The agricultural sector in Peru has faced great difficulties in recent years due to the rapid rise in international fertilizer prices. According to data from the National Institute of Statistics and Informatics (INEI), products such as fertilizers, other fertilizers and nitrogen mixtures are essential for agricultural production, representing 29.9% of intermediate consumption in this economic activity, at current 2019 prices.
In addition, 89.5% of the subscription offer, fertilizers and nitrogen mixtures come from imports, which makes Peruvian agriculture very vulnerable to fluctuations in international fertilizer prices. However, the market for this item is going to change enormously for Peru after a multi-million dollar investment.
New fertilizer plant in Bay贸var will make Peru a market power
The addendum has been signed between Activos Mineros SAC (AMSAC), representing the State, and Fosfatos del Pac铆fico SAC (Fospac) for the production of phosphate rock in Bay贸var (Piura), which represents a crucial milestone for the agricultural and economic development of the country.
In a scenario where international prices of fertilizers This measure aims to ensure cheaper and more reliable inputs for farmers, improving agricultural productivity and strengthening food security in Peru.
The production of phosphate rock in Bay贸var will provide raw material for manufacturing fertilizers at a lower cost, resulting in more affordable prices for farmers. This will have a positive impact on their profit margins, allowing them to invest in other areas such as modernisation or expansion of cultivation areas.
Million-dollar investment for the fertilizer plant in Bay贸var
The Private Investment Promotion Agency (ProInversi贸n) played a crucial role in the signing of the addendum. This historic agreement marks a milestone in the country’s agricultural sector, allowing for large-scale domestic production of phosphate rock, creating numerous opportunities for Peruvian agro-industrial development.
Fospac has agreed to invest US$940 million over a 10-year period to produce 2.5 million tons of phosphate rock per year. This high-quality mineral (concentration of between 28.5% and 30% P2O5) can be used both as a raw material and as a raw material. fertilizer directly in agriculture, as a raw material for the manufacture of phosphoric acid and granular fertilizers.
How have fertilizer prices increased in recent years?
The market crisis fertilizers was intensified by the Russian invasion of Ukraine in 2022, which caused an unprecedented increase in prices, putting the country’s food security at risk.
The impact in Peru was notable. Between 2019 and 2021, the demand for fertilizers Agricultural activity increased by 9.3%, while imports grew by 15.4%, according to the Ministry of Agrarian Development and Irrigation (Midagri). During the same period, the intermediate consumer price index for fertilizers rose by 34.8%, in line with the 38.1% increase in the import price index.
The INEI indicates that between 2019 and 2021, the agricultural demand for fertilizers increased despite rising prices. In this context, the increase in international prices was transferred to the domestic market, raising agricultural production costs, a phenomenon known in economics as the transfer of input-output prices.
Despite this, there is some relief in the international market. The price index for fertilizers The growth in GDP reported by the World Bank (WB) fell slightly in early April this year, after falling by 20% in the first quarter compared to the same period in 2023, standing at nearly 30% below the level of the previous year.
The Russia-Ukraine conflict has significantly increased the cost of fertilizers. Photo: AFP
Source: Larepublica
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