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Yara sees another difficult year in Brazil for fertilizer sales
Feb. 18, 2016
Yara International ASA
NorwayFollow
NorwayA recovery in fertilizer sales in Brazil, Latin America's farming powerhouse, is not on the near-term horizon after tighter credit conditions triggered a contraction in 2015 for the sector, an executive with Norwegian fertilizer producer Yara International ASA said on Friday.
The delivery of fertilizers to Brazilian farms fell in 2015 to 30.2 million tonnes from 32.2 million the year before, according to data from the National Fertilizer Distributors Association (Anda).
"We are working with a conservative outlook," Lair Hanzen, Yara's vice president, told Reuters in an interview. "We are bracing for a market like we saw in 2015."
Yara is Brazil's biggest supplier of fertilizer with 25 percent market share in the country that imports upwards of 75 percent of its annual crop nutrient needs.
Hanzen avoided giving an exact projection of sales but dismissed the notion of a strong recovery through the year.
"In the short term, there are big structural challenges that will eventually be resolved, but I doubt they will be resolved soon," Hanzen said of the recent rise in the cost of credit available to farmers in Brazil.
Amid what looks to be Brazil's worst economic contraction in more than a century, the farming sector is expected to be one of the few areas that will grow.
The executive said he remains positive on the Brazilian market for fertilizer in the medium term, as the reserves of nutrients in the soil will only last one season, which will pressure farmers to return to the market.
He said some farmers will struggle to secure credit as banks become increasingly risk-averse amid rising loan defaults in the current downturn.
A recent study by Imea, the farm economics institute for Brazil's main grain state of Mato Grosso, showed the producers were increasingly turning to their own cash to finance their operations as credit becomes sparse.
"The logic of (expanding) production continues firm: the world will continue to need food," Hanzen said of Brazil, which accounts for a third of the company's movement of fertilizer globally.
Source: Reuters
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