According to a Chinese Customs data report, China’s pesticide exports to Latin America in 2015 amounted to 384,040 tons, down 9% year-on-year, with an export value of US$1.83 billion, marking a drop for the second consecutive year and a 24% overall decline. China’s pesticide is exported to 27 countries of the 34 countries/regions in Latin America. The top 10 countries by export value are ranked as follows: Brazil, Argentina, Colombia, Paraguay, Mexico, Uruguay, Chile, Peru, Ecuador, and Guatemala. China’s pesticide export value to these 10 countries accounts for more than 87% of the total export value to Latin America, while its volume of exports accounts for some 90% of the total (Table 1).
In 2015, Brazil and Argentina remained the top two countries in Latin America to purchase the largest amount of pesticide from China for US$613.45 million and US$261.62 million, respectively, accounting for 34% and 14% of the total value of exports, down 48.82% and 67.16%, respectively, from 2014.
The Brazilian crop protection product sales of 2015 reached US$9.6 billion, down 21.56% year-on-year. According to an analysis by Sindiveg, the drop in sales was a result of a devalued Brazilian currency, major smuggling operations, increased difficulties faced by farmers in obtaining loans, and high stocks of goods held by manufacturers and distribution channels. The Brazilian currency was devalued by 50% in 2015, which came as a major shock to China’s pesticide exporters to Brazil.
A similar situation occurred in other Latin American countries, where the economies witnessed a slump: The currency was devalued, commodity prices fell, and the weather was unfavorable so planting structures were adjusted. As a result, China’s exports of pesticides to most Latin American countries suffered a drop, both in value and volume, with the only exception being Paraguay, where import volume from China grew 48.56%, prompting a rise in rankings to No.4 in 2015 from No.7 in 2014.
According to China’s Pesticide Export to Paraguay Analysis Report issued by AgroPages, as shown in Table 2, China’s exports of pesticide technical in 2015 amounted to $71.10 million, up 21% year-on-year, while volume increased by 67%. Formulations exported amounted to $58.95 million, marking a 3% drop year-on-year, although volume had increased 63%.
According to German Pessagno, COO of Paraguayan company Chemtec, agriculture has witnessed a global decline in recent years. Further, the Brazilian and Argentine currencies have been devalued, resulting in an increase in the export of farm products and a significant impact on the agricultural sector of Paraguay. In this highly agriculture-dependent country, the export of farm products contributes 20% of the GDP. Despite this unfavorable situation, the government is still providing inputs to the industry. As seen in 2015, loans issued to the industry increased by 33%, reaching $3,142 million, which stimulated further investment in production, including for agrochemical products. In 2015, the total imports of pesticide by Paraguay reached a historic record of 45,000 tons, worth $410 million, which also led to an increase in China’s pesticide exports to Paraguay. “Lots of agrochemicals were sold via Paraguay to other countries in Latin America,” said an industry insider, who believed that transit trade was another important reason for the increase in Paraguay’s imports of pesticide.
Analysis by Product
New source of growth brought by weed resistance
In 2015, China’s exports of pesticides to Latin America were still highly centralized, where the top 20 pesticide varieties accounted for 69.64% of the total exports to the region. The export value touched $1.28 billion and volume reached 353,270 tons, accounting for 70.76% of the total export volume, as shown in Table 3.
Compared with 2014, China’s exports to Latin America in 2015 did not show much of a difference in product structure or variety. Herbicides still led exports by a wide margin. There were 11 herbicide products among the top 20 export products, accounting for 72% of the export value. This was followed by four fungicide products, accounting for 9% of the export value, and five insecticide products, accounting for 19%.
Due to the impact of falling market demand and the currency devaluation, Latin American countries reduced the procurement of staple pesticides but continued to sell inventory, which led directly to an average 20% reduction in the volume of conventional pesticides, represented by glyphosate and paraquat, the prices of which dropped sharply by 40%-50%.
Most of the top 20 products saw a fall in prices, while the export of clethodim and haloxyfop-P-methyl increased, both in price and volume. Of the two, the export of clethodim increased 265%.
According to the 2015 Clethodim Export Analysis issued by AgroPages, clethodim was exported to 13 countries in Latin America, with the top three countries being Colombia (33%), Argentina (30%), and Paraguay (23%), while in 2014, clethodim was exported to only five countries, with Colombia accounting for 95% of the total. With reference to haloxyfop-R-methyl, its export value increased by 89% in 2015, attributed mainly to the volume exported by Argentina, which accounted for 95% of the total exports of the product.
AgroPages discussed the changes experienced by these two products with the major industry players, including China’s prime clethodim manufacturer Yifan Biotech Group, China’s haloxyfop-R-methyl industry leader Shandong Luba Chemical, and the primary Argentine importer Tecnomyl.
Spokespeople for these organizations were of the general opinion that the two products have similar functions and are mainly used to control grassy weed growing next to dicotyledonous crops. However, with the continuous promotion of GM soybeans in Colombia, Argentina, and Paraguay, the weed’s resistance to glyphosate has become a serious issue in these countries. Clethodim is highly selective and is effective against most grassy weed outbreaks. Clethodim can be mixed with glyphosate to solve the problem of resistance. Demand for the product therefore appears to be on the rise in Latin America.
The other product, haloxyfop-R-methyl, is also a good selective post-emergence herbicide, which is mostly manufactured as an emulsifiable solution. So far, some haloxyfop-R-methyl tolerant weeds have been found in Argentina, so the product can also be mixed with benazolin or clethodim to combat resistance. Another possible reason for the increased export of these two products last year is the approval of several registrations.
Analysis by Company
Maintaining sustainable growth through market cultivation
In 2014, seven Chinese suppliers earned $100 million from exports to Latin America. They are Rainbow, Leshan Fuhua, Youth Chemical, Wynca Chemical, Nanjing Red Sun, Sinochem Ningbo, and Nantong Jiangshan. However, in 2015, only Rainbow was able to maintain these earnings. Most of the glyphosate suppliers suffered losses from the unchecked dip in prices for glyphosate, resulting in a sharp decrease in their export value. However, Rainbow managed to hold the drop in export value to within 15%, attributable to its localized operations, strong supply chain, and diversified product range.
The top 20 exporters of 2015 contributed nearly 50% of the export value from China to Latin America (Table 4). Among them Iprochem Company and Jiangsu Sevencontinent Green Chemical achieved moderate growth.
“The growth of Shanghai E-TONG is the result of our devotion and persistence,” said Song Yongping, the general manager of the company. “We are currently processing 2,000 registrations worldwide, and 800 of them have been approved, including 120 from Paraguay. E-TONG is among the first few Chinese enterprises that explored the market of Paraguay.
“E-TONG is a trade company, and our competitive edge lies in our excellent team, who are skilled at precise market positioning and the proactive identification of products with potential. We can start the registration process quickly to gain the first-move advantage.
“Besides Paraguay, our business in Uruguay, Bolivia, Venezuela, and Colombia has been progressing steadily,” Song added.
With a strong vision of the market, E-TONG was the first to register thiamethoxam technical and 75WG in Paraguay. They also registered Azoxystrobin + Cyproconazole SC, which Song believes has great prospects for application to food grains and soybeans in the future. This will then have an impact on the use of other triazole fungicide products.
Zhou Wei, general manager of Jiangsu Sevencontinent Green Chemical Ltd, holds a unique view on risk assessment and the market expectations of Latin America, using this as the basis on which it advances the development of the market in Latin America. From 2015 to 2016, the currencies of Argentina and Brazil were devalued by 50%, where local industry players suffered a significant drop in profitability and most of the dealers switched to selling off product inventory instead of procuring more products. It is expected that as the economy changes for the better, procurement numbers from Latin America will gradually recover, starting from the second half of 2017. At present, multinationals have relaxed their payment periods to 360 days and have engaged in barter trades. Compared with multinationals, Chinese enterprises do not have the capacity for this kind of risk mitigation or elimination, so they have to work harder to improve their risk management and select reputable clients for sales in order to make it through the hard times.
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