Articles from Auriga Magasinet No. 1, June 2007
The important South American market
Agricultural production is considerable in Brazil, Argentina and Colombia, which are important markets for Cheminova.
Agricultural production in South America has grown dramatically in recent decades. Brazil has seen particularly high growth rates, and the Brazilian market for plant protection products is therefore extremely interesting for Cheminova. After years of strong growth, the agricultural sector in Brazil was hit by an economic crisis last year and the year before last, which also had an impact on Cheminova’s activities. This has been clear from the financial reports of Auriga Industries A/S.
- However, South America as a whole remains a very important market for Cheminova. The Brazilian market for plant protection products is worth approx. USD 4 billion and is the second-largest in the world - exceeded only by the USA, says President and CEO Bjørn Albinus.
With a broad range of crops, the need for plant protection products is great - not least to control the much-feared Asian rust fungal disease in soya beans.
- The Brazilian market is also important because many of our products are used in both South and North America, where roughly the same crops are being grown. Registering these products is usually faster in Brazil, and this means that we gain much useful experience before the products are introduced in the USA and Canada, Bjørn Albinus emphasises.
Even though the Brazilian market has been declining for the past two years, Brazil remains one of the largest agricultural countries in the world.
Large-scale farms
Cheminova set up its own subsidiary in São Paulo, Brazil, about ten years ago. It is from here that sales activities in the enormous agricultural country are controlled, the most important crops for Cheminova being soya, coffee, cotton, citrus, maize and sugarcane. Brazil has in recent years seen considerable growth in the production of sugarcane, which is the most competitive crop used for the manufacture of ethanol. Actually, this production started more than 30 years ago in Brazil.
The considerable growth in agricultural production in South America - like soya - will
continue in the coming years. Cheminova set up its own subsidiary in Brazil ten years
ago, and also has subsidiaries in Argentina and Colombia to secure access to these
important markets.
- In Brazil, the end-users of Cheminova’s products are primarily 10-40,000-hectare farms. They are professional farmers with a high level of insight into modern plant production. After a couple of years of falling revenue for Brazilian farmers, the outlook for the coming year is more promising: The 2006/2007 harvest is good, and prices are reasonable. This gives grounds for optimism in the industry, and this will, of course, benefit Cheminova in the coming years, Bjørn Albinus points out.
Argentina and Colombia
In South America, Brazil is the dominant market by far for Cheminova, but Argentina and Columbia are also home to important activities.
- Eight years ago, we acquired a company in Argentina, and sales to this market are currently seeing satisfactory and positive growth. In Colombia we acquired a 51 per cent stake in a company last year. Colombia is also an interesting market for Cheminova. It is a rich agricultural country with many exciting crops such as flowers and vegetables. So even though these markets have been hit by economic and political difficulties, South America will play an important role for Cheminova in the coming years. They remain interesting markets for a large number of our products, Bjørn Albinus concludes.
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