Sales of agrochemicals will grow 6% annually in Brazil

According to a research authored by Kleffmann Consultancy, Brazil will continue to lead the sales growth of agrochemicals in the global market. While the global sales advance is projected at just 3%, the growth in Brazil will be 6% per year until 2019, forecasts the study.

The expansion of the global market is only half of what was recorded in the last five years due to the fall of international prices of commodities and the slowdown of the Chinese economy. “There is a pressure over the commodity prices and an impact over the expenditures of producers, but they are still making money, even though everybody says they are not,” says Bob Fairclough, research leader at Kleffmann to newspaper Valor.

Part of the explanation for the better Brazilian performance comes from currency issue. The devalued against the U.S. Dollar have guaranteed gains to farmers, even though the costs of the inputs are high. According to Kleffmann, the market of agrochemical has generated US$ 8.74 billion in Brazil last year – well below the US$ 12 billion pointed out by the National Union of the Industry of Products for Plant Protection (Sindiveg).

Bob Fairclough sustains that the market presents three categories of companies. The multinationals would be the “top tier”. At the “second tier”, companies like the Australian Nufarm and the Indian UPL, which bets on the strategy of reusing molecules with expired patents and innovating in the formulations.

The third group is companies of generic products without the same “business approach” at the words of the Kleffmann representative. “They have plants in China and India and are interested in volume and market share with prices, in extreme cases, equivalent to up to 10% of those charged by other players,” tells Fairclough.

The analyst estimates that, overcoming the bureaucratic and regulatory barriers of Brazil, these companies will alter the configuration of the sector in the three to five years: “This may not be good in the long-term because they tend to offer farmers cheaper products, which perhaps will not have the same quality,” he alerts.