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Flavio Hirata

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Brazil Anvisa releases 2,4-D with application restrictions

Since last months of 2016, the prices of the agrochemical products are constantly raising. Would it be speculation? What is the limit?

Some factors have forced successive price increase, which may reach 100%. As China is the largest global supplier of the technical products and their intermediates and the biggest exporter of these products to the world, including to Brazil and India – which also exports big quantity to Brazil, any restriction in the Asian country affects the production chain and consequently, the prices.

Governmental policies in the environmental preservation area in China have restricted the production in some regions, which might result in total closure of factories, not only for agrochemical products, but intermediates necessary for the production of the technical products, as well, and temporary closure of factories for the pollution levels to return to more acceptable levels, and are increasing the production costs and reducing the offer. For this reason, it is not rare that recently built factories are not able to operate.

The factories are operating at maximum capacity and restricting the supply selectively, serving priority customers, who offer better payment conditions, lower credit risk, long-term partnerships and obviously, those who pay more.

The closure of factories motivated by accidents shall be added to this. This happened on December 10, in the Jiangsu Province, China. A factory producing dichlorobenzene exploded. Dlchlorobenzene is intermediate of difenoconazole, hexaconazole, propiconazole.

Finally, there are acquisitions and mergers of companies. These operations are cyclic, and aim at complementation of portfolio, synergism, scale increase, cost reduction, neutralization or elimination of competitors, and as result, price increase.

One of the products, whose price has been successively increased and the offer reduced, is 2,4-D.

2,4-D is an herbicide used to control large-leaf weeds, such as morning glory or coast morning glory, euphorbia, sida, ipecacuanha, sow thistle, mate, widow's tears and weeds difficult to control, such as annual daisy. Commercialized since 1945 as agricultural herbicide, 2,4-D is also registered in the United States for control of aquatic plants.

In Brazil, the first commercialized 2,4-D-based product was DMA 806 SL by DowAgrosciences, leader on the market. The active substance 2,4-D is registered under several trademarks, 66 total, through different salts and formulated products. The most common formulated products are 806 g/L (dimethylamine salt), soluble concentrate; in mixtures with glyphosate and picloram – this is exclusively for use in pastures. This year, MAPA approved the register of EnlistDuo, also by DowAgrosciences.

The following stand out among the 19 registration holders of 2,4-D and its combinations:

Registration holder	Active ingredient	Number of registrations
DowAgrosciences Nufarm AllierBrasil⁽¹⁾ Adama Rainbow Nortox	2,4-D	5 5 4 3 3 3
DowAgrosciences Volcano	2,4-D + picloran	11 4
DowAgrosciences	2,4-D + glyphosate	4

Source: Ministry of Agrculture of Brazil

(1) Consulting firm on behalf of its clients

The broad spectrum, the excellent cost-benefit ratio and its action on weeds resistant to glyphosate herbicides, herbicides from the sulfonylurea (chlorimuron, halosulfuron, metsulfuron, nicosulfuron) and imidazolinone (imazapyr, imazapic, imazaquin, imazethapyr, imazamox) chemical groups, make 2,4-D one of the most used herbicides in the country.

A complete survey made by AllierBrasil Consulting found out the abrupt increase of the prices of this herbicide, mainly of import coming from China, main supplier for Brazil.

Taking the average price of the reference product 2,4-D 806 g/L SL on import coming from the United States in January 2017 as “base 100”, the similar products imported in the same month from Argentina and China, were 56% and 29% more expensive, respectively (FOB price). Due to the seasonal use, there was no import from February to May. Between June and September, there was import from China only. In June, the price variation was higher, between 40% and 43%, depending on the importer / exporter. In August and September, the prices were even higher, between 47% and 57%.

The first import in the year coming from India started in October. In October and November, the prices of the Indian products were 29% to 37% higher, while those coming from China were 47% to 49% higher, opposite to the prices from the United States, which dropped by up to 5%.

2,4-D 806 SL, FORMULATED PRODUCT
EXPORTER COUNTRY BRAND NAME ⁽¹⁾	Month / Year
EXPORTER COUNTRY BRAND NAME ⁽¹⁾	Nov 2016	Jan 2017	Jun 2017	Jul 2017	Sep 2017	Oct 2017	Nov 2017
ARGENTINA
2,4-D 840 SL (brand name 1)	161%	156%
CHINA
2,4-D 806 SL (brand name 2)	134%		140%	157%
2,4-D 806 SL (brand name 3)						149%
2,4-D 806 SL (brand name 4)		129%	143%
2,4-D 806 SL (brand name 5)					147%	147%
UNITED STATES
2,4-D 806 SL (brand name 6)		100%				95%	96%
INDIA
2,4-D 806 SL (brand name 7)						129%	129%
2,4-D 806 SL (brand name 8)						137%	137%

(1) Main trademarks

Source:

Brazilian Import of Agrochemical Products – Chapter 2,4-D, 2016/2017.

Monthy monitoring: Price (FOB), Volume, Brand name, Importer/Exporter, EUP/RET.

AllierBrasil Consulting

For the 2,4-D-based technical products, it is virtually the opposite in relation to the prices of the products coming from the United States. Furthermore, the base of exporting countries increases, adding Austria, Australia and Poland.

Thus, taking the average price of the reference product 2,4-D technical 97% on import coming from the United States in November 2016 as “base 100”, the prices of the imported products in the analyzed period (November 2016 to November 2017) were mostly lower. The Chinese products were between 6% and 22% cheaper, and those from Austria and India, 2% to 9% cheaper, respectively.

During the following 11 months, except for import coming from China in January of a single importer, and import coming from Argentina, whose prices were between 2% and 8% higher than the reference, respectively, the price base of all other import operations was lower by up to 23%, or equal to the that of the reference product.

The prices of the reference product imported in Nov/2016, and from July to September 2017, dropped from 9% to 10% in the latter period.

Thus, the prices from Argentina are considerably higher than the prices of the reference product, when compared month-by-month, reaching 16% difference.

Among the products imported from China, there is a big price discrepancy among the importers/exporters, which might reach up to 25% lower than the price of the reference product.

2,4-D TECHNICAL GRADE
EXPORTER COUNTRY BRAND NAME ⁽¹⁾	Month / Year
EXPORTER COUNTRY BRAND NAME ⁽¹⁾	Nov 2016	Dez 2016	Jan 2017	Feb 2017	Mar 2017	Abr 2017	May 2017	Jun 2017	Jul 2017	Aug 2017	Sep 2017	Oct 2017	Nov 2017
ARGENTINA
2,4-D technical (brand name 1)			102%	102%	102%	102%	102%	107%	107%	107%			108%
2,4-D technical (brand name 2)		102%
AUSTRALIA
2,4-D technical (brand name 3)								94%
AUSTRIA
2,4-D technical (brand name 4)	98%		98%	98%	98%	98%	98%	98%	98%	98%	98%	98%
CHINA
2,4-D technical (brand name 5)			102%
2,4-D technical (brand name 6)	94%		89%					100%	100%		94%
2,4-D technical (brand name 7)	78%
2,4-D technical (brand name 8)								94%	94%	94%
2,4-D technical (brand name 9)	75%	77%	77%	85%		88%	88%	84%	83%	85%	93%
UNITED STATES
2,4-D technical (brand name 10)	100%								91%	91%	90%
INDIA
2,4-D technical (brand name 11)	91%		91%	91%	91%	91%	96%	96%	96%	96%	96%		96%
2,4-D technical (brand name 12)										100%
2,4-D technical (brand name 13)		91%
2,4-D technical (brand name 14)						79%
2,4-D technical (brand name 15)									83%
2,4-D technical (brand name 16)				91%		87%					102%
2,4-D technical (brand name 17)											88%	88%
POLAND
2,4-D technical (brand name 18)			85%	85%	86%	89%	89%	89%	88%	87%	87%	89%

(1) Main trademarks

Source:

Brazilian Import of Agrochemical Products – Chapter 2,4-D, 2016/2017.

Monthy monitoring: Price (FOB), Volume, Brand name, Importer/Exporter, EUP/RET.

AllierBrasil Consulting

2,4-D is not the only imported product, whose price increased. On the contrary. In the monthly survey “Brazilian Import of Agrochemical Products” made by AllierBrasil Consulting with more than 70 active ingredient of surveyed agrochemical products, it was found out that most of the imported products suffered considerable increase of the FOB price.

This increase affects directly the distribution chain in Brazil. Distributors shall redefine their suppliers and commercial partnerships. According to Mr. Anderson Faustino, from Cropfield/Solus, the company has a competitive differential, which is the higher proximity to the sales channels and the agricultural producers.

If on one side the Chinese manufacturers are increasing prices, on the other side, the pressure in the last years for more competitive prices in the Brazilian agriculture has been a big challenge for the local distributors. The stock refill for the next harvest will bring even more surprises.

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