Brazilian fertilizer distributors association Anda expects domestic sales to fall 5% in 2008 compared to last year due to the global financial crisis and the resulting lack of credit.
In October, 2.31Mt of fertilizers were distributed in Brazil compared to 3.15Mt in the same month of 2007.
"This year was good up to September, but credit restrictions hit the agriculture sector after that. October historically is a time when demand for fertilizers is highest but this year it registered a significant drop," Anda's executive director Eduardo Daher told BNamericas.
Initially, the fertilizer sector was expecting record deliveries in 2008 and growth of 4-6%. "Now I don't think we can even reach 24Mt. It will be a victory if we finish the year close to that," Daher said.
According to the executive, the government has announced plans to free up credit for the agriculture sector, but producers have yet to see it.
In addition, the fall in sales caused an increase in fertilizer stocks, which totaled 6Mt in Brazil at the beginning of the fourth quarter. "Usually at this time of the year stocks stand between 2.5Mt and 3Mt to supply the first quarter of the following year," Daher said.
Even though the fertilizer industry cut production and held off on imports, stocks are high because the sector is not able to deliver, according to the executive.
"We have registered record sales since 2007, but 2009 and 2010 are going to be weak," Daher said, comparing the next two years to 2005-06, when Brazil's agriculture sector faced a difficult period due to a weak currency, drought and soybean rust.
According to Daher, it is too soon to make predictions about next year. "We have to wait for the results from November and December."
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