individual farmers and cooperatives from any Brazilian state.

According to estimates by the National Association for the Promotion of Fertilizers (Anda), fertilizers output in Paraná is going to total 3.61 million tons this year. In Brazil, the forecast demand is 26 million tons. In 2007, a total of 24.61 million tons were consumed in the country, 3.42 million tons of which went to Paraná.

According to estimates by the Technical and Economic Managing Board at Ocepar (Getec), the demand for fertilizers by the cooperatives in Paraná in 2008 will total 2 million tons. In 2007, the sector consumed 1.89 million tons.

The consortium is comprised of Agrária, Agropar, Batavo, Bom Jesus, C.Vale, Capal, Castrolanda, Cocari, Codepa, Cofercatu, Coopagricola, Coopermibra, Cooperval, Copacol, Copagra, Copagril, Corol, Integrada, Lar, Nova Produtiva, and Unicastro.

Anba

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