Feb. 02, 2015
Sumitomo Corporation Acquires 65% Stake in Agro Amazonia Produtos Agropecuarios in Mato GrossoCreating New Kind of Distributor of Agricultural and Livestock Supply in Brasil
Sumitomo Corporation (“Sumitomo”) and Agro Amazonia Produtos Agropecuários Ltda (“Agro Amazonia”) announced their agreement to have Sumitomo acquire a 65 percent share of Agro Amazonia, a distributor of farm and livestock supply (i.e. agrochemicals, fertilizers, seeds, veterinary products, wires, and more) located in the State of Mato Grosso, the largest granary and producer of soybean, cotton, maize, sunflower and beef cattle in Brasil. This investment gives Sumitomo an entry point for multifaceted distribution of products and services offered to farmers in the Brazilian agribusiness. This deal also represents the first full-scale investment of its kind in the State of Mato Grosso, by a Japanese company.
“We are pleased to partner with such a leading company like Agro Amazonia”, said Shoichiro Oka, President, Sumitomo Corporation do Brasil. “Together we aim to build a sustainable agribusiness model that mutually generates profits and environmental preservation, and helps increase agricultural and livestock production in the company's operating regions, through unique services and a complete portfolio of products for farmers and ranchers who are contributing to the stable supply of food in the world.”
In recent years, Agro Amazonia has been expanding its presence and growing its business in neighboring states. Through this partnership with Sumitomo Corporation, Agro Amazonia will advance its efforts to strengthen and solidify its business base and contribute more to Brasil’s mission for “Sustainable Development of Agribusiness.” By utilizing Sumitomo’s financing, logistics, procurement, and marketing capability and taking advantage of market growth, this alliance will allow Agro Amazonia to move closer to its goal of increasing sales to more than $500 million by 2019, which is more than double the present level.
Luiz Piccinin, President, Agro Amazonia says, "From the beginning of our activities we conduct business guided by integrity and transparency, and we have consolidated in Agro Amazônia, a management model focused on sustainability. The market has grown, and it will continue to grow, so we follow this locomotive called agribusiness and continue serving our customers and suppliers, always delivering the best experience. We felt we needed to take a new leap forward, and we found an ideal partner in Sumitomo, because in addition to their financial capacity, their philosophy is very similar to ours. Their plans for the future are to meet our strategic long-term objectives and they share the same trust that we have in the strength that agribusiness has to feed the world."
Brasil is a major agricultural power as the world’s second largest producer of soybeans, and the third largest in terms of corn production (see Figure 1). Estado de Mato Grosso, lying in the mid-west part of Brasil, covers a vast area of land two and a half times as large as Japan, and is blessed with a stable climate. The state produces the largest amount of grains in the country. The area where soybeans and corn are planted has increased sharply over the past 10 years (see Figure 2), and a further increase of 4-5 percent per year is projected over the next 10 years. Based on this, it is projected that the market for agricultural materials, including agrochemicals, seeds and fertilizers, will expand 5-8 percent per year.
Sumitomo’s agrochemicals business started more than 30 years ago with the global export of agrochemicals produced by Japanese manufacturers. It has expanded its value chain, transforming itself into an export and wholesale business operating in 30 countries all over the world. In 2011, Sumitomo acquired Alcedo S.R.L, the largest agricultural material distribution company in Romania and transformed the company into a multifaceted crop-production support business by enhancing peripheral functions such as the sale of materials for agricultural production, as well as inland collection and export of grain. Alcedo has successfully boosted its sales and profit almost twofold over the last two years by leveraging Sumitomo’s finance sourcing and procurement capability while maintaining Alcedo’s strength.
The Agro Amazonia investment is an example of Sumitomo expanding this strategic business model into other countries and providing specific services tailored to the needs of each country or region.
According to Roberto Motta, Commercial Director, Agro Amazonia, “In this model, Sumitomo, through its ability to provide finance sourcing and solutions, intends to expand its business by creating synergies. This business model also provides opportunities to increase their participation in their customers' business chain, providing in addition to agricultural supplies, other products that may contribute to the success of farmers, such as storage and export of grain.”
Founded in 1983, Agro Amazonia is a pioneer in the agribusiness sector in the State of Mato Grosso. It is one of the largest and most successful distributors of agricultural and livestock supplies, offering a spectrum of the finest products from international manufacturers, and also providing technical support to farmers. Agro Amazonia is the only company of its kind to operate throughout the State of Mato Grosso and also has a presence in states of Goias, Tocantins and Para. With 25 locations and nearly 300 employees, the Company services over 2,500 customers in the agricultural sector and 14,000 in livestock. A consolidated partnership with suppliers allows them to offer customers the best and most complete portfolio of agro-business materials and services. It is the goal of Agro Amazonia’s trained and qualified team to provide good value and help increase crop yield.
【Figure 1】Production volume of soybeans by country (domestic share)
【Figure 2】Shifts of Production volume and planted areas of soybeans by State
|Overview of Agro Amazonia (*) After completion of deal|
|Company name||:||Agro Amazonia Produtos Agropecuarios Ltda.|
|Representative||:||Luiz Piccinin, president|
|Head office||:||Cuiaba, Estado de Mato Grosso, Federative Republic of Brazil|
|Registered capital (*)||:||BRL 34 million|
|Ownership ratio (*)||:||65% by Sumitomo Corporation;
35% by management team and individual shareholders
|Sales||:||BRL 530 million
(approximately JPY 23 billion: BRL 1 = JPY44.2 )
|Product line||:||Agricultural materials (agrochemicals, seeds, fertilizers)
Materials for livestock industry (herbicides for pasture, seeds, wires)
|No. of employees||:||297|
|No. of sales outlets||:||25 (23 in Estado de Mato Grosso,1 each in Estado de Goias and Estado do Para)|
|** operation starts in March 2015|
Agro Amazonia’s Head Office