Does your company want to sell information technology solutions to Brazilian agribusiness? So start by understanding how this segment works in Brazil.

Do you want to sell your IT products and services to Brazilian agribusiness companies? So come to understand how this segment actually works in Brazil.

The other day, talking to a CEO of an information technology company and one of its directors, I was asked ... "Why is not my IT company selling more to the Agribusiness segment? A segment that represents 25% of the Brazilian GDP and is one of the only segments that will grow in 2015 (forecast around 2.5%). "

Even before I respond, this CEO (from technology but not agribusiness) has already amended the answer: "Because my executives are not properly offering my product.", "Because my executives are not looking for the right Agribusiness companies, because I want to talk to the C-level. "

The correct answer is not this ... so let's try to help this CEO full of will ...

Faced with this questioning, I envisioned an opportunity to humbly try to clarify, who is, and how this Brazilian Agribusiness works, from the point of view of companies that supply IT products and services.

DEFINING THE AGRIBUSINESS SEGMENT.

All right ... what's the classic definition for agribusiness?

"It is considered an agribusiness company that produces, markets or uses as its main raw material products of animal or vegetable origin, which are seasonal, perishable or heterogeneous, as well as those companies that produce inputs to be used directly in rural production. "

Other important factors we should consider ...

• The seasonality of agricultural crops;
• Agricultural crops occur in different regions and periods;
• The regionalization of rural production;
• Given the climate, soil or vocation, certain regions of Brazil have specialized in certain agricultural cultures.
• Difficulty of the rural entrepreneur in buying something intangible, such as software.
• This difficulty exists in all segments, but in agribusiness this is more latent due to the delay in the computerization process and the family management model.
• It is much easier for the rural producer to acquire a tractor of R $ 1.5 million than to buy software of R $ 50k.

TALKING OF Brazilian GDP.

When the federal government informs the nation of the closed numbers of GDP Brazil and presents the percentage that represents the Agribusiness Segment, it does not consider only the rural production, as we can see in the example of the figure below:

In this example, when the government considers that agribusiness represented 22.13% of Brazil's GDP, it divides this percentage among all sub-segments of agribusiness:

• Inputs - 11.80%
• Agricultural and Livestock Production - 28.80%
• Agroindustry - 28.52%
• Wholesale, Retail and Consumer Market - 30.87%

Only with this information and considering the product or IT service that the CEO's company sells, we have already been able to determine, approximately, what your potential market is. You will soon see that the actual potential market is much smaller than the CEO thought.

Still, everything will depend on the adherence of your products and services, against the "pains" of each subsegment listed above.

THE VALUE CHAIN OF AGRIBUSINESS VERSUS IT DEMANDS.

We have important players that are directly and indirectly related in the agribusiness value chain, as shown below:

After understanding the value of the agribusiness segment chain, you should turn your eyes to your products and services portfolio and define what your company offers today or may offer in the future for each of the players.

To facilitate this understanding, we have provided some examples below:

So, hands-on, study the agribusiness sub-segments one by one, determine your main "pains" and map out the possible systemic solutions you can offer.

THE GREAT VEGETABLE OF AGRIBUSINESS - FOOD PRODUCTION.

Within a universe of agribusiness subsegments, let's consider only food production ...

What is the size and importance of this subsegment?

The world today has about 7 billion people and if nothing of the bad happens, we will be more than 10 billion by 2050. How will this whole people be fed?

In this context, Brazil is considered by other nations as one of the world's powers in food production and a key factor in solving this problem. Expect a lot from Brazil, Believe it!

Despite so many internal political and economic problems, Brazilian agribusiness is highly respected by the other nations of the world. We are really reference, without false modesty.

Some numbers corroborate to demonstrate the greatness of our rural production. We have approximately:

• 5 Million Rural Properties.
• 1,500 Agribusiness Cooperatives.
• 200 Million Tons of Food Produced per Year.
• Largest Consumer of Chemical Defenders in the World.
• Over 64 million hectares Cultivated.
• 209 million cattle - the largest commercial herd in the world.
• THE GREAT CHALLENGE - ORGANIZING RURAL PROPERTY.

When we look at the entire agribusiness value chain, we realize that rural property is the basis of everything, right? For without it the rest of the chain has no reason to be.

Almost 90% of Brazilian rural properties are small, meaning they do not use efficient IT tools to solve their business processes. This fact affects the entire production chain, since there is no accurate and quality information that can be used by other players in the value chain.

This fact greatly hinders planning, logistics, agricultural financing, agricultural insurance and contractual relations between the rural producer and other players.

Oops! Here we have set some interesting demands ... think a little.

Small rural producers need Basic Management Systems that are efficient, easy and intuitive rather than complex ERPs that require more than they deliver to the rural producer. That is why, for most of the time, projects to implement traditional management systems in rural properties have failed.

WHAT DO SMALL RURAL PRODUCERS REALLY NEED?

1. Carry out the Rural Environmental Registry and update the General Registries of Rural Property.
2. Organize the administration of the farm office; Purchasing, Sales, Finance and Stock.

If your company can meet this demand, you have a gigantic market of rural properties. With one detail - All this should be offered in the Cloud Computing and SaaS mode.

It's for me ... it's a myth that there is no way the rural producer can access the internet. It accesses from home, office, etc. - He'll find a way.

After solving the basic "pains", then we can offer more management tools, such as ...

1. Management of agricultural machinery.
2. Agricultural Production Management.
3. Management of the Agricultural Workforce.
4. Field mobility.
5. Precision agriculture.

Dashboards, Geoprocessing and Business Analytics.

You see ... an organized producer generates quality information, which in turn can feed cooperatives, distributors and agribusiness industries - did you realize?

Given this scenario, you can offer the other players in the agribusiness chain access to this information, which will be used as input for strategic analysis and planning.

There are latent "pains" in all sub-segments of the agribusiness chain, just knowing where and how you can meet with quality and adherence.

In the next publications we will continue to discuss a little more about Information Technology applied to Agribusiness.

A hug.

Sidney R Jr.

+55 19-992004587 | [email protected]