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August 30, 2017

Bolivia will Sell Urea to Brazil and Brazil will Sell Soybeans to Bolivia

Author: Michael Cordonnier/Soybean & Corn Advisor, Inc.

Representatives from the Bolivian government and the state of Mato Grosso met recently to discuss the expansion of trade between the two governments. Bolivia is interested in selling natural gas and urea fertilizer to Mato Grosso farmers and Mato Grosso farmers are interested in selling soybeans and corn to Bolivia.

Last week, the Mato Grosso Agriculture and Livestock Federation (Famato) met with Yacimentos Petroliferos Fiscales Bolivianos (YPFB) and the company Nutrioil to discuss mutual cooperation between the two countries. According to the president of YPFB, Oscar Barriga, the purpose of the meeting was to open new markets in Mato Grosso and Mato Grosso do Sul for natural gas and urea fertilizer.

Starting in September, a new fertilizer production facility in Bolivia will have the capacity to produce 700,000 tons of urea annually. They expect to sell 70% of their production to Brazil and especially to farmers in the states of Mato Grosso and Mato Grosso do Sul.

For their part, Brazilian farmers would prefer to purchase their urea from neighboring Bolivia instead of Russia, which is currently where they get most of their urea fertilizer. Brazilian farmers would also like to sell more of their soybean and corn production to Bolivia instead of transporting it to distant ports for export.

The one problem with this arrangement could be the lack of appropriate highways connecting Bolivia with Mato Grosso and Mato Grosso do Sul.

According to the Mato Grosso Institute of Agricultural Economics (Imea), they are estimating that in 2025, the state of Mato Grosso will produce 46.2 million tons of soybeans and 38.5 million tons of corn. Therefore, the demand for fertilizers will be there. In fact, Mato Grosso may need more urea than is capable of being shipped into the state from Bolivia.

After the meeting, the governor of Mato Grosso signed a memorandum of understanding with YPFB that YPFB will supply natural gas and urea for the state, and in exchange, Brazil will sell more soybeans and corn to Bolivia.