Arquivos Bunge - Murray Advogados

Company aims to expand its program area to 600,000 hectares and engage customers in Brazil

04/15/2024

Rossano de Angelis — Foto: Divulgação

Bunge is set to enhance its regenerative agriculture program in Brazil, introduced a year ago. With a $20 million investment, the Missouri-based conglomerate intends to more than double the current area under the program from 250,000 hectares to 600,000 hectares by 2026.

Although this expansion marks a significant leap within a year, it still represents just a fraction of the total agricultural area Bunge sources from in Brazil, with the soybean area mapped by the company in 2022 alone surpassing 19 million hectares.

The funds will be allocated to award premiums to participating farmers and supply products to Bunge. Additionally, the investment will support the provision of technical assistance, precision agriculture tools, and measurement technologies at no cost, aiming to assist producers in adopting methods that contribute to emission reduction in agriculture. This support will be offered through Orígeo, a joint venture of Bunge and UPL.

At this phase, Bunge is also keen on involving its customers from the food and biofuel sectors, proposing that these industries also offer premiums to the producers. According to Rossano de Angelis Junior, Bunge’s vice president of agribusiness for South America, there’s a growing interest within the agro-industry to establish direct connections with farmers, and some contracts with clients have already been finalized.

The program does not require producers to sell their entire harvest to Bunge unless it involves an industry client of Bunge that is financing the farm. If a producer opts to sell a portion of their harvest to Bunge, the company will compensate them with a premium for that portion, based on a fixed rate per hectare, though the specific amount has not been disclosed.

Moreover, Bunge plans to broaden the geographical reach of the program currently concentrated in the Matopiba area (the region encompassing the Brazilian states of Maranhão, Tocantins, Piauí, and Bahia) and in Mato Grosso to include producers in Pará, Goiás, São Paulo, Paraná, and Rio Grande do Sul.

In its first year, the program has attracted 34 farms from 26 producers. The most embraced regenerative technique among them is no-till farming, followed by the use of cover crops during the off-season to protect the soil, with 46% adoption. Although other regenerative practices are less common, such as bio-inputs, crop rotation, and natural fertilization, Bunge is focusing on promoting these five practices at this stage for their scalability and customer engagement potential. The program may also support additional techniques like crop-forest-pasture integration, pasture rotation, and reduced water and energy use on farms.

A specific initiative Bunge is exploring involves using oilseeds as cover crops, potentially opening new revenue streams for producers and catering to the demand from advanced biofuel industries, such as aviation biofuel (sustainable aviation fuel, SAF) and green diesel (hydrotreated vegetable oil, HVO). In collaboration with Embrapa, Orígeo, and UPL’s Advanta, the company is studying the viability of growing canola as a cover crop in the Cerrado—a vast tropical savanna region of Brazil—for these industries. “With adequate solutions and assistance, we believe there’s potential for canola cultivation in the Cerrado,” stated Mr. de Angelis. The program anticipates its first canola harvest this year, with seed selection tailored to each farm’s specific conditions, he added.

*Por Camila Souza Ramos — São Paulo

Source: Valor International

https://valorinternational.globo.com/

Abu Dhabi’s Mubadala fund, Raízen are among those interested in assets

08/09/2022

Bunge and BP created joint venture in 2019 — Foto: Divulgação

U.S.-based Bunge and British oil company BP have put up for sale the sugar-and-ethanol company BP Bunge Bionergia, a joint venture created by the two companies in 2019, sources say. With 11 sugar-and-ethanol mills and capacity to crush about 33 million tonnes, the deal attracted the interest of Abu Dhabi’s Mubadala fund and the giant Raízen, a partnership between Cosan and Shell, sources familiar with the matter say.

JP Morgan has been hired to advise on the sale of the company. The assets are valued between R$9 billion and R$10 billion, considering a price between $55 and $60 per tonne of crushed cane, according to a source in the sugar-and-ethanol sector.

This is not the first time that Bunge has tried to dispose of its sugar-and-ethanol business. Before creating the joint venture with BP, the U.S.-based agribusiness behemoth hired banks to sell assets in the sector.

The sale is still in the non-binding proposal phase, according to sources. In this phase, offers are received, but there is no exclusivity contract between the parties. Sources say any deal is unlikely to be cut before the elections, in October.

Initially, only Bunge wanted to sell its 50% stake in the business. In the last two months, however, BP has also decided to throw off its stake, people familiar with the matter say.

Raízen and Mubadala are said to be potentially interested in the whole business, but did not make an offer yet. The shareholders do not rule out selling the assets separately. The company’s mills are located in the states of Goiás, Mato Grosso do Sul, Minas Gerais, São Paulo and Tocantins, and have a crushing capacity of 32.4 million tonnes of sugarcane per harvest. In the harvest ending March 2022, BP Bunge Bioenergia’s net operating revenue totaled R$7.2 billion, with net income of about R$1.7 billion.

Raízen was among the groups interested in buying Bunge’s assets in the past, but the deal did not go forward. The largest sugar-and-ethanol company in Brazil, the joint venture between Cosan and Shell has a crushing capacity of over 100 million tonnes of sugarcane and 35 production units.

Last year, the group closed one of the largest M&A deal with the purchase of Biosev’s (formerly Louis Dreyfus) mills. Bunge and Louis Dreyfus, another giant in the sector, have made heavy investments in sugar and ethanol in Brazil, but have not obtained the return they expected from the deal.

Abu Dhabi’s sovereign wealth fund Mubadala is also looking at sugar-and-ethanol assets to verticalize its refining business in Brazil, sources say. Last year, the group bought the Landulpho Alves refinery (RLAM) in Bahia from Petrobras for $1.65 billion. The sovereign wealth fund raised earlier this year $322 million to invest in Brazil — last week, the fund made an offer for the control of the fast-food chain Burger King in the country.

BP and BP Bunge Bioenergia said they do not comment on market speculations. Mubadala, Raízen and JP Morgan also declined to comment.

In a statement, Bunge said it “continues to evaluate options to exit its participation in the sugar and bioenergy joint venture.” The company stresses in the statement that it is satisfied with the performance of the business, but the assets are not essential to the overall strategy of its business.

*By Monica Scaramuzzo — São Paulo

Source: Valor International

https://valorinternational.globo.com/

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