Impact of new economic scenario on fertilizers, agrochemicals in Argentina

Investment in agricultural technology has been significantly affected. The Argentine Chamber of Industry of Fertilizers and Agrochemicals (CIAFA) is convinced that, due to changes in export rights, crops that demand more technology will see their margins affected and, therefore, there will be a move towards crops such as soybean, to the detriment of Poaceae, mainly corn and wheat.

Eduardo Tajada and Horacio Silva, President and Vice President of CIAFA, respectively, jointly stated, “The reduction of inputs is an adjustment variable that has been observed in previous years, through the reduced use of plant protection and fertilizer technology. This can be appreciated in the new planting campaign in 2020/21."

In relation to the fertilizer market, Tajada predicted that the reduced planting of Poaceae indicates a lower consumption of products in this area, while suggesting that it would be difficult to achieve an absolute record consumption in the 2019/2020 campaign.

In terms of plant protection, Silva estimates a drop of 10 percent, adding, “We will return to a market value close to that of 2015, motivated by the cautious attitude of producers that focuses on soybean cultivation, which requires less initial investment and, therefore, less capital financing.”

The CIAFA executives warned, “When there is a stimulus for planting Poaceae, we can see that proposals for more sustainable planting schemes, such as those that occurred in the 2018/2019 and 2019/2020 campaigns, are favored.

”The last two campaigns serve as test pilots for understanding that when input-output ratios are favorable, the sowing of Poaceae increases, as occurred in the 2018/2019 campaign when wheat production reached 19 million tons and corn reached 48 million tons,” they added.

That is why, in the face of an increase in export duties, they believe that it is very important to seek stimuli, including a bill for the conservation and improvement of soil fertility, as currently promoted by legislator Luis Basterra (Minister of Agriculture).

Tajada and Silva stressed, "Argentina has an established capacity for synthesizing and formulating phytosanitary products and producting certain fertilizers, enabling it to ensure timely supply and offer diverse products, both for extensive crops and regional economies while providing some independence in terms of external factors, and, in turn, adding local value at competitive prices."

"The necessary conditions to stimulate and maintain local production is to guarantee, in a timely manner, an adequate supply of raw materials that will maintain normal supply, with installed production capacity being currently able to generate an increase in labor from demand, which can even cover 100 percent of demand for many inputs," they added.

“Changes to the exchange rate could offset the right to export these products and boost the export market for both fertilizers and plant protection products, since, for example, exports of formulated plant protection products have decreased in the last three years, totaling $251 million in 2018 versus $450 million in 2015,” they further added.

"The consolidation of the industry is and will be a challenge, with the vision to produce more inputs with added value in the country. The agricultural sector needs economic stability, with access to credit and production incentives, to deliver predictability of yield that assures investments, as well as diversification and economic, social and productive sustainability, in the constant search for added value in our primary production," they said in conclusion.

The original Spanish version of this piece is from Clarín.com | Rural.