newag rio 2013 mprado wanderson - agro-inputs distribution
DESCRIPTION
That was an speech at 13o NewAg International Conference in Rio de Janeiro March,15, 2013.TRANSCRIPT
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TRENDS IN THE BRAZILIAN DISTRIBUTION SYSTEM
FOR AGRO-INPUTS
Wanderson Rodrigues2013, March, 15
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Visao fundação Marcelo prado
... our way of seeing
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500d e a l e r s
300c i t i e s
25s t a t e s
A r g e n t i n aB o l i v i aB r a z i l
P a r a g u a yP o r t u g a l
U K
70c o n s u l t a n t s
mp
rad
og
c.c
om
.br
15y e a r s
CORPORATE GOVERNANCE
100l a r g e
f a r m e r s
60c o o p s
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TECHNOLOGY
TRADE
BUSINESS
MANAGEM
ENT
CORPO
RATE
GOVERN
ANCE
1970 -‐ 89
1990 -‐ 99
2000 -‐
09
2010 -‐ 19
Brazilian
Ag
ribusiness
Source: Mprado 2011
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Buying Groups1%
Coops21%
Industry32%
Dealer46%
Source: KFF Group 2012
WHERE THE BRAZILIAN FARMERS PURCHASE THEIR INPUTS?
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INPUTS SOLD BY THE DISTRIBUTION CHANNEL(Dealers and Coops)
66%Agro-inputs
45%Fertilizers
60%Crop Protection
82%Seeds
↑2012
Source: ANDAV 2012 and MPrado survey with industries
(Dealers and Coops)
$1,7 bi
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FARMERS PURCHASEOF CHEMICAL PRODUCTS
(agribusiness Size X Channel)
Small Farmers Medium Farmers Large Farmers AG Companies
Direct SalesDealersRedistributors
Redistributors Direct SalesDealers
Direct SalesChannel
17%
50%
17% 16%
Sour
ce: K
leffm
an 2
012
and
MPr
ado
Surv
ey
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The actors in this market need to deal with it is the weakest link in the chain that defines their level of compeBBveness
INTEGRATEDVALUE CHAIN
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GOOD EXAMPLEMAY 2012
Syngenta supported some dealers to capture 86Mi R$ in a transaction using CRA at Bovespa Securities Market.
The goal was to capitalize some of the dealers, help them to become more competitive and enable them to sell a
range of products (chemicals, seeds and fertilizers).
Source: Syngenta Press Release 2012
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Who can best understand the
Brazilian market needs?
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PANORAMA OF BRAZILIAN AG DISTRIBUITION
↑ 4,02% in 10 years
↑ 6% average profitability
↑ 1,5% default rate2002 2011
8.0008.322
Source: ANDAV 2012 and MPrado
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THE RUIN OF AG DEALERS IN BRAZIL
(main causes)Lack of corporate governance
§ High levels of farmers’ default
§ Indebtedness with suppliers and banks
§ Low quality Management
§ Disharmony between partners
§ Misalignment in partnership with industries
§ Small product portfolio
§ Expansion and diversification poorly planned
§ Difficulties in complying with the local, state and federal laws
Source: ANDAV 2011 and Mprado
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MAIN CHANGES IN FARMING BUSINESS
• Prioritizing main crops • Outsourcing services• Strengthening partnerships with dealers and industries• Adopting Hedging• Using of state of the art ag technology (seeds mainly)• Valuing better trained and prepared workers • Implementing management information systems (ERP)• Professionalizing marketing and management
Source: 500 company study MPrado 2012
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MAIN CHANGES IN CROP PROTECTION BUSINESS• Crop industries merge and takeovers• Growth of generics• Molecules Exchange between industries to maximize portfolios• Customer segmentation• Business Clusters (geographical - customers - crop)• Formal Business Agreements with dealers• Solidification of partnerships à industries / dealers• Plant Protection moving from chemicals to seed resistance
through biotechnology
Source: 500 company study MPrado 2012
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SCENARIO AND TENDENCIES IN THE DISTRIBUTION OF AGRO-INPUTS• Expansion of Dealers (concentration)• Improvement in professional management• Investment in education to develop talents• More compliance with the Law: tax, social, environmental• Sales Force Automation and CRM• New services and integrated solutions• Strengthening of relationships with main suppliers• Rigidity in credit management for farmers• Importance of dealer capitalization to offer fertilizers• New Business Models (partnerships among dealers and between
dealers and other players like food industries)
Source: 500 company study MPrado 2012
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MANAGEMENT:
Key Performance IndicatorsManagement reportsInventory turnoverSharing decisionsInternal and external communicationRisk management / Credit ManagementEnvironmental regulation
COMMERCIAL:
Customer ManagementSales Force ManagementMarket Intelligence
Distributors managementRoom for improvement
Source: 500 company study MPrado 2012
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FINANCES:
Annual budgetCash flow managementInvestments Valuation
HUMAN RESOURCES:
Payment by results (wage and benefits)Performance EvaluationHR Policies Management
Distributors managementRoom for improvement
Source: 500 company study MPrado 2012
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What does the future hold for Agro-inputs distribution in Brazil?
In the future, the local distribution of agrochemicals will follow the American or
European model?
Farmers will keep buying products or convenience services?
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”… 40% of the increase in global agricultural
production will come from Brazil
in the next years. “Marco Antonio Nasser, Chairman of the Board ANDAV
What are going to do?
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TRENDS IN THE BRAZILIAN DISTRIBUTION SYSTEM
FOR AGRO-INPUTS
Wanderson Rodrigues Silva, [email protected]+55 (34) 3228-‐3300+55 (34) 9192-‐3366