Source: Global Agrochemicals
Adama’s Marketing Director, Romeu Stanguerlin recently had an interview to the portal Global Agrochemicals. He joined Adama in 2014, after working for a long time at Syngenta. The interview is as follows:
1. Which are the major factors that have harmed Adama’s performance in South America and which measures are being taken to regain sales?
Brazil represents 70% of the total South American market and, through the first semester saw a slight fall in sales, according to the public figures of the company, we have conquered market share, compared with the same period of last year, which is also relevant for the company’s strategy.
In the Brazilian market, we have three questions that should be looked at carefully: first, the high product stocks in the distribution network; the second is the lack of liquidity among farmers and distribution networks. When there is lack of credit, producers invest less, affecting the market. The third is the significant entrance of products smuggled without enforcement through the dry border. But the most important thing for Adama is that even in this scenario, the company has maintained the growth pace of the last several years through the development of differentiated new products and digital technologies. Besides, we seek to be quick and offer better alternatives to everyone. For instance, we offer farmers the possibility to make grain exchange operations with the high (where the farmer's price rises) and the low (in which if the price falls the farmer pays us using the lowest price of the commodity) price option. Soon, we will generate 30% of our business through exchanges. These initiatives demonstrate a solid and committed campaign with producers at work, easing life in the field and helping productivity.
2. The Chinese and Indian agchem markets have suffered due to changes stemming from stricter environmental policies in China and because of the implementation of new tariffs in India. How does Adama see the future of the production and pesticide sales in these countries in the short and medium terms?
After a period of lows in prices caused by oversupply, the prices and volume of chemical products increased in the first semester of 2017. This is due to the increase in oil prices, as well as of demand registered in the first quarter of 2017, mostly from China and the United States.
Regarding cost, the situation is critical, after an increase in the last quarter of 2016, the prices of products in India and China continued to jump in 2017 due to regulations and stricter environmental inspections, which resulted in more interruptions in supply and raw material scarcity.
The reality that we see today is an increase in the value of raw materials and, therefore, an increase in prices for farmers.
3. How does Adama seek new solutions for Asian Rust, given that several fungicides have lost effectiveness against Phakopsora pachyrhizi?
Asian Rust is, undoubtedly, the most destructive among soybean diseases, accounting for 80% of crop losses. As said, the greater difficulty found when combating rust is the effective loss of products available in the market, year after year, besides the detection of resistance cases for traditional products.
In order to help the farmer fight against Asian Rust, we recently obtained registration of the fungicide Cronnos (mancozeb + picoxystrobin + tebuconazole). We will make the pre-launch of the product for a set of activities and commercial areas in all regions of Brazil this harvest season. The big differential in Cronnos is the fact that it relies on a triple combination of active principles as a protector. For having three principles active in its formulation, it protects the plant completely, once these mechanisms act directly on fungi and hamper the entrance of the plant. Besides, for being a simple product for the farmer to use, it avoids tank mixtures that cause chemical incompatibility and clog the sprayer nozzles.
4. How does Adama see the current market situation and what will be the main consequences for distribution networks?
We have a crop with high productivity, mostly corn and soybeans, which means an increase of supply and, thus, an increase in domestic stocks and less competitive prices in the market. At the global level, we have good expectations from the North American corn and soybean crops, which will also hamper the price reaction.
With this scenario of stable commodity prices, added to the difficulty of credit obtention and high stocks in the distribution networks, the issue of credit and guarantees should be very well managed in the supply chain. The focus should be effectiveness and the efficiency of the procedures to reduce the risks. Therefore, as we commented before, Adama has financial tools that help our customers mitigate the business risk.