For the first time in our country, the agro-industry will have a monthly and annual report on the real prices of agricultural inputs, and it will do so with the help of Agrocompra, the first digital market for agricultural inputs.
“What we always dreamed of when we opened Agrocompra was that from this digital ecosystem, which by its nature generates a lot of information, we could share, for example, the evolution of agricultural input prices, with the same users, agricultural companies, farmers, so that they could be up to date with what is happening, not with what is happening in the global stock markets with prices or with historical values, but rather with the average real price that they could access, that is, the average purchase price that farmers pay in Chile.” explained Max Donoso, Founding Partner and Director of Agrocompra.
This is how, based on the hundreds of quotes that Agrocompra received during 2022, they prepared a complete annual evolutionary report that graphs the behavior of the prices of fertilizers, some phytosanitary products and agricultural diesel during the corresponding period.
“It is the first report that exists in Chile on average prices, published, of objective quotes from many suppliers, so we said: if we have this information that is linked to the real market, well why don’t we make it available, and not only that, we build evolutionary graphs; because one thing is to know the price of the month, but it is more interesting to know the trend of these prices… Are we in a market that is going up or down? We wanted the producer to have visibility for the first time of what was happening here,” added Max Donoso.
Prices of agricultural inputs during 2022
If during 2021 the agricultural inputs scenario, mainly fertilizers, was strongly hit by the rise in prices, linked to the gas and oil situation, during the first half of 2022 a new ingredient was added that generated a peak never seen before: the war between Ukraine and Russia, one of the largest producers of nitrogen fertilizers internationally, which caused very significant increases.
“Urea in Chile reached $1,300,000 per ton, something that had never been seen in history and in addition Chile is faced with the political and constitutional situation, where the dollar plus the whole issue of inflation generated a huge escalation of the dollar, and they adjusted at once, ADDED TO a situation of sky-high international prices and a very high exchange rate; and I add the third, a situation of freight costs still sky-high, so there were three good reasons to explain these price increases, that peaked in the war, this fundamentally affected prices during the end of the first quarter and the entire second quarter, where the market had immense volatility with brutal costs and the market became very complex”, Donoso explained.
According to the Agrocompra price report, agricultural input prices began to stabilize at the end of the first half of 2022.
“Starting in June, prices began to stabilize and began to fall, international prices began to fall, the impact of the drop in freight rates began to be seen and the dollar began to lose ground a little, so we saw a fairly consistent drop in prices during the second half of the year, ureas returned to values of $800 thousand, then the price of fertilizers began to stabilize, particularly those linked to the world of oil and gas,” detailed Agrocompra.
As with urea, the prices of Liquid Phosphoric Acid, Soluble Muriate of Potassium (Potassium Chloride) (KCL), Soluble Potassium Nitrate, Soluble Magnesium Sulfate Heptahydrate, Soluble Monoammonium Phosphate (MAP), Granular Super Triple Phosphate (TSP) (SFT), Soluble Zinc Sulfate, and Soluble Potassium Sulfate also stabilized and tended to decline during the second half of the year. A different situation occurred with Granular Muriate of Potassium (Potassium Chloride) (KCL), which although it had a significant drop during the month of October, rose again in the last quarter of 2022 due to a specific situation, but that does not break the downward trend.
“The difference with nitrogen is that it is linked to oil and gas, so when oil and gas begin to normalize their supply in Europe, from Ukraine and other sources, prices begin to drop; now, muriate of potash and phosphorus behave very differently from oil-linked products, because they have to do with global production capacity and global demand from agriculture,” warned Max Donoso.
Currently, international markets are showing a slight downward trend in nitrates and phosphorus, however, at this stage of the year there is not much movement so an updated figure could be unrepresentative.
What happened in the field?
Faced with the complex situation related to the rise in agricultural inputs, producers were expected to reduce their purchases of these products as much as possible, relying on soil and foliar studies that would allow them to know the exact type and quantity of products their crops required.
“Everything that was fertilization until August was very, very optimized, in fact, lagging orchards were left behind that were not worth producing, people cut back on their volumes, they must have emptied the warehouse stock they had; we discussed at the beginning of the year that demand was going to shrink by 15 percent and everything indicates that the fertilizer market did so by up to 25 percent in 2022.”, said Max Donoso.
Added to this were stock shortages; according to data provided by Agrocompra, in this context there were problems with some important products, including Calcium Nitrate and Phosphoric Acid, as well as some Potassium Acids.
This first report on average prices of objective quotations made available to the industry by Agrocompra is based on real data that allowed the creation of a document with specific information on sales prices in Chile, that is, a useful x-ray of the local agricultural inputs market.
“The more farmers receive their quotes and close their deals through Agrocompra, the more information we will have and the closer we will get to the reality of prices in Chile and its different areas. In a perfect world, if all transactions went through Agrocompra we would have the market in sight, it would be like the online market for prices; the invitation is: quote, compare and buy through Agrocompra so that we can also have real market information that will be available to the agroindustry.” concluded Max Donoso.
