Fertilizer Logistics in Brazil: Application of a Mixed-Integer Programming Mathematical Model for Optimal Mixer Locations

Fernando Pauli de Bastiani, Thiago Guilherme Péra () and José Vicente Caixeta-Filho
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Fernando Pauli de Bastiani: Luiz de Queiroz College of Agriculture, University of São Paulo (ESALQ/USP), Piracicaba 13418-900, Brazil
Thiago Guilherme Péra: Luiz de Queiroz College of Agriculture, University of São Paulo (ESALQ/USP), Piracicaba 13418-900, Brazil
José Vicente Caixeta-Filho: Lemann Center for Brazilian Studies, University of Illinois at Urbana-Champaign (UIUC), Champaign, IL 61820, USA

Logistics, 2024, vol. 8, issue 1, 1-26

Abstract: Background: Brazil is one of the largest consumers of fertilizers and is highly dependent on the international market to meet its demand for agricultural production inputs. The complexity of the fertilizer supply chain motivated us to carry out this study on redesigning the fertilizer logistics chain and evaluate strategies for reducing logistics costs by redesigning the fertilizer mixing network in Brazil, a country that is heavily dependent on imported fertilizers for agriculture. Methods: We introduce a multi-product mixed-integer linear programming optimization model encompassing the logistics network, from import ports to mixing factories and agricultural fertilizer supply centers. This model includes logistics infrastructure and taxes, accounting for greenhouse gas emissions (specifically carbon dioxide) in fertilizer logistics. Results: The results indicate that expanding the port capacity for fertilizer importation can significantly reduce logistics costs and greenhouse gas emissions by up to 22.5%, decreasing by 23.9% compared to the baseline. We also observed that removing taxes on fertilizer importation can reduce logistics costs by approximately 11%, but it increases greenhouse gas emissions by 2.25% due to increased reliance on road transport. We identified 15 highly resilient regions for establishing mixing factories, evaluated various scenarios and determined the importance of these locations in optimizing the fertilizer supply network in the country. Moreover, the results suggest a significant potential to enhance the role of Brazil’s Northern Arc region in fertilizer import flows. Conclusions: Public policies and private initiatives could be directed toward encouraging the establishment of mixing factories in the identified regions and increasing transport capacity in the Northern Arc region. Improving the logistical conditions of the fertilizer network would contribute to food security by reducing the costs of essential inputs in food production and promoting sustainability by reducing greenhouse gas emissions.

Keywords: fertilizers; logistics; mixers; optimal location; mathematical programming (search for similar items in EconPapers)
JEL-codes: L8 L80 L81 L86 L87 L9 L90 L91 L92 L93 L98 L99 M1 M10 M11 M16 M19 R4 R40 R41 R49 (search for similar items in EconPapers)
Date: 2024
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