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Aug. 26, 2016

Forward Favorites Print Aug. 26, 2016
In the first half of 2016, dollar devaluation was 25% and in June it was 12.5%. Unemployment rate in Brazil is currently 11% with inflation around 6%. GDP growth is close to 0% indicating the economy has stabilized. In the political environment, the President of the country is in the process of being impeached and has been replaced by the Vice President, until the impeachment process is adjudicated by the Federal Senate. Since the Vice President took office on May 13th, 3 ministers have resigned under suspicion of corruption. 
In the agricultural industry, the harvest estimate is down 8.4% due to weather conditions, mainly in Center of Brazil, affecting both soybean and maize yields in this area, the most important soybean region in the country. In the South, the region that represents 72% of rice production, the excess of rain reduced yields by 12%. 
All of these factors have affected the agrochemical market. In addition, the dollar devaluation has had a negative impact on several product importers.  Importers who did not hedge and sold to farmers in local currency, had to cover accounts with foreign suppliers in the first quarter of 2016 with inflated dollars, thereby incurring significant losses, even after the dollar devaluation of 25% in 2016. Due to the instable economic and political environments, official government credits have been delayed. In addition, banks reduced credit to farmers in order to minimize collection risks, thereby forcing them to source working capital at significantly higher interest rates. Even though companies dropped the price of products in dollars, this was not enough to minimize the loss in the market. Several huge farmers and dealers went to court in an attempt to recover the losses. Agriculture represents 25% of the GDP and agricultural products represent 45% of Brazilian exports. 
Sales in the agrochemical market in 2016 is forecasted to drop 5%, compared to 2015 sales of US$ 9.25 bn, mainly because of high stocks from 2015 in the field. Nevertheless, the volume of applied product has increased in 2016, due to the increase in area planted.
The main barrier to market entry is still registration. What a barrier! Today a registration of a technical product and its respective formulated product would take approximately 6 years. More than 800 registration requests for technical products are in the queue for evaluation. The delay for evaluations is also caused by manufacturers sending samples and/or registration dossiers to multiple distributors. This alone would be very positive if not for the fact that samples and/or dossiers often return different results. Such discrepancies result in regulatory authorities spending much more time than usual to compare and evaluate the conflicting dossiers. As a consequence last year it was decided to reject all submissions and cancel approved registrations that have conflicting dossier results.
In order to speed product registration evaluations, some companies are suing regulatory agencies, mainly ANVISA. If the court decides in favor of the company, the agency in question is legally obliged to start the registration evaluation almost immediately. Such actions further delay evaluation of the submissions already waiting in the queue.
In addition to the registration delays, there are other issues to consider:
- A product may be deemed ineligible for registration by IBAMA if any single parameter is more toxic than the already register product, even though other parameters of said product are less toxic than the corresponding parameters in the registered product. 
- Agencies fees from IBAMA and ANVISA increased by as much as 300% in 2015, and may be adjusted annually for inflation in successive years.
- Product registration by IBAMA is prohibited for any product whose active ingredient is scheduled for re-evaluation. Considering the re-evaluation of an active ingredient takes around 4 years, no technical or formulated product based on said AI will be evaluated for registration during that 4-year period. Thiamethoxam re-evaluation is being sponsored only by Syngenta for Syngenta and thus no other technical or formulated product registration with thiamethoxam will be approved until the Syngenta evaluation is completed. Fipronil re-evaluation might start in the second half of 2016. 
- Rio Grande do Sul State has forbidden nonyl phenol in all products. Thus, companies with products registered as containing nonyl phenol will have 12 months to submit a new Statement of Composition that could require a new study dossier. In addition, this State requires the product in question to be registered in the country of origin (where the molecule was developed). For the cases where the active ingredient is no longer registered in the country of the origin, products containing said active ingredient will not be considered eligible for registration. 
- Parana State has suspended the registrations of all fungicides that do not show sufficient efficacy against soybean Asian rust. This condition does not depend only on products containing a single active ingredient, but on the use of products with different mode of actions. By now, 66 brands are not allowed to be sold in the State, such as tebuconazole, flutriafol, epoxiconazole, myclobutanil, azoxystrobine, ….
- Efficacy re-evaluation by Ministry of Agriculture: considering the above several products shall need to update MAPA with efficacy trials. 
Thankfully, some actions have been implemented in order to reduce bureaucracy and speed up registration evaluations:
- The most significant was the experimental use permit (EUP) that now is evaluated and approved only by the Ministry of Agriculture if the active ingredient is already registered in the country. Thereby an EUP can be approved in few days. 
- Biological product registrations have prioritization for evaluation allowing a registration to be granted in short time. There is also a specific regulation for organic products that allows much faster access to the market. 
- Now, only MAPA and IBAMA are in charge of technical product evaluations in phase I. In case the product is not considered equivalent, the next step evaluation, phase II, will be the responsibility of ANVISA.
Many important decisions are still expected in 2016. The judgment of the impeachment of the President and the policy of the current President, including the control of government expenditures, will define political and economy stability. The new Minister of Agriculture, Mr. B. Maggi, is one of the biggest soybean farmers in the world. Knowing the difficulties from the field, one would expect introduction of actions resulting in reduced costs for agriculture, including the registration of agrochemicals. In June Mr. Maggi went to China for an official visit with one of the objectives to enlarge trading between the two countries. 

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