Growth of the bioinputs market should drive mergers and acquisitions

The growth of the Brazilian biological inputs market, stimulated by the implementation of the National Bioinputs Program and the search for sustainable food production, should boost mergers and acquisitions (M&A) activities in Brazil, according to a report by Redirection International, a specialized consultancy in mergers & acquisitions, recently published. The study mapped the Brazilian agricultural input industry and highlights the factors that place the Brazilian market as one of the most attractive for investments in the biological sector.

According to the report, the adoption of bioinputs has grown increasingly in Brazil and presents itself as an alternative to chemical products that, in general, are highly dependent on the international market. As an example, despite Brazil being one of the largest food producers in the world and the fourth largest global consumer of fertilizers, around 80% of the inputs consumed in the country are imported.

“The conflict between Russia and Ukraine has exposed the country's fragility and dependence on some agricultural inputs, making it more vulnerable to soaring international prices. Therefore, attention is increasingly turning to alternatives, such as soil remineralization and the use of bio-inputs, which involve the use of raw materials of biological origin, such as microorganisms, plant, organic or natural materials”, explains the economist and partner at Redirection International, Vinicius Oliveira, one of those responsible for the study.

According to data from CropLife Brasil, an entity that represents the input industry, sales of biological products grew 30% in 2023 and the expectation is to close the year with growth of 35%, generating around R$4 billion in the country. The potential of the national bioinputs market is also highlighted in a 2022 Embrapa Soja publication, which projects that the sector will reach a volume of R$16,9 billion in 2030.

In addition to reducing Brazil's dependence on the international market, other factors should also boost investments in the organic products industry, such as, for example, the global trend towards environmentally sustainable agricultural crops (prioritizing products that already exist in nature and reducing the use of chemical inputs) and increased productivity and food security.

The Redirection International report also points out that the results of the use of biological inputs are very encouraging and cites the case of a publicly traded company that adopted the exclusive use of these inputs in crop management, obtaining gains of up to 15% in grain productivity in Rio Grande do Sul and increasing the quality of products such as coffee, for example.

“As this is an embryonic market, it is still subject to regulatory issues, especially ‘on farm’ production, which is carried out on the rural property itself and which, normally, does not follow strict quality control criteria. Many studies already point to the risks of this type of homemade production, both for human health and the environment. Therefore, there is an expectation for the regulation of the production chain and the professionalization of the sector in the coming years, mainly due to the implementation of the National Bioinputs Program, launched in 2020, which should encourage industrial development in this segment”, highlights Vinicius Oliveira.