Brazil Sindiveg predicts 11.8% decline in agrochemical market in 2020

Date:11-12-2020

The dollar's rise against the real over this year will hurt the crop protection product market. The National Union of Plant Protection Products Industry (Sindiveg) projects a drop of 11.8% in dollar revenue in 2020, to US$11.994 billion. 

Last year, the industry generated US$13.603 billion. In the Brazilian currency, turnover is expected to grow 7.8% in 2020. With the real depreciated against the dollar, the companies' revenue in real ends up being converted into a smaller amount in dollars than if the US dollar were less valued. In addition, most of the industry's costs are in foreign currency, due to the import of raw materials.

"Until October, the exchange rate loss was 22% for the sector. It has not yet been possible to fully pass on the increase in costs (to buyers)", said the president of Sindiveg, Julio Borges Garcia. In 2019, the value of the pesticide market in Brazil was higher than in 2018, both in dollars (1.7%) and in reais (15.2%).

At the request of the report, Sindiveg also reported that the area treated with crop protection products in 2020 is expected to increase by 6.5% in comparison with 2019, reaching 1.664 billion hectares. The calculation considers the area that received agrochemicals multiplied by the number of products used and the number of applications of each product in the same crop. In 2019, the treated area reached 1.562 billion hectares. The advance in 2020 is similar to that seen in 2019, at 6.8%.

Garcia explains that the growth this year is due to two main factors: expansion of the planted area in the country and greater pressure from sucking insects (such as bedbugs, cane leafhopper and corn leafhopper), diseases (Asian rust and target spot on soybeans and ramularia on cotton) and resistant weeds. "The high incidence demands reinforcement in care with the management and control of these pests," the executive said.

Garcia stressed that Sindiveg and associated companies have been reinforcing actions to disseminate good practices in the application of agrochemicals in the field, to ensure that the instructions for use and regulatory bodies are followed.

Treated area grows 7% until September this year, but dollar revenue decreases 7.8% 

The area treated with crop protection products in the country between January and September this year increased 7.1% compared to the same period last year, reaching 904.1 million hectares. A year ago, there were 844.5 million hectares. The soybean and corn crops, as in 2019, had greater weight in the result, representing 34% and 24%, respectively, of the area that received agrochemicals. Revenue from the sale of products, on the other hand, fell 7.8% in the year to September, reaching R$7.128 billion (US$1.322 billion), according to data released by the National Union of Industry for Plant Defense Products (Sindiveg).

The appreciation of the dollar against the real interfered in the financial result, according to the entity, since most of the industry costs are linked to imports of raw materials, which ended up becoming more expensive in real. "The sharp and accelerated devaluation of the real (against the dollar) did not allow the full transfer of the increase in these costs this year," said Sindiveg president Julio Borges Garcia in a note.

The data ordered by Sindiveg from the consultancy Spark Intelligence Strategy show that the revenue of companies in the sector fell even more significantly in the third quarter of 2020, by 18%, reaching R$1.390 billion (US$257.8 million). Soy (29%), sugar cane (18%), fruits and vegetables (12%), pasture (9%) and corn (7%) were the crops with the greatest participation in financial performance.

Herbicides were the ones that had the greatest weight in the sector's sales in the third quarter, representing 51% of the business in dollars, due to the need to combat weeds during the planting preparation period, explained Sindiveg. In second place were insecticides (with 18% of the revenue), fungicides (15%) and seed treatment (10%). When observed from January to September, the participation of each product category changes slightly compared to the third quarter. Considering the area treated with pesticides, insecticides were applied in 27% of the total, followed by herbicides (24%), fungicides (17%), seed treatment (8%) and other products (23%).

Still, in the third quarter, the treated area increased by 5%, to 212.2 million hectares, 10 million more than in the corresponding interval of 2019. Soy crops represented most of the area that received some type of agrochemical, 39%, followed by pastures (19%), wheat (9%) and corn (8%).

From January to September, Mato Grosso was the state with the greatest relevance for dollar sales, 27% of the total. São Paulo appears in second place, with 14% of the whole, followed by the Matopiba region (which covers part of Maranhão, Tocantins, Piauí and Bahia), with 11%, of Paraná (10%), Rio Grande do Sul and Santa Catarina (10%), Goiás (8%), Minas Gerais (8%) and Mato Grosso do Sul (7%). Still in the accumulated result for the year, after soy and corn, the crops with the largest share in the treated area were cotton (15%), sugarcane (6%), pasture (5%), beans (4%) and fruits and vegetables (3%).

During the 2020-2021 harvest, Sindiveg drew attention to the expected increase in the area planted with soybeans, corn and cotton and the main pests and diseases that must attack such crops. In the case of soybeans, the study commissioned by the organization foresees a 3.4% growth in the cultivated area, as well as greater use of technologies to combat Asian rust, bedbugs, nematodes, mites and other phytosanitary problems.

For the second harvest of corn, the forecast is for an increase of 4% in the sown area compared to the past harvest, with greater demand for products that combat suckers and leaf spots and for seed treatment.

Concerning the next cotton harvest, the estimate is for a 3% decrease in the cultivated area, but with a greater need for products for protection and control against boll weevils. "The increase in agricultural production in a tropical country, such as Brazil, takes its toll. Our climate and temperature are ideal for the spread of diseases, pests and weeds that are increasingly resistant and challenging, and pesticides play a role, essential to controlling these enemies and increasing food production," Garcia pointed out.

The original Portuguese version of this piece is from noticias AGRICOLAS.