Investment will drive expansion of input distribution, agricultural production, and strategic acquisitions

10/14/2024

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Agrex do Brasil, a subsidiary of Mitsubishi Corporation, plans to invest R$700 million to expand its input distribution, agricultural production, and infrastructure operations. The funds will support new dealerships, increased soybean and corn production, an expanded seed business, and the construction of storage facilities, with acquisitions also part of the growth strategy.

This marks Agrex’s most significant investment since acquiring control of Los Grobo in 2013, transforming Ceagro Los Grobo into Agrex do Brasil.

“Mitsubishi Corporation is confident in further investing in Agrex do Brasil—a critical asset in ensuring international food security,” says Yoshihiro Enosawa, president and CEO of Agrex do Brasil.

Globally, Agrex operates in Brazil, the United States, and Australia, where it merged with Riverina in 2017. Its production primarily supplies Japan, China, and Singapore.

Mr. Enosawa, with experience leading Agrex’s operations in Australia and the U.S., identifies Brazil as the company’s most promising market. “In our long-term vision, Brazil’s potential for expansion is unmatched. Australia and the U.S. offer limited room for additional grain planting,” he explains.

Despite the challenges Brazilian farmers faced in the 2023/24 season—driven by lower production and commodity prices—Agrex remains optimistic about long-term growth. Mr. Enosawa is confident that future harvests will benefit from improved yields and technological advancements.

“Many producers are struggling with debt, and dealers are facing market difficulties,” says Kenji Akiyama, Agrex do Brasil’s strategy and planning director. “We believe our role is even more crucial now, helping customers grow through these challenges.”

For the 2024/25 harvest, Agrex do Brasil anticipates a more stable year, with productivity aligning with historical averages. “It should be a solid year for our clients’ finances. Prices won’t make it extraordinary, but it will certainly outperform the previous season,” says Rafael Villarroel, Agrex do Brasil’s operations director.

The company generates annual revenues of around R$5 billion and focuses on producing, sourcing, and selling soybeans, corn, and sorghum. Its operations are concentrated in Matopiba—the confluence of Maranhão, Tocantins, Piauí, and Bahia—as well as in Pará, Goiás, and Mato Grosso. Agrex also owns Dimatre, a soybean seed company, and holds a 50% stake in Fertgrow, a fertilizer firm. In June, the company spearheaded a R$68 million fundraising effort for Gênica, a biological inputs company based in Piracicaba, São Paulo.

According to Kenji Akiyama, strategy and planning director, the company’s acquisition strategy includes both familiar regions and emerging sectors, such as ethanol. “We are exploring opportunities in ethanol, with some acquisitions already in negotiation,” he notes.

While Agrex does not disclose its total grain sourcing volume, it reported 2 million tonnes sourced from Matopiba (bordering the states of Maranhão, Tocantins, Piauí, and Bahia) alone for the 2023/24 harvest. Some of this output comes from Agrex’s own farms, which span 24,000 hectares of soybeans and over 10,000 hectares of corn across Maranhão, Piauí, and Tocantins. “We plan to expand the planting area, though the exact scope is yet to be defined,” Mr. Akiyama adds, indicating that the expansion will be driven by leasing agreements. The company also aims to more than double its soybean seed production over the next five years, leveraging partnerships with “a few dozen” seed multipliers across Brazil.

Additionally, Agrex is expanding its retail footprint, currently operating 22 Agrex and Synagro stores, with plans to open two new branches soon and grow the network to 30 units by 2028.

“We are also investing in storage and transshipment infrastructure,” Mr. Villarroel notes. Agrex holds the concession for Lot 4 of the Porto Franco rail terminal (Maranhão) and manages transshipment operations at Porto Nacional (Tocantins). This rail network facilitates grain shipments to the port of Itaqui in São Luís (Maranhão), “providing cost efficiency and logistical flexibility,” adds Mr. Akiyama.

Reaffirming Mitsubishi Corporation’s long-term commitment to Agrex do Brasil, Yoshinori Nagata, general manager of Mitsubishi’s global grains, oilseeds, and feed materials department, visited the company’s headquarters in Goiânia last week alongside other senior executives. “With enhanced productivity and robust exports, Brazil is consolidating its role as a global leader in agricultural production, driving both world food security and national economic development,” says Mr. Nagata.

*By Cibelle Bouças, Globo Rural — Goiânia

Source: Valor International

https://valorinternational.globo.com/