Dec 22, 2015

Agricultural Chemical Sales in Brazil Decline 23% in 2015

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

The sale of agricultural chemicals in Brazil in down 23% in 2015 compared to the same period in 2014 according to the National Plant Protection Association (Sindiveg). The sales volume of agricultural chemicals in Brazil in 2015 is expected to be US$ 9.5 billion.

The association feels the primary reason for the drop in sales has been the devaluation of the Brazilian currency. Many of the agricultural chemicals are imported and the weaker currency has resulted in price increases, which have been difficult to pass along to the farmers. Since early in 2015, the Brazilian currency has weakened approximately 30% compared to the dollar making imports much more expensive. Currently, the Brazilian currency is trading at approximately 4 Brazilian reals to the dollar and it could weaken even further.

In addition to the currency, a lack of affordable credit and a declining Brazilian economy has added to the uncertainty. Due to a lack of disposal income, many farmers are trying to reduce their cost of production by cutting back on chemical use.

Another factor in the reduced sales is the increase in counterfeit agricultural chemicals, which has become a major problem in Brazil. Just yesterday, the police in Rondonopolis, Mato Grosso arrested three men for transporting 21 boxes containing 450 liters of counterfeit chemicals. The men had been under surveillance for several months after making a prior sale of counterfeit chemicals. They were arrested after returning to the city with a pickup truck full of chemicals they intended to sell.

The Sindiveg organization is composed of 50 chemical manufacturers and distributors and they have made a concerted effort in recent years to combat the increase in counterfeit chemicals.