Aug. 23, 2017
The sales of agricultural inputs of companies linked to the National Association of Distributors of Agricultural and Veterinary Inputs (Andav) are expected to grow between 8% and 10% this year, compared with 2016, when around R$37 billion in sales were reported.
The estimate was released by Andav President Henrique Mazotini. According to him, the pesticides sector moves R$109 billion per year and the dealerships, including the ones that are not part of Andav, were responsible for R$47 billion in 2016.
He further explained that the outlook is due to farmers’ intention to plant crops and invest in technology and the intention to recover pasture areas for crops.
“There is a process of increase in the planted and the production area,” Mazotini affirmed. “I’m convinced that Brazil will again set a record for the 2017-2018 cycle.”
According to the National Supply Company (Conab), the 2016/17 harvest is expected to reach 238 million tons, an increase of 27% over the 2015/2016 cycle.
He added that the sales of input for the next season are delayed; on the other hand, he discarded the possibility that this delay in decision-making could cancel investments. Mazotini estimated that between 50% and 60% of the purchases have already been made, while in 2016 over 90% of the inputs were acquired by producers during this part of the year.
“We should be negotiating the products for the second crop of next year and the producers are negotiating the summer crop.”
Andav’s Director, Estevan Bento, explained that several farmers are awaiting the end of political instability to define the production area and the necessity of inputs to take a position, that is, to acquire the necessary products for a new crop.
The adoption of new technologies has grown among the producers that seek high productivity, observed the Director-President of Brandt, Wladimir Chaga. “The farmers invest a high value in seeds and needs to seek all the technology for the seed to express this advance of productivity. This leads us to believe that the farmer will use better pesticides and fertilizers even if the commodities don’t have very attractive prices.”
According to research requested by Andav, of the 371 companies in the sector, 119 had a revenue of up to R$20 million, 167 companies had a revenue from R$20 million to R$100 million, while 70 companies had a revenue above R$100 million and 15 above R$500 million.
Bento highlighted further that the products for the grain crops are responsible for 67% of the revenue of companies. The sale of pesticides represents 48% of the revenue, considering just the inputs. He also stated that for 23% of dealerships, the barter—purchase of inputs with payment in grains—represents 40% of the revenue. In Rio Grande do Sul and São Paulo, barter accounts for 12% of revenues.
“We understand that an important tool from my standpoint is the guarantee of cash flow and credit,” affirmed the executive. “But not all the dealerships understand this procedure and we have given lectures to stimulate the use of the tool."
According to Bento, this is important because the companies buy the fertilizers with cash and sell the product with deferred payment. “We push the use of barter to avoid this mismatch of cash,” he argued.