Industries foresee increased raw material costs, says re-elected president of Sindiveg, Júlio Garcia, of Ihara

Date:05-21-2020

By Leonardo Gottems, Reporter for AgroPages

In an exclusive interview with AgroPages, re-elected president of Sindiveg (National Union of Agricultural Defensive Industries), Júlio Borges Garcia, spoke about his management plan and how he intends to consolidate the entity as a national representative of the agrochemical industry. Garcia, who is also president of Iharabras Indústrias Químicas, projected the consequences of the global crisis and the COVID-19 pandemic on the sector.

What is the importance of following your mandate for the continuation of the restructuring and strengthening plan of Sindiveg?

The new board has senior executives from 14 of our member companies, with extensive experience in the pesticide sector and with the common goal of combining efforts to continue the consolidation of Sindiveg as a national representative of the category. Follow-up is also important so that we can continue working on our 4-pillar agenda.

Tell us more about the entity's "4 pillars of action" and how they are being built.

This includes the consolidation of a predictable, transparent and science-based federal regulatory framework that results in a legally secure environment for the activities of our associates.

Second is the legitimate representation of the sector based on economic data and statistical information about the market, taxes, product registration, credit and imports.

Third is the institutional defense of the sector through communication focused on data and the benefits of using pesticides in tropical agriculture.

And finally the promotion of the accurate and safe usage of pesticides.

What are Sindiveg's plans in the medium and long term?

These include positioning Sindiveg as a representative of the national pesticide industry and as an important interlocutor with the government, regulatory agencies and the agribusiness production chain.

What can you say about the reaction of the agrochemical industry to the pandemic, and how do you project this year's performance?

Sindiveg's first concern was to protect the people working in the sector. With the recognition of the agricultural inputs industry, including pesticides, as an essential activity by the federal government, the sector took all the necessary precautions based on the recommendations of the Ministry of Health and WHO to continue its manufacturing operations.

The pesticide sector is an importer of raw materials, especially from countries that have suffered and are still suffering from restrictions due to COVID-19. With this, our industry has its costs linked to the dollar. The devaluation and volatility in recent weeks have posed a great challenge to risk management and profitability with the consequent need to pass this cost on to product prices. Even though there is a stock of past purchases, it is important to note that approximately 70% of imports are starting to occur now and will be at the current currency value. In addition, the industries foresee an increase in the costs of raw materials, mainly those imported, which basically come from China and India.

Certainly, we can say that there will be an impact on the profitability of the businesses previously assumed and that the products most affected will be those of immediate use, in sugarcane, cotton and HF crops.

For now, the impact on logistics and distribution has been minor. Sindiveg's associates have been facing postponements and/or delays in shipments, as the global logistics system is being damaged due to the coronavirus outbreak. Here in Brazil, we are not going through a period of the greatest production, but we are preparing ourselves, as this situation requires caution. The lack of visibility about the crisis itself and its consequences is forcing companies to reschedule all their commercial and internal activities.

How big is the loss due to the cancellation and postponement of several events?

Companies adapted quickly, working and serving customers online. The cancellation of agricultural events and fairs can make it difficult to launch products and projects, but it is necessary to understand that a new pattern of behavior will emerge after the crisis. Proof of this is that companies in the sector have taken all the recommended precautions to protect their teams, without prejudice to production and productivity.