Chemtec SAE : Quality, Technology, Government Policy

Date:08-13-2015

Most of local agchem companies in Latin America are operating conventional bulk agrochemical products.  Apart from existing multinational giants and leading off-patent competitors, they have to face competition from gradual market penetration of Chinese and Indian companies in recent years. AgroPages has recently had a dialogue with Mr. German Augusto Pessagno, operations manager of Chemtec SAE. Mr. German shared his viewpoints on the local advantages of Paraguayan agchem companies and their development path. Edited excerpts:

Key Factors for Growth of Paraguayan Agchem Market

The Latin America market, and specially the Paraguayan market have been thru an important growth for the last years. After the 2008/2009 crisis, the market recovered the growth and kept a 10% increase year after year. This growth is due to both the growth of agricultural area and the growth of the use of technology.

From the table of Main crops in Paraguay, we can see that soybean, is definitively the most important crop in Paraguay, and so the product portfolio registered, formulated and imported in Paraguay.

Main crops in Paraguay


The table of production area  and  turnout of soybean in the world showed that Paraguay is one of the  most important soybean producers in the world.

Production area and  turnout of soybean in the world


Advantages of Local Companies

Apart from existing multinational giants and leading off-patent competitors, we have to face competition from gradual market penetration of Chinese and Indian companies in recent years. The presence of Chinese industry is significant both in its strong presence in the distribution market of Paragua, as well as in the number of registered companies and products. The local industry is in a constant challenge in terms of how to maintain competitiveness against this strong presence of Chinese products. Advantages of local companies are achieved from two fields.

On one hand, maintain and ensure the quality of products and technical assistance. Local companies like Chemtec maintain the quality of their products and this made possible them to be considered as a leader in the development of new products and preserve our market presence, even competing with low prices products. This quality, added with a direct contact with customers, ensures the quality of our product throughout the cycle, from the selection of our suppliers abroad, control of raw materials, finished goods control and after-sales feedback. The commercial factor coupled with a strong development work keeps our product portfolio updated according to market requirements.

On the other hand, an important point on competitiveness depends directly on the influence of government policy in terms of protecting local industry. For the last years Paraguayan industry continues to grow and as such has generated greater pressure to the government seeking for protection. The industry now has some custom duties and tax advantages that keep this competitive. These advantages can be summarized as follows:

1. Import Duties: Due to a presidential decree, all raw materials involved in the formulation process, are exempt off any duty for local industries. This benefit applies only to established local industries and directly affects the cost of products.
2. Taxes: Paraguay keeps the lowest tax in the region. Even this benefit applies for all the players in the market, for local formulators like Chemtec, allows to stay competitive to other markets and so, increase their productions.
3. Tax benefits for investments: This benefit allows the company to get some support for investment in infrastructure and equipment also allows local industry to keep updated in equipment and technology for improving formulation competitiveness. The import duties & taxes for capital goods as well the taxes for remittances abroad, abroad loans payments taxes of dividends & transfer of profits abroad all of them are exempt, and pay 0%.

Views of Glyphosate Ban in Latin America

Glyphosate ban is another controversy topic. We see that there is not only a discussion about the product toxicology; the discussion is based really on the reality in each country production systems. Agricultural production methods are mixed in these discussions, increased soybean area over other crops and reach more sensitive social issues such as the distribution of land, the fair distribution of wealth and other highly sensitive social points for our society. Surely these are fundamentals debates to any country, especially for countries with an economy based on agriculture such as is that of Paraguay, but is also essential to conduct the analysis of each of these points independently, technically and professionally. The registration process of agrochemicals implemented in South America, especially in Paraguay, allow today ensure the quality and safety in terms of human health and the environment.

It is also important to include in this discussion, which is the alternative to Glyphosate. What are the alternatives? What is the environmental impact of this replacement? What is the economic impact of this replacement? I think this is an issue that just is starting and will be subject of discussion for the time necessary until there is conclusive data on the safety or otherwise of this product.

Future Development Path of Chemtec SAE

After a very hard year, our company is very conservative about the expansion during 2015-2016. We expect that the growth of the agrochemical market will keep closely linked to the situation off commodities prices. In the other hand, the cultivated area is expected to remain the same, and the market will keep demanding our products.

Our company holds registration in other countries of the region such as Argentina and Bolivia, and we are looking for new business alternatives for these markets. This means that we are open for some cooperation or investments for companies abroad that may be interested in our market.

About Chemtec S.A.E.

Chemtec S.A.E., is a company placed in Paraguay, leader in the manufacturing of chemical products for agricultural purposes. Chemtec, with 25 years of experience, works in the field of formulation and synthesis of agrochemicals, formulation of innovative organic products. Chemtec holds now more than 80 registrations in Paraguay and developed registrations in Argentina and Bolivia.