Brazilian inputs market should return to normal in 2024, says Lavoro CEO

Ruy Cunha, CEO of Lavoro, has stated that the market for the distribution of agricultural inputs is returning to normalcy in Brazil. 

According to the head of the largest Brazilian company in this segment, the free fall in prices of pesticides and fertilizers has been halted, and the high inventories at retailers are almost balanced.

"We already see a trend of stabilization and recovery in the prices of fertilizers and agrochemicals from our suppliers, and this will reach the end consumer," Cunha stated at a recent event. According to the results, Lavoro had a 24% higher net revenue in the 2023-24 crop, reaching $1.8 billion.

"Margins should start improving in the coming months. We already see this in our order book," said the CEO, who expected revenue to grow to 28% in 2024. He pointed to the increase in barter contracts in the retail segment as producers seek more ways to finance costs and protect themselves from price drops. "We may still see some reflection of excess inventory in the coming months, but they are already on the way to normalization," Cunha said.

For the Lavoro CEO, retailers will complete the adjustment process by the end of 2023: "In January, February, or March 2024, inventories should be normalized," he said. Citing glyphosate as an example, he highlighted a 65% price retraction in 12 months. In the case of phosphated fertilizers, prices plummeted nearly 60%.

Expectations are higher for Lavoro's Crop Care business unit, which includes the segments of biologicals, foliar fertilizers, and chemical imports. The unit has been increasing its representativeness in the company mainly due to the advancement in the sales of biologicals. "There is a demand related to the sustainability theme, pest resistance, and increased productivity. This will not change," he said in conclusion.

(Editing by Leonardo Gottems, reporter for AgroPages)