BRAZILIAN SEED MARKET NEWS. By MNAGRO

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1 BRAZILIAN SEED MARKET NEWS By MNAGRO AGRIBUSINESS IN BRAZIL KEEPS GROWING CONAB, the Brazilian Agriculture Supply government entity recently estimate what should be the last figure for Brazilian grain and fiber production for crop. They estimated it on 186 million tons which represents an increase of 12% compared to the previous year crop that was 166 million tons. The is the largest crop in Brazil history. The last figures include some increase on corn production comparable to previous forecast. The corn production will be 80 million tons. This means a 10% compared to 2011/12 crop. Soybean production is 81,5 million tons which mean a growth of 22,7% or 15,1 million tons compared to crop. The total production of grain and fibers indicate a growth of 4,7% in planted area combined with a 7% growth in yield. The technology used in agribusiness resulted in an important growth in volume rather than just in area. The combination of better cultivars, agricultural input and crop management practices increased the yield in several crops in Brazil. In the ISF publications, Brazil is considered to have a seed market of approximately USD 2.6 billion, at prices seed companies practice with dealers and distributors. The Brazilian seed market value is much higher than this at price paid by growers. In a preliminary calculation done by MNagro, the corn and soybean seed market add up to USD 2.5 billion, at price paid by farmers. Besides these two species, we have many others such as wheat, cotton, rice, sorghum, sunflower, dry beans and others that have an important market value. The recent data published on vegetable seed market indicates a value between USD million, at price paid by growers. The forage seed market estimates USD 400 million, based on UNIPASTO information. Grass seeds had a growth based on the expansion of beef cattle business, due to the fact that Brazil became a key player on meat exportation the past few years. In addition, Brazilian grass (forage seeds) has being exported a lot more recently. In segments like rice, the utilization of hybrids increased, as well as in other segments. The expectations are that farmers decrease the use of "saved seed" and start using improved seeds. Wheat is another crop in which private companies have gained 1

2 market share. Sorghum grain and forage had a good expansion in last two years. More recently sweet sorghum was introduced in Brazil to be a potential crop to complement sugar cane in ethanol production. SOYBEAN SEEDS IN BRAZIL- VERY BIG BUSINESS Soybean crop history in Brazil is an example of fast growing expansion. By the year 1980 around 9 millions soybean hectares were cultivated and now it is around 27 millions! The soybean production at that time used to be about 15 million tons and now is about 81 million tons. This is about 523% increase. It is estimated Brazil has around 500 seed companies and more than 1000 cultivars are registered at National Registration Service. It is considered 18 companies do soybean breeding in Brazil and about 380 breeders are working on this specie. In addition there are about 650 seeds processing units to clean and package the seeds and about 250 seeds labs works on quality control of such seeds. There is an estimate that more than 5000 agronomist works on the seed segment of such crop. Seed market value is estimated around 800,000 to 1 billion dollars. This value will keep increasing with the new traits being incorporated on the new cultivars. (Source: Seeds News magazine). BRAZIL CORN HYBRIDS OFFERED TO GROWERS REACH ALMOST 500 FOR CROP The Brazilian corn seed companies offers almost 500 hybrids in the market for the 2012/13 crop. Conventional hybrids represent 55% of the total, while GMO represent 45%. It is an interesting fact since corn cultivated area with GMO is much bigger than the one with conventional hybrids. From the total 479 cultivars, 93 were introduced this year, while the 103 offered last year dropped out. From the 93 new cultivars, 5 are conventional and 34 are new cultivars introduce with a one GMO trait. When considering only GMO cultivars, we can find that 87 new cultivars were introduced in the market, while 42 dropped out. In the conventional segment, 6 news cultivars were introduced while 61 dropped out. 2

The information above was collected directly from seed companies and their promotional materials, as well as Seed Associations. Usually each GMO cultivar has a conventional version.

3 The information above was collected directly from seed companies and their promotional materials, as well as Seed Associations. Usually each GMO cultivar has a conventional version. See in the graph below the distribution between single cross hybrids, three ways, double hybrids and open pollinated varieties. Early matured cultivars represent 71% of the total, while very early are only 22%. Cultivars in medium and normal (late) maturity represent 7%. Among GMO cultivars, 78% are simple hybrids, the others are three ways. GMO cultivars The GMO cultivars existing in the market are a result of 5 traits for worm control: TC 1507 (Herculex I ); MON 810 (YieldGard ); MON (YieldGard VT PRO ); Bt11 (Agrisure TL ); MIR162 (TL VIP ) and two traits for glyphosate herbicide: NK603 (Roundup Ready ) and GA 21 TG. Besides these two, there is Liberty Link for herbicide tolerance based on ammonium glufosinate for Herculex I corn. Follow the 168 Bt corn cultivars: 54 cultivars with VT PRO ; 54 cultivars with Herculex I ; 35 cultivars with YieldGard ; 18 cultivars with Agrisure TL and 4 cultivars with TL VIP ; 4 cultivars with Herculex I and YieldGard. 3

There are 38 GMO cultivars for worm and herbicide glyphosate and glufosinate: 12 cultivars with VT PRO, Herculex I and Roundup Ready 10 cultivars with VT PRO and Roundup Ready 9 cultivars with

4 There are 38 GMO cultivars for worm and herbicide glyphosate and glufosinate: 12 cultivars with VT PRO, Herculex I and Roundup Ready 10 cultivars with VT PRO and Roundup Ready 9 cultivars with Herculex I and Roundup Ready 2 cultivars with YieldGard and Roundup Ready 2 cultivars with Herculex I, YieldGard and Roundup Ready 2 cultivars with Agrisure TL, TL VIP and GA21 1 cultivar with Agrisure TL and GA21 There are still 9 GMO cultivars resistant to glyphosate herbicide applied to post-emergency corn. IMPROVED RICE SEED UTILIZATION IS INCREASING IN BRAZIL Improved rice seeds (only for irrigated rice) utilization has reached more than 50% on the 2011/12 crop. This increase meant additional sales of more than 1 million seed bags (40kg each bag). During the 2009/10 crop improved rice seeds were used in only 35% of the planted area. The reasons for this increase were: Introduction of new and superior varieties and hybrids with better ability to react to modern agriculture supplies and also to have better tolerance to low temperatures and iron toxicity; The implementation of better crop management practices specially by Embrapa and IRGA. This project showed that rice growers can get much higher yield if they use the correct number of plants per hectares, as well as appropriated fertilization, adequate irrigation practices, weed control and pest and disease controls. 4

5 Average yield of irrigated rice is approximately 7.5 tons per hectare in view of all these procedures. Seed treatment is another positive procedure for the crop. The bigger use of improved seed shows that the rice growers are more professional and they are conducting their rice farms during the past few years much better. THE WHEAT SEED BUSINESS IN BRAZIL The 2011 wheat crop in Brazil produced one of the greatest harvests during the last few years, in both productivity and quality. Wheat production is estimated in 5.6 million tons, compared to 5.02 million tons in the last one. Even with a reduction of 11.8% in acreage, wheat production will increase by 11.5% in volume. Southern Brazil is the center of this production. Brazil has a good wheat research program. Recent information indicates that there are 7 organizations that develop wheat breeding: 3 are public and 4 are private. All organizations are releasing about 5 wheat breeding cultivars per year. At this time, more than 40 cultivars are available for farmers. More recently, we see more seed groups becoming interest in creating wheat breeding activities. In order to do that they try to use experienced breeders that are retiring from public institutes. As far as seed producers go (seed companies) in Brazil, approximately 120 companies are offering 120 cultivars. Most of the seed companies are located in Southern Brazil. Assuming a planted area of 2.5 million hectares, seed utilization of 120kg per hectare represents a potential demand for 300,000 tons of seeds. Considering that only 70% of the area sowed uses improved seeds, the demand is reduced in about 210,000 tons. Considering an average price of USD 0.58/kg gives us a market value of USD 120 million. The Southern region represents more than 90% of planted area. See below the wheat concentration in Brazil. 5

6 FORAGE SEED BUSINESS IN BRAZIL The forage seed demand come mainly from grass. Recently there was a big increase due to the fact that Brazil has more than 200 million cattle and it became a very important meat exporter country. Today it represents 17% of the world market. The second reason is that beef and milk cattle farmers are using more technology in order to get more kilograms of meat or liters of milk per hectare. The biggest part of beef cattle in Brazil is raised in natural pastures at open fields. Statistics indicate that Brazil has approximately 60 million hectares of natural pasture and 120 million hectares of cultivated pastures from which 8 million hectares are renewed every single year. The 180 million hectares of pasture are 3 times more than the area used for grain production in the country (50 million hectares). Forage seed production in Brazil reached about 120,000 tons in 2007, decreasing to 60,000 tons in 2008 due to climatic conditions. We can estimate the most recent demand for forage seed is more than 90,000 tons and it has a value of more than USD 400 million. Only Brazil exports approximately 60,000 tons of forage seeds every year that represents about USD 60 million. Forage seeds represent 18% of the whole Brazilian seed market and it has called foreign companies attention the past couple of years. 6

volume and fourth in value among the ones we studied in the project.

7 ONION A BIG VEGETABLE CROP IN BRAZIL Onion is one of the largest vegetable crops in Brazil. According to information we estimated on the project mentioned above, we found out onion is the third specie in volume and fourth in value among the ones we studied in the project. Onion is still a very important seed market in Brazil, in spite of the high percentage of OP cultivars utilization. Among all the 17 segments that were part of the project, 7

8 onion seed value is the second one. The use of hybrids by growers associated with high density system applied in central areas in Brazil is making the onion seed market value increase. In the central region growers use hybrids that cost about USD per kg of seeds, while in other regions we see growers using OP varieties that cost USD per kg. There is a very high percentage of the market to be converted to hybrids which will have a tremendous increase in the seed market value. Part of the onion seeds sowed in Brazil is produced in Southern States. 8

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