Reinventing the Business Model of Brazilian Cooperatives: Constantly Changing Environment Requires Adaptations in Long-Term Planning
Cooperatives have played a key role in Brazilian agribusiness throughout the last century. For corn, soybeans, and pork, around half of local production is linked to farmers who are members of cooperatives. They are also responsible for close to 30% of farm inputs distribution and poultry production.
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However, a new scenario – characterized by increased competition due to consolidation in the market, growing competition among cooperatives, and changes in Brazil’s subsidized rural credit – will require a rethinking of the business strategy of local cooperatives. “In order to improve margins and secure future growth, cooperatives could focus on governance and costs optimization. Geographical diversification and vertical integration are also important pillars to be considered. However, they should be part of a solid go-to-market strategy and have a purpose in each business context in order to boost and not harm financial results,” according to Victor Ikeda, Senior Analyst – Grains & Oilseeds. In all these alternatives, opportunities will arise, but at the same time, some risks need to assessed.