Iran and Brazil increase barter trade as war in Ukraine weighs on plans

Iran is likely to step up imports of maize from Brazil, with a shipment of urea set to leave for the South American country next week under a barter deal.

Iran sources 60% of its corn from Brazil and the rest from Ukraine and Russia. It could import 100% of its needs from Brazil if the conflict between Eastern European neighbors persists, President of the Iran-Brazil Chamber of Commerce, Industry and Agriculture Fakhreddin Amerian said on Monday.

“The barter of urea as fertilizer with livestock inputs from Brazil begins next week when a shipment of urea will be sent and corn will be imported in exchange,” he told reporters.

Iran began sending test cargoes to Brazil, a new market for Iranian petrochemical exports, in mid-2019, but the trade ran into problems when Iranian vessels were blocked in Brazilian ports. for weeks after state oil company Petrobras refused to sell them fuel due to US sanctions.

Last week, Brazil’s Minister of Agriculture, Tereza Cristina, traveled to Tehran where she signed an agreement to barter urea with corn.

Iran currently exports 400,000 tons of urea to Brazil a year, but they are looking to increase it to 2 million tons, Agriculture Minister Javad Sadatinejad said.

The Islamic Republic is one of the largest buyers of agricultural products from Brazil. Food is not covered by US sanctions, but traders often struggle to find international banks willing to process transactions due to the perceived risk.

The United States has also banned purchases of Iranian petrochemicals which include “any aromatic, olefinic and synthetic gases, and any of their derivatives, including ethylene, propylene, butadiene, benzene, toluene , xylene, ammonia, methanol and urea”.

However, according to the US Energy Information Administration’s standard definition, petroleum products do not include natural gas, liquefied natural gas, biofuels, methanol and other non-petroleum fuels, suggesting a discrepancy in the types of petrochemicals that have been banned, such as methanol and fertilizer.

An Iranian official said the wide variety of petrochemicals and strong international demand for them make the industry unsanctionable.

Last week, Reuters said India was planning its first long-term urea import deal with Iran, seeking to pay in rupees to protect itself from global supply disruptions now complicated by the Russian conflict. -Ukrainian.

India is a major importer of urea and other soil nutrients needed to fuel its huge agricultural sector, which employs around 60% of the country’s workforce and accounts for 15% of the savings of $2.7 trillion.

It halted urea imports from Iran in 2019 under pressure from US sanctions on Tehran, Asia’s third-largest economy turning to countries such as China, Ukraine and Russia to meet its demand. nutrient demand for crops.

Some Indian states faced urea shortages last year after “sudden” export restrictions imposed by China amid high global prices, Reuters said, citing an Indian source as saying the Russian-Ukrainian issue had added to uncertainties regarding supplies and prices and “therefore our goal is to secure supplies at reasonable rates”.

According to the news agency, Iran was India’s third-largest source of urea in 2018/19, supplying around 17% of New Delhi’s nearly 7.5 million tonnes of urea imports.

Reuters quoted an Indian source as saying that some meetings with stakeholders had already taken place and that the plan was to pay in rupees with the participation of local banks to import 1.5 million tons of urea from Iran annually.

With Brazil, Iran’s annual trade amounts to $100 million, which the two countries can increase to $1 billion, Amerian said.

He spoke of the threats and opportunities that the Ukrainian crisis could hold for Iran.

“The Russian-Ukrainian crisis can create a good export market for our urea and other petrochemicals, because Russia is our main rival for these products.”

However, the conflict is also expected to disrupt Iran’s agricultural investments in Ukraine in a bid to ensure food security.

According to Reza Nourani, a member of the Iran-Ukraine Chamber of Commerce, the Islamic Republic has made various investments in Ukrainian farms due to the country’s rich soil.

“One of our policies is the production of agricultural products, including grain in Ukraine. The outbreak of war has hampered our agricultural investments abroad,” he said. “We hope that this problem will be resolved as soon as possible with the end of the conflict.”

Iran mainly exports seafood, pistachios, grapes and minerals to Ukraine and imports cereals from the country, Nourani said. He estimated the nine-month trade between the two countries since March 2021 at $162 million.

Iran has signed agreements with a number of countries to help increase grain production and secure food supplies in the country which faces shrinking arable land and increasingly salty water.

According to Amerian, Iranian investors are growing soybeans and corn on 60,000 hectares in Brazil, which they plan to expand to 100,000 hectares.

“The greatest advantage of this country is to grow crops such as corn, soybeans, wheat and barley, which are also necessary for our country,” he said.

Iran is also trying to export apples to Brazil under the barter scheme, he added.

About Marco C. Nichols

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