The seed is considered the basic input for productivity. It is one of the factors that defines success or not and the choice depends on many factors. The seed market moves more than R$ 10 billion per year in Brazil, which has the third largest industry in the world in the sector. Corn and soybeans account for about 85% of the market. The contribution to research, genetics, cultivars resistant to diseases and pests, competitiveness and many good quality options on the market is reflected in the distribution sector. The subject was discussed in the live “The Seed Industry and the Consolidation of the Brazilian Agricultural Market”, promoted by SeedCorp this Thursday (9). The meeting was attended by Syngenta, CropLife Brasil, Nutrien, Aqua Capital and Consultoria Céleres.
Brazil has just confirmed a record grain harvest, worth 251 million tons. How important is the seed at this moment? 10 years ago, a large number of producers thought they could make soybean seed and today this has reduced significantly, leaving only specialized companies. With techniques that preserve the characteristics of the seed that comes from the field and biotechnology, the value of soybean seed has risen around 6 times compared to what it was in the 90s, for example.
“In 5 years the way of negotiating, producing and distributing will change profoundly”
This is the bet of Anderson Galvão, founder of Consultoria Céleres, focused on agribusiness analysis. For him, the scenario is one of an increasingly qualified, informed producer who invests in technologies that will bring results and the seed has become a great element of value. Based on this, distribution had to adapt with a series of services to meet this demand. “The seed industry is continually developing and is already ahead of the regulatory framework. We need legislation accompanying this rapid movement to provide intellectual security for those who develop the cultivar and for those who distribute it”, he bets.
Furthermore, acquisitions in the sector lead to a consolidation of the retail service. The soybean seed industry, for example, started much later than the corn industry, but gains importance as the oilseed becomes the country's main crop and is also the entry point for the harvest.
For André Dias, director of Nutrien Brasil, having access to several options and the best soybean cultivars makes the company's relevance high with the producer. “You cannot look at any input in isolation and this has also changed the work of distribution. If before it was just about selling, today it's about integrating everything. As there are many options, the producer needs someone to help him and that is where distribution comes in. Not only with the right seed but with effective fertilizer and the right pesticide applied”, he argues. For him, consolidation is a consequence. “There are several distribution models being established but the market is likely to undergo changes in the coming years. Access to seed, sales force and having a good portfolio makes a difference for any company”.
“Seed is the basis and the biggest business of agricultural renewal”
Research shows that today a soybean cultivar has an average life cycle of 5.7 years. This means that if today a producer bets everything on one variety, five years from now he will have another. For André Franco, Head of Seeds at Syngenta for Brazil and Paraguay, seeds are the basis of agricultural activity and the biggest agricultural renewal business. Syngenta, for example, renews around 15 % of its portfolio every year. “The consolidation of the business allows this. Contribute not only technology but knowledge”, he states. Advances have led to requirements such as a cold room for soybean seeds and controlled drying outside the field. Issues that weren't talked about recently. “The producer’s choice is strategic, which to cultivate and where to place it, which technology to use.
This embedded technology demands investment from companies, whether in biotechnology or technology to develop new cultivars and maintain these technologies that are quickly overcome by resistance”, he explains.
For Tomás Romero, Partner at Aqua Capital, in consolidating in the distribution market the biggest advantage belongs to the farmer because everyone will think about how to support him to produce more. “The big boost from now on comes from the value of the bag with high technology, germination and delivery capacity in the field and whoever manages to bring a different seed will also make a difference in the market. This demands genetics, improvement and efficient distribution and work in the chain and close to the farmer”, he projects.
Personalized service
The executives argue that advising farmers to choose good cultivars will bring a new direction to the role of distribution, supporting and creating a link between the crop and the input and not just a sale. Today it is possible to customize by municipality, but the future brings the challenge of serving each property in a unique way, according to the needs of that location.
At this point, digitalization could be the sector's bet, as highlighted by the Syngenta executive. “Digital will make a difference. It’s a new moment, more connected, efficient production systems, faster research and more personalized sales in each property and this is a monstrous revolution”, highlights Franco.
To achieve this goal, it is also important to accelerate connectivity in the field. “The farmer is increasingly a sophisticated agent, who seeks a level of service and this leads to improvements in the production process. In digital, we have to hope that connectivity keeps up with the speed of technologies in agriculture”, ponders Galvão.
The seed industry faces some difficulties that include illegality, as pointed out by Christian Lohbauer, executive president of CropLife Brasil, an entity that represents several areas of agribusiness. In seed piracy, losses total more than R$ 2 billion to Brazilian agribusiness. “Here the problem is illegality in the seed and this has to be combated. The germination rule is 80% but if anything less than that is accepted, there is piracy which is difficult to track and arrest gangs. We are concerned with ensuring that quality, market homogeneity and illegality are discussed and combated at the seed level”, concludes the leader.
Source: agrolink
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