One of the largest global agribusiness, Bunge is considering
a radical change in its logistics structure in Brazil.
Renowned for pioneering the installation of silos for grain
receiving areas of agricultural frontiers, the company is
reviewing its strategy for the storage service after having
suffered from the devaluation of commodities due to the
deepening global crisis, from September of the year past.
Partly because of this, many silos of the company have been
sold and others are being negotiated.
Bunge once had in Brazil more than 200 storage systems in
virtually all States that produced soybeans and corn. Of this
total, more than 50 have been sold and in Mato Grosso another
30 are up for sale, according to sources consulted by Valor.
According to these sources, the company abandoned its
aim of being present in all frontier regions. With
sales, it is estimated that the company may raise about R$
100 million
Considered strategic, the total storage capacity and the
number of silos have not disclosed by the company; however,
only in Mato Grosso State - representing almost 30% of
soybeans and 14% of the corn produced in Brazil - its
facilities are capable of storing 1.4 million tons of
grain.
Sources know that the multinational is reviewing its
position in the storage sector, but they say there is also
need for raising cash after losses from the crisis. Even
before the financial crisis, Bunge was studying a re-structure to make its business more efficient.
"In the last harvest, Bunge caught the purchase price of
soybean producers, but left a significant amount of product
in the open market", said one expert. When prices began to
fall, the company found itself unprotected from market
swings. Remember that part of the exchange Bunge
and other trading houses were consumed by the daily
adjustments of the stock due to the appreciation of grain
between 2007 and 2008.
Officially, Bunge confirms the sale of some stores, but
advises that it is an optimization of its logistics
infrastructure. The company says it is directing its
attention in this activity to areas where there is a greater
demand for storage facilities. According to a spokesperson,
the idea is to redesign and organize the storage service to
gain more flexibility in this segment and create a better
flow between the origination of grain to export and
processing.
Survey of the National Supply Company (Conab) indicate that
Brazil has a deficit of 4% in storage capacity. The
situation is more critical in the northern region, which
lack silos for 35.8% of the total harvest of grain, followed
by the Northeast (15.8%), South (7.2%) and Midwest (5.1 %).
In addition to financial need, another reason that led Bunge
to review your business is connected to storage management.
According major producers of Mato Grosso, the company has
never excelled for efficiency in this segment and has
struggled to manage the origination of many lots with small
volumes. For this reason, they say, the company will give
preference this season for buying large volumes at
wholesale, thereby providing direct financing to producers
and also its risks.
"In Mato Grosso, we feel that Bunge decreased its funding
for farmers and gave credit only to those who were able to
deliver large volumes and with those with whom it had had
long relationships," said one producer in the State.
