Brazilian agriculture is setting up for a late start this coming growing season. Orders of chemicals and fertilizers are down for this time of year and because of this, industries already fear trouble in shipping inputs and supplies when they are ordered. Planting season in Brazil begins in October.
The challenges are the result of grower uncertainty following lower production last season, especially in soybeans, including heavy yield losses due to drought in southern Brazil. High levels of debt and lack of credit are also blamed.
Experts in the country say if this situation is not resolved soon, growers could face delays in getting the supplies they need to produce crops of soybeans and corn. Due to the shorter time frame, there are not enough trucks to ship all products at once, supplying companies say.
The delay could be good news for American farmers, who would benefit from a presumably smaller harvest in Brazil and, thus, higher international prices. But there is still some doubt over the impact of the delayed decisions.
The Brazilian government believes that even though they predict a reduction of 3 percent in planted area for grains and soybeans, this season's production could duplicate last year's crops (120 million tons of grains).
Roberto Rodrigues, Brazil's agriculture minister, projects a small increase in production in 2005-06. However, a more negative forecast is also possible. “We have no doubt that there will be a problem shipping adequate supplies to the field and that the risk of productivity loss is very high.”
Shipments of inputs therefore, are currently the key to the success of Brazilian season. If they are delayed even further, every link in the production chain would be compromised, which could have a negative impact on Brazilian agriculture.
José Roberto Da Ros, vice-chairman of Sindag (National Agro Defense Products Industry Union) says that it will be very hard for growers not to face logistical problems this year. To keep the supplies flowing smoothly, substantial investments would be required on the part of suppliers. “This is not likely to happen, but even if it did, delays are likely going to happen anyway.”
Da Ros is certain that there are plenty of supplies to ship. This is a ghost that haunts both farmers and industry in the country since the problems endured during the 2001 season.
At the time, there were inadequate supplies of fungicides to meet the demand of soybean farmers struggling with Asian soybean rust. This caused heavy losses for some producers, who lost as much as 70 percent of their crops. Since then, the confidence between input providers and farmers has been shaken.
A big reason for the delay in ordering inputs is the soybean farmers' lack of confidence in what is going to happen next. Disappointed by the smaller than expected production of last season, and by their high debt, they are waiting as long as they can to make the decision on what to plant — and therefore what products to use in their fields.
CNA (National Brazilian Agriculture Confederation) is the most important entity of farmers in Brazil. According to Alécio Maróstica, representative in the Setorial Chamber and Fertilizers of the Agribusiness Council (Consagro), the situation is not irreparable. “The delay is a concern. Nevertheless, there still is plenty of time to begin buying. The key factor in a farmer's decision should be the U.S. forecasts for grain and soybean production.”
He says Brazilian producers will wait till the last possible minute to gather all available information and decide what to do. The most accurate estimates of that production in the United States will come with the release of USDA's October crop production report.
Sergio Jose Osse is a Brazilian agricultural journalist covering South American agriculture for Farm Press Publications. He owns a public relations firm in Sao Paulo and has worked as a press advisor for Syngenta, Brazil.