China: what does the Asian giant expect from its trade partnership with Brazil in the coming months?

By: Paulo Alvares, Director of Regulatory Affairs and R&D at Crop Care and Juliana Shiraishi, Head of Strategic Sourcing at Perterra, a Crop Care holding company

 

China is undoubtedly one of Brazil’s biggest trading partners in various sectors, and this is no different in agriculture. Today, our country is the main exporter of soy and beef to China. On a visit to the country, we noticed an increase in mutual interest in other products and services that both countries can trade.

 

According to data from the Ministry of Development, Industry, Trade and Services, compiled by Insper (a higher education institution that works in the areas of business and economics, among others), Brazilian agribusiness exports reached a historic high in 2023: they totaled US$ 167 billion, up 5% on 2022 (US$ 159 billion). This volume includes various commodities and other goods, such as meat and even forestry products.

 

The Asian giant is one of the largest suppliers of agricultural inputs to Brazil, especially molecules used in crops to manage pests and diseases. However, this figure was slightly lower last year. Also, according to data from the Ministry of Development, Brazilian agribusiness imports fell by 16% year-on-year. Imports of inputs (fertilizers, pesticides, agricultural medicines and machinery and equipment) fell by 32%.

 

In fact, there are some factors that could put a brake on business growth between the two countries, one of which is the process of registering new products. In Brazil, these procedures are considered to take longer than in other countries and are the subject of various discussions and regulatory laws in the National Congress.

 

Every year, new products are launched onto the market and the approval and regulation process has always been a concern for foreign partners. For this reason, Brazilian industry had to do what it does best: create solutions to meet the demands. This is how trading companies were born, with the aim of acquiring agricultural inputs from countries like China for distribution on the domestic market.

 

Within the Crop Care ecosystem, for example, we have Perterra Trading, a company based in Uruguay that was born with the aim of brokering deals with foreign markets. After all, for the business to remain solid, you need to maintain a close relationship with your suppliers. And that goes for any company, in any sector.

 

On our visit to China in March of this year, we had the opportunity to further strengthen our relationship with Chinese partners, as well as to hear what the market expects.

 

One point worth highlighting is our importance as a global agricultural power. Yes, China is a major producer, but there’s no way it can be a major producer without relying on Brazil to transport its goods. This is an important point that helps sustain our partnerships. What’s more, it’s a relationship that has always been friendly, very friendly.

 

From the point of view of those who have contact with this market 24 hours a day and seven days a week, the technological investment in sites and new production plants in China is something never seen in other parts of the world. Brazil is at an advantageous point for business, being the productive hub that it is.

 

Another fact observed in conversations is that many of the large molecule manufacturers are looking for distribution services, which is very positive, as it demonstrates their interest in continuing to sell already formulated products, and not just active ingredients and raw materials. Many people are worried about prices, which are at their lowest for five years. There are complaints about the losses, mainly related to the shrinking harvest we are seeing.

 

However, there is room for great expectations and positivity regarding the movement of the market. Despite the concern, there is no fear of a possible shortage of products, either for import or export. And above all, despite the regulatory scenario, which could have an impact, foreign partners have good prospects for the development of new molecules and registrations.

 

Caution and good analysis are fundamental elements when closing a deal. Many consultancies and analysts point to a difficult market at times for agribusiness for the 2024/2025 harvest. But despite this, we take some comfort in knowing that our biggest trading partners continue to have an optimistic and confident outlook on the Brazilian market.

 

About Crop Care

Crop Care is a Brazilian holding company that operates in the chemical, biological, and specialty fertilizer market. Among Crop Care’s investments are Agrobiológica Sustentabilidade, an innovative platform for biological and on-farm solutions; Perterra and K2, which have an extensive post-patent agrochemical portfolio; Union Agro, a leader in specialty fertilizers; and Cromo Química, which specializes in the production of high-performance adjuvants and enhancers for agriculture. By means of partnerships with distributors and cooperatives, and direct access to agricultural companies, Crop Care is present in major producing regions in Latin America.

 

Press Information: 

Hill + Knowlton Brasil 

Ana Lívia Lopes | + 55 11 98845-7142

Gisele Gomes | + 55 11 99103-0946

Thiago Salles | +55 11 95602-8627

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