How about the sales performance of CCAB in the past three years? What challenges have you met?
Consórcio Cooperativo Agropecuário Brasileiro (CCAB Agro) was founded in 2007 by the Brazilian Farmers initiative, to ensure the sustainability of the Brazilian agribusiness, based on corporate governance excellence with ISO 9001: 2015. We are Inc. company, and cooperativity management model.
Our turnover during the last three years was around US$130 million and we are now preparing the company to growth with high corporate procedures and financial, as Market Company CCAB Agro was audit by KPMG since the beginning of operations in 2007. In the year 2015, CCAB Agro was recognized as the best crop protection company in Brazil by one of the most important financial magazines in Brazil (Revista Exame –Melhores & Maiores).
The market for Crop Protection has undergone major transformations, and many mergers and acquisitions are taking place at all levels. At the level of the large crop protection industries, which also invest in the development of GMO, we will have four companies in the future that will hold more than 70% of the global market, is a worrying concentration for the farmers that we represent both such as CCAB Agro, as InVivo. That is why the sum of efforts between CCAB Agro and InVivo is the beginning of the creation of a global platform of agricultural producers' cooperatives so that together we can defend the interests of our shareholders.
We have noticed that CCAB and InVivo have something in common: you all control many cooperatives. Did this common point lay the foundation for the deal between your companies? In your opinion, what are the similarities and differences between CCAB and InVivo in the operation of cooperatives? What could each learn from the other?
Both InVivo and CCAB Agro have Agricultural Cooperative shareholders, Invivo has in its group 220 cooperatives and has presence in more than 30 countries, CCAB Holding is currently composed of 20 cooperatives or groups producing agricultural commodities, the two companies were created a huge coops platform to defend the interests of farmers.
InVivo has an annual turnover of more than 6 Billion Euros, CCAB Holding accounts for about 20% of the area of soy, 70% of the area of cotton and 14% of the area of corn of Brazil, with the interest of other cooperatives to be part of the group, we should have a rapid growth. Combining the two companies, we are undoubtedly one of the largest customers of agrochemical supply companies in the world.
We have many points of synergy between companies, we are focused on analyzing these synergies such as digital agriculture, supply chain, organic products among others, we are analyzing these to put into practice.
From a long-term perspective, what benefits will CCAB obtain from the cooperation between InVivo and CCAB?
CCAB Agro have in pipeline more 109 generic and biologic product registrations, 17 granted and 30 will coming in short time, we will have a largest registration portfolio to supply Brazilian Growers. InVivo investment and product portfolio are making other agricultural cooperatives propose to join as CCAB Holding members, which will strengthen our presence, we intend to be a national platform of agricultural cooperatives, being able to represent them and help in the face of M&A between their multinational suppliers. We are certain that we can triple the size of the company in the next 3 years.
What do you think of Chinese pesticide companies’ entrances in Brazilian market? How does CCAB compete with Chinese companies in this market?
There are two markets in the world, where it requires great knowledge of the local market, one region is the countries of Eastern Europe and another of major importance is Brazil due to the size and market potential.
Brazil has an area available to increase the area of production, but we are in the tropical zone where the technology must be created locally. Our farmers are born entrepreneurs, this is a cultural question, because Brazil was discovered in the year 1500 and colonized by Portuguese at the first moment, but here came people of various nationalities, and came to open a new frontier, to do agriculture, started production in the south of the country and about 20 years ago are exploring the Brazilian savannah, where we have an immense opportunity for growth. But as well as the challenge of the unknown, the need for more technologies, this way investing in the purchase of new lands and beginning the production the Brazilian farmer needs credit for production, which from time to time are challenged by the climate, new plague, new Brazil economic policy, global crisis affecting the prices of these commodities. Understanding this dynamics is for a few, Chinese companies must be prepared for this challenge to participate in this market.