1. TRENDS IN THE BRAZILIAN
DISTRIBUTION SYSTEM
FOR AGRO-INPUTS
Wanderson Rodrigues
2013, March, 15

2. Visao fundação Marcelo prado
... our way of seeing

3. 500d e a l e r s
300c i t i e s
25
s t a t e s
A r g e n t i n a
B o l i v i a
B r a z i l
P a r a g u a y
P o r t u g a l
U K
70c o n s u l t a n t s
mpradogc.com.br
15
y e a r s
CORPORATE
GOVERNANCE
100l a r g e
f a r m e r s
60
c o o p s

4. TECHNOLOGY
TRADE
BUSINESS
MANAGEMENT
CORPORATE
GOVERNANCE
1970
-­‐
89
1990
-­‐
99
2000
-­‐
09
2010
-­‐
19
Brazilian
Agribusiness
Source:
Mprado
2011

5. Buying Groups
1%
Coops
21%
Industry
32%
Dealer
46%
Source: KFF Group 2012
WHERE THE BRAZILIAN
FARMERS PURCHASE
THEIR INPUTS?

6. 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

7. FARMERS PURCHASE
OF CHEMICAL PRODUCTS
(agribusiness Size X Channel)
Small Farmers Medium Farmers Large Farmers AG Companies
Direct Sales
Dealers
Redistributors
Redistributors Direct Sales
Dealers
Direct Sales
Channel
17%
50%
17% 16%
Source:Kleffman2012andMPradoSurvey

8. The
actors
in
this
market
need
to
deal
with
it
is
the
weakest
link
in
the
chain
that
defines
their
level
of
compeBBveness
INTEGRATED
VALUE CHAIN

9. GOOD EXAMPLE
MAY 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

10. Who can
best understand the
Brazilian market needs?

11. PANORAMA OF BRAZILIAN
AG DISTRIBUITION
↑ 4,02% in 10 years
↑ 6% average profitability
↑ 1,5% default rate
2002 2011
8.000
8.322
Source: ANDAV 2012 and MPrado

12. 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

13. 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

14. 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

15. 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

16. MANAGEMENT:
Key Performance Indicators
Management reports
Inventory turnover
Sharing decisions
Internal and external communication
Risk management / Credit Management
Environmental regulation
COMMERCIAL:
Customer Management
Sales Force Management
Market Intelligence
Distributors management
Room for improvement
Source: 500 company study MPrado 2012

17. FINANCES:
Annual budget
Cash flow management
Investments Valuation
HUMAN RESOURCES:
Payment by results (wage and benefits)
Performance Evaluation
HR Policies Management
Distributors management
Room for improvement
Source: 500 company study MPrado 2012

18. 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?

19. ”… 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?

20. TRENDS IN THE BRAZILIAN
DISTRIBUTION SYSTEM
FOR AGRO-INPUTS
Wanderson Rodrigues Silva, CCI
Director
wrs@mprado.com.br
+55
(34)
3228-­‐3300
+55
(34)
9192-­‐3366