The effect of the pandemic affected supply chains globally, many plants in the world stopped operations, others operated at medium capacity and also had repercussions on the logistics process and that generated shortages of some agrochemicals that are used in agriculture in some countries that are suppliers of Mexico, as Nery Echeverría, commercial director of Bayer Mexico in interview with The Economist.
“Some types of fertilizers have increased in real terms, double and others up to triple compared to the same period last year. The main causes are the high rises in natural gas prices, in the case of nitrogenous fertilizers, where 80% of the cost depends on energy, and to this is added the uncertainty and volatility in commodities, the pandemic and the current situation in Ukraine, these elements have caused the rise in the prices of agrochemical inputs such as fertilizers”, he said.
What does war have to do with the countryside?
Russia and Ukraine produce more than 30% of nitrogenous fertilizers worldwide, when you have two countries, one practically living a war and the other with some important restrictions that have been issued by countries such as: the United States, the European Union, among others, in against Russiawhich puts production in check.
China produces about 25-26% of the global production of nitrogen fertilizers and also other countries such as Egypt, however, scarcity and demand raise the cost of a fundamental input for the production of basic grains and puts the entire production in check. agriculture,” Echeverría said.
Additionally, Ukraine is the world’s fourth largest exporter of wheat and corn, “the war casts serious doubt on whether they will be able to plant corn in April and May, the most important planting window, and poses a challenge to the rest of the countries such as Egypt, which They have put some of the export restrictions. When you put all this together, that is reflected in Mexico, because we import wheat, corn, soybeans, and the prices of commodities are already high, which directly affects the price of food, such as tortillas.”
The sector
Generally speaking, the agricultural sector in Mexico in recent years it has been a sector that has been growing, especially in export crops, such as: vegetables, berries, avocado, which is reflected in the trade surplus in the agricultural balance of almost 13,000 million dollars.
“Specialized export crops have grown, however, in the production of basic grains we have not grown at the same rate, on the contrary, our dependence on imports has been increasing.
“The outlook looks positive, but the impact of the pandemic and Russia’s invasion of Ukraine generates uncertainty and/or imbalance in the prices of some key inputs such as fertilizers, fuels, and this situation puts farmers with more reserves in the decisions on how much to invest and how to make better use of the resources you have for your investment”.
Trends
Nery Echeverría considered that a very important trend is the digitalization of agriculture, for three years and the perspectives mark relevant advances in the next five years that will revolutionize the way of doing agriculture in Mexico and in the world.
“In other countries, the use of digital tools focused on precision agriculture is growing, where you put the amount of seed, fertilizer and pesticides that the plant actually needs.”
Another trend is towards certification, more and more, the countries to which we export (United States, Japan, Canada, the European Union) require more certifications from the producing countries.
He considered that the consumption of organic products has grown, not at levels as thought, but the demand will continue in the coming years.
“We have three large product units: seeds, crop protection, which includes agrochemicals and biological products, and digital agriculture. For a decade at Bayer we have made the strategic decision to move towards more environmentally friendly products and towards research”, concluded Nery Echeverría.
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