Input crisis in China threatens 2022-23 crop in Brazil, says specialist

By Leonardo Gottems, reporter for AgroPages

China, one of the largest suppliers of inputs for manufacturing agricultural pesticides, faces severe energy restrictions that threaten the Brazilian agribusiness, said Professor Marcos Fava Neves, a specialist in agribusiness strategic planning.

“Since many Chinese industries have limited production due to energy rationing, doubts arise about the supply capacity. With restricted supply, prices keep increasing. Glyphosate, for example, is already 233% more expensive than in 2020. There may be cases of supply difficulties,” he highlighted while making this assessment.

Even so, Neves pointed out that fertilizer deliveries in 2021 should reach 44 million tons, an increase of 8% compared to 40.56 million tons in the previous year. “The scenario is not very favorable due to the global problem of maritime logistics faced in recent months.”

According to the expert, the estimate is that fertilizer negotiations have nearly concluded for this second half of 2021. On the other hand, for the first half of 2022, only 34% of the demanded inputs have been negotiated.

"If the energy crisis in the world continues, the biggest problem would be for the second [Brazilian] crop and the crop in the northern hemisphere, to be planted in April-May 2022. We have to hope that producers do not rush to buy stocks that may not be used, complicating the life of other producers. We must have a lot of collective action in these moments of scarcity,” he said.

According to him, this new phase of energy end inputs scarcity in the world should bring positive impacts for companies of alternative products aimed at energy and biological inputs; companies that allow savings in the use of resources (application efficiency, management per square meter), and companies that enhance the sharing of assets (mechanisms that facilitate meetings of suppliers with stocks and buyers in need), among others.

The energy crisis affecting China has also impacted the supply of raw materials for some important agrochemicals used in Brazilian agriculture. Traditional companies in the sector have already cautioned their customers that they will not deliver some products purchased at the beginning of the year for the current crop. Others are already signaling that they may have problems in supplying products for the second corn crop.

“This is a moment when the farmer needs to adopt an intelligent strategy for managing his crop. We recommend at this moment of crisis the association of the use of chemical pesticides with biological ones. In addition to releasing part of the products that would be used in this harvest for the second harvest that is approaching, he will still be able to take advantage of all the benefits provided by a biological product in his plantation,” advised Everton Molina Campos, Marketing Director at Agrivalle.

Management combining chemical and biological products should not be limited to this season. “In recent years, the lack, or great fluctuation in chemical products prices has become constant. A few years ago, China's new environmental legislation culminated in the government closing many polluting factories, impacting the supply of products for Brazilian agriculture. This year the problem is the energy issue! What's next? For this reason, producers must be open to using new forms of management to guarantee the health of their crops and add other benefits to the entire ecosystem, such as biological products,” he said in conclusion.