Brazil will continue to pull sales of pesticides

In spite of the slowdown in international agricultural commodity prices and the cooling Chinese economy, sales of agrochemicals should keep growing, though in more moderate pace than the past few years, predicts the Kleffmann. The scenario outlined by the German consultancy, specialising in agribusiness, suggests that the segment will advance overall 3% per year until 2019, half the increase observed between 2010 and 2014. The exception is Brazil, which is expected to register an annual expansion of the order of 6% over the next five years.
"There is pressure on commodity prices and an impact on producers ' costs, but they are still making money, although all over the world they say they're not," said the value Bob Fairclough, who leads the world survey of pesticides from the Kleffmann. In Brazil, the dollar appreciated compared to the real has helped to sustain profitability in important crops, such as soybeans and corn, although most of the inputs have dollarized their prices and production costs in the country are at their highest level in history.
According to the agrochemicals Kleffmann moved $ 60,5 billion in 2014, and $ 9,74 billion in Brazil, short of the $ 12 billion singled out by National Union of industry products for Plant Defense (Sindiveg). With an extensive area of cultivation and tropical climate, favorable to the occurrence of pests, Brazil is the biggest global market for pesticides. To Fairclough, the country will continue ahead mainly by expansion in the cultivation of soybeans, but other factors help to sustain the gains of the agrochemical industry in the country, in particular a certain "shield" in the generics market.
The analyst divides the market into three categories: companies of "top tier" (first line), where are large multinationals such as Syngenta and Bayer European, followed by the "second tier", as the Australian Nufarm and the indiana UPL-which, in practice, working with products that have lost their patent, but seek to keep prices high with innovations in the formulations. Already the third level is formed by generic companies that do not have the same "business approach", as Fairclough. "They have plants in China and India and are interested in volume and market share, with prices that in extreme cases are equivalent to up to 10% of those charged by other [players]". Despite the bureaucratic and regulatory barriers of Brazil, these companies are starting to look more for Brazil, and can influence the setting of the sector in the next three to five years, estimated the analyst. "This may not be good in the long run, because they tend to offer the farmer a product cheaper, what might not support or offer the same quality," he said.
Major importer of agricultural products, China also emerged in recent years as a major supplier of technical products (active ingredients of pesticides), due to cheap manufacturing licenses. However, environmental problems derived from the absence of a control drive in the production have changed the profile of the local industry. China, said Fairclough, is starting to leave "more difficult" the production of agrochemicals, opening the way for India (another important pole of technical products) will win an additional slice of the market. "The fact is that the era of raw materials very, very cheap for pesticides is over".
The own technological developments, pushed by the new demands of agriculture, contributes to bring defensive prices a notch above, added Fairclough. For years, there was a cheap solution based on the application of glyphosate, but the growing resistance of weeds to herbicide met the múltis around workarounds-and of course more expensive, as the assets 2.4-D and dicamba. "With this, the herbicides will probably grow at a faster rate than other products [insecticides and fungicides]", he predicted. Currently, the herbicides are the locomotive of the sector, accounting for more than half of the global trade in pesticides, or about $ 30 billion, of which $ 7 billion to $ 8 billion from the glyphosate, calculates the Kleffmann.
Rearrangements also tend to gain traction among businesses both at the base and at the top, even after negotiations between Monsanto and Syngenta have shipwrecked. Remember that there are 15-year-old Fairclough there was an intense consolidation that resulted in the "big six": Bayer CropScience, Syngenta, Basf, Dow AgroSciences, Monsanto and DuPont. Since then, little has happened. "But there are economies of scale, research and development costs, so it's time for something great to happen with any of these six joining".
The expectation is that the changes extend also to the seed market, operated by the same múltis. The recent decision by Monsanto to close the development of sugarcane varieties in the country, which was through CanaVialis exemplifies the movement of rationalization, assessed the Kleffmann analyst. "Ten years ago, it was a game of ' Monopoly ', I'd buy anything in the seed business. But that changed, focusing now on certain crops, for certain companies.
The consultancy estimates that double-digit advances also stayed behind and seed sales will grow at the same pace as those of pesticides-so between 3% to 3.5% per year until 2019, from $ 45,11 billion last year. With $ 3,93 billion of this total, Brazil is on the way to overcome China and occupy the second position in this market, behind the us (where are the more expensive new transgenic events). "Brazil will China quickly, maybe in one or two years," designed Fairclough.