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March 14, 2016

Ag Chemical Sales in Brazil Declines 21.5% in 2015

Author: Michael Cordonnier/Soybean & Corn Advisor, Inc.

Last year was not a good year for agricultural chemical sales in Brazil in spite of the fact that the total crop acreage in Brazil increased in 2015. One of the consequences of the devaluation of the Brazilian currency was a reduction in agricultural chemical sales in Brazil. According to the National Plant Protection Industry of Brazil (Sindiveg), agricultural chemical sales in Brazil in 2015 declined 21.5% to US$ 9.6 billion.

As reported in Agrolink, the industry attributes the decline to a number of factors including: a devaluation of the Brazilian currency, a growing problem with counterfeit products, and tight credit policies of the Brazilian government.

The industry is heavily dependent on imports which make up 80% of the ingredients in agricultural chemicals sold in Brazil. A 50% devaluation of the Brazilian currency in 2015 greatly increased the cost of the chemicals and the companies had a difficult time passing along the additional costs to their customers resulting in lost sales. As a result, imports declined 6.1% in 2015 to 392,526 tons.

The lack of credit was such a significant problem for the agricultural chemical sector that 70% of the purchases were financed by the industry according to the vice president of Sindiveg

The class of chemicals with the highest sales in Brazil in 2015 was insecticides at US$ 3.171 billion, followed by herbicides at US$ 3.086 billion, and fungicides at US$ 2.907 billion. The remaining classes combined had sales of US$ 548 million in 2015.

The number one state for agricultural chemical sales in Brazil was Mato Grosso followed by Sao Paulo, Parana, and Rio Grande do Sul. The state of Sao Paulo saw an increase in market share due to the recuperation of sugarcane, coffee, and citrus.

Counterfeit chemical sales are an increasing problem in Brazil. Sindiveg estimates that counterfeit chemicals may account for as much as 20% of the agricultural chemical sales in Brazil with insecticide sales being the most impacted. Insecticide sales in Brazil declined 35% in 2015 and the industry attributes much of the decline to chemicals coming into Brazil illegally from Paraguay and the increased use of insect resistant soybean varieties. Sindiveg feels these counterfeit chemicals also represent a risk to public health because of a lack of registration or regulation.