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The global power of Brazilian agribusiness – CMAE | Commodities Corn, Soybeans, Soybean Meal, Suppliers and Exporters.


The global power of Brazilian agribusiness

The global power of Brazilian agribusiness
Brazilian farmers don’t need wait for Government to solve the problems of infrastructure or credit to become “world leaders unattainable”, according to a study from the Economist Intelligence Unit, a British research Company linked to the magazine “The Economist”.
The study, titled “The global power of Brazilian agribusiness”, points out the challenges of infrastructure and other difficulties of rural producer such as to obtaining credit, but adopts a positive tone. Instead of lamenting, suggests ways for the farmer to overcome these problems, improving management techniques.

Brazil is world’s fi fth-largest country by geographical area and the largest in terms of arable land.
Although only a fraction of its land is exploited, the country produces a highly diverse array of
agricultural goods. This puts Brazil in a unique position to lead the global agricultural sector in the
medium to long term. With an abundant supply of natural resources—water, land and a favourable
climate—it has the opportunity to be the largest agribusiness superpower, supplying the world market while also providing affordable food for its own population.
The country already ranks as the top global supplier of products as diverse as beef, orange juice and
ethanol, and is expected to continue to expand its exports in other areas as well, such as cotton, soybean oil and cellulose. Its markets are also diverse: China is now the largest market for Brazilian agribusiness products, and sales to Eastern Europe, the Middle East and Africa are also growing rapidly.
To maintain this trajectory, Brazil must build on the signifi cant improvements in productivity that
underpin its current success and overcome the barriers to full realisation of its potential. Obstacles range from scarcity of credit to logistical logjams, from protectionist measures in key markets to environmental concerns.
Frontier regions are a testament to what is right, and wrong, with Brazil’s agribusiness sector. The rich
harvests from the country’s vast hinterland have more than paid back public and private investment in research to create new plant varieties adapted to the region’s soil and climate. Large-scale production and professional management have helped to offset the high costs and tight margins of farming such areas.
Attracted by the promise of growth, investors have both fi nanced agriculture’s expansion and provided technological know-how. Yet agricultural endeavours in these regions are burdened by inadequate transport and insuffi cient storage capacity. Productivity in such segments as beef production and corn remains low. Margins remain tight.
The industry’s strong performance today is based on changes in business models, farming practices and technology over the past 30 years. For Brazil to fulfi l its potential as a global agribusiness powerhouse in the coming decades, companies must continue to innovate, transforming how and where they do business.
Leading companies have successfully tested different paths to expanding Brazil’s agribusiness beyond
the country’s borders. To overcome protectionist barriers in the US and Europe, they have diversifi ed their offerings, improved sanitary controls and acquired foreign competitors. They have increased the value of products sold in developed markets, but also have penetrated emerging markets worldwide.

Further investments and transformations are needed so that the agribusiness sector can thrive in the
coming decades. These include:

  • l Infrastructure—transport, port and storage—must be upgraded to meet current and future needs.
  • l Land must be used more productively through innovative farming techniques. Growth will come through better use of existing crop and pasture land, not just the opening of new areas.
  • l Research must continue to ensure development of crop varieties adapted to Brazil’s climate and soil conditions.
The EIU study was sponsored by Accenture.
The report is available for download in English and Portuguese

The global power of Brazilian agribusiness – CMAE | Commodities Corn, Soybeans, Soybean Meal, Suppliers and Exporters.

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Cargill sounds warning of a slow recovery



Cargill sounds warning of a slow recovery

By Gregory Meyer in New York
Published: August 17 2010 18:49 | Last updated: August 18 2010 01:20
Cargill, the world’s largest agricultural commodities trader, on Tuesday warned that the global recovery had yet to gain traction as it reported a second straight decline in annual profit.
As economists debate the merits of government intervention to avoid a double-dip recession, the company said the economic outlook was uncertain.
“More uncertainty lies ahead, for the world has yet to transition from a policy-stimulated upturn to a structurally sustained recovery,” Cargill said in its annual report. “Europe’s debt crisis and China’s monetary tightening are moving markets. Governments have made promises that their economies cannot fulfil. Regulations are changing in unpredictable ways.”
The US’s largest privately owned company by revenue has a unique vantage on global economic trends, trading commodities from corn to oil to salt with employees in 66 countries.
It has expanded into more value-added business, developing finished products for food companies, hedging strategies for farmers and investment vehicles for pension funds.
Cargill earned $2.6bn in the fiscal year ended May 31, down 22 per cent from the previous year’s $3.3bn. Profit was the lowest since 2007. Results were dragged down by Mosaic, the fertiliser company in which Cargill owns a 64 per cent stake. Excluding Mosaic, whose profit fell 65 per cent in the year, Cargill’s profit rose 14 per cent to $2.1bn.
In a sign that the worst of the financial crisis is over, all five of Cargill business segments earned more in the fourth quarter than the same quarter of 2009. Net quarterly profit more than doubled to $691m from $327m a year before. Excluding the Mosaic investment, earnings rose 87 per cent to $433m.
Minnesota-based Cargill does not detail results of individual business segments, but said three of the five improved performance in the year.
After bottoming out in 2009, many commodity prices have moved sideways due to listless demand in developed economies. Corn futures fell 19 per cent during Cargill’s fiscal year, while crude oil gained 8 per cent. Cargill blamed lower annual profits in its origination and processing segment, which hauls grain across oceans, on “choppy, range-bound markets” that made trading opportunities scarce.
“There was a lot of uncertainty,” David MacLennan, Cargill’s chief financial officer, told the Financial Times. “There was a lot of traditional market participants on the sidelines staying liquid. I think there was a lot of residual fear of risk.” The company said the recession slowed food consumption in western Europe and the US, but emerging economies’ demand “grew at a surprisingly sturdy rate”.
Cargill’s annual revenue fell to $107.9bn from $115.1bn in 2009.

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