May 27, 2011
Agricultural Input Sales in Brazil to Increase 10-15% in 2011
Agricultural input supplies in Brazil are expecting 2011 to be a very good year. Brazilian farmers are coming off a good production year and commodity prices are very attractive. Prices are strong for all the major commodities in Brazil including: soybeans, corn, cotton, sugar, and coffee. According to a study released by the Federal University of Lavras in Minas Gerais, rural incomes in Brazil increased 26% over the last twelve months.
Input supplies hope the higher incomes translate to increased sales of their products and there are already signs of that happening. The Brazilian Association of Machinery and Equipment Manufactures (Abimaq) is forecasting that agricultural equipment sales will increase 15% in 2011. John Deere, the largest manufacturer of agricultural equipment in the world, is expecting the sales increase to surpass 15%. The demand is so strong for specific machinery that the wait time for delivers can be as long as one year.
The longest wait time is for mechanical sugarcane harvesters. The federal government is phasing out the practice of burning sugarcane fields in preparation for harvesting the sugarcane by hand. As a result, sugarcane growers must purchase mechanical harvesters, but there are only two manufactures in Brazil and the demand for the harvesters has outstripped the production capacity.
The Brazilian Association of Agricultural Limestone Procurers (Abracal) has indicated that there have been strong sales of limestone thus far in 2011. During the first four months of 2011, sales totaled 406,000 tons, which was just short of the record sales set in 2004. Estimates are that for 2011 sales will total 2.5 million tons of limestone, just short of the record of 2.75 million tons sold in 2044. Last year, farmers in Brazil purchased 1.85 million tons of agricultural limestone. Abracal indicated that 6 million tons of limestone would be needed to correct the acidity of all the agricultural lands in Brazil.
The National Association of Fertilizer Distributors (Anda) is forecasting that fertilizer sales in 2011 will reach 26.0 million tons or an increase of 6% compared to the 24.5 million tons sold in 2010.
Suppliers of seed and chemicals are expecting sales to increase of 10% to 15% compared to last year.
Brazilian farmers are expected to expand their crop acreage in 2011/12, but more importantly, farmers are trying to maximize their productivity on acres already under cultivation. New regulations concerning environmental laws and foreign ownership of farmland is making it more difficult to clear new areas to expand production, so farmers are concentrating more on land that has already been cleared.