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Arysta: Distribution concentration will change agrochemical market in Brazilqrcode

Dec. 5, 2017

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Arysta: Distribution concentration will change agrochemical market in Brazil

Source: Global Agrochemicals

Marcelo Zanchi, marketing director of Arysta LifeScience in Brazil, was recently interviewed by the portal Global Agrochemicals. The agronomist graduated from the Federal University of Santa Maria (Rio Grande do Sul), majored in management development and marketing at the Federal University of Rio de Janeiro, and earned an MBA at the University of São Paulo. Drawing on over 20 years of experience in marketing and sales, Marcelo has worked in agribusiness companies such as Dupont, Timac before he joined Arysta LifeScience in February 2013.
1. How do you see the Brazilian market reacting to the entrance of biologicals? What concerns Brazilian farmers the most with regard to this new line of products?
Biological control technologies are not new to Brazil, having been around since 1980. However, such products were still in their nascent stages at the time. Over the last few years, the search for more sustainable products that do not harm the environment and preserve natural enemies as well as safer products that reduce the levels of plant residue has intensified. The Arysta vision is that this movement will not move backward. 
We have developed solid information on how to monitor the situation in the field, how to use the products, and how to optimize rational and sustainable management.
As a reminder, Arysta LifeScience believes that the integration of biosolutions (biocontrol and physioactivators) with traditional pesticides makes the product more efficient – what we call the Pronutiva program. The various products provide efficiency and minimize residue, besides offering benefits for the environment, for the farmer, for the industry, and mostly for the consumer. The idea is to take healthy food and make advances in the area of sustainable production. That is the main goal of Arysta: generating the best quality food and high productivity, with profitability gains for farmers.
2. Slowly, there will be new proposals, laws, and revisions, with the goal of easing registration and the release of pesticides in Brazil. So far, how does Arysta view the changes? Will this contribute to increasing Brazil's competitiveness?
There is a movement today between the government agencies involved in registration and the release of new products that speeds up the process. In fact, the Brazilian process needs to be modernized to make it faster, especially when the product includes new active ingredients, new formulations, and a mixture of products that aim for higher efficiency in the control of plagues, diseases, and weeds. However, there is some concern that this process does not account for irregular products or those that are technically not registered with due controls and their results and quality remain unproven.
Competitiveness is not inherent to markets, and speeding up the registration of new products does not necessarily affect it. The Brazilian agriculture sector, with its industries and production chain, is very efficient in terms of yield, increasing the availability of food for export.
The industry already competes in a sustainable manner to reduce the cost of production for farmers. It should be noted that increasing cost effectiveness for farmers does not necessarily lead to a cannibalization of prices through the uncontrolled registration of generic products, for instance. We have to focus on ways to increase productivity and quality, and consequently, the profitability of farmers in a way that reduces costs per unit produced through adequate technologies and solutions, including those available but not yet adopted, such as the biosolutions mentioned.
3. Several products imported from China have seen price readjustments and shrinking supply due to a crackdown by the government intent on reducing pollution in Chinese cities. How was Arysta impacted by this new policy? In your vision, is it possible that India will become more competitive and surpass China in the pesticide market?
The global agriculture market will see major changes in terms of asset availability and formulated products coming from China. Not only the supply chain but also the cost of these products will be affected. In the past few years, we saw a significant increase in all molecules coming from China. This affected in some way almost all companies in the market.
Arysta, in general, was only slightly affected as we have a portfolio based on assets and formulated products from Europe, Japan, Africa, North America, and India. We were affected to a lesser extent by the products we acquired through B2B negotiations.
India and China are two major players in the agrochemicals market. It is hard to say whether India has sufficient infrastructure to overtake China. In the mid-term certainly not, because China, even with its environmental and government restrictions, still has a strong factory park, and the country is incomparable in terms of its recovery capacity.

4. In 2017, Arysta announced a partnership with DuPont to expand its development of foliar insecticides. What do you think of the competitiveness in the national pesticide market after large consolidated mergers?
The process of consolidation or cooperation in the industry is strongly based on the need for companies to become more efficient and optimize their procedures for the discovery, development, and production of new molecules, thus reducing costs. It is important to note that this process is more expensive, reaching up to US$400 million, and the approval process for registration takes a very long time, thus reducing the investment return. It also has less effective protection legislation.
On the issue of competitiveness, with regard to the industry and our portfolio, I believe it will change very little because demand from producers is based on the effectiveness of commercial products used in the field for specific needs, including the control of plagues, diseases, and invasive plants.
What will happen in a very intensive way is a change in the distribution model of products. The concentration of the industry will necessarily lead to a concentration of the distribution system in Brazil, which is already happening very strongly. This process should completely change the way the entire chain of pesticides and how it will have to act to reach the farmer with increasingly sustainable and efficient solutions.
5. What are your projections for the national pesticide market for the next year? Do you believe that 2018 will see growth in the sector?
The market for agricultural pesticides will experience a concentration of the industry and the distribution system and will require a reduction in the inventories of products for plagues and diseases, which have declined over the last two harvests. The volume of products sold by the industry for the distribution system will tend to be conservative in 2018, but we believe there will be an improvement over 2017 for products used in the field.
However, it is hard to determine the intensity. We are going to enter a peak planting period, which will depend on the performance of the market from now until the end of the year. The determining factor will be the climate and the pressure from plagues and diseases in the current harvest.
Overall, the agricultural sector will continue to grow in 2018 and maintain its leadership in the Brazilian trade balance. After all, we are a country with a vocation to produce food and feed the world!

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