Brazil is sometimes referred to in terms of “three, four and five.” It is the world’s third largest territory, its fourth largest population and its fifth largest economy. Since the country’s foundation, commodities have constituted a significant part of that economy and as a result, the country is home to some of the world’s most prominent players in the sector.
Before many the current cohort of companies arrived to take advantage of Brazil’s agricultural riches, SLC Agricola was already a household name in Brazil. It was founded in 1977 by the SLC Group, and focuses on the production of cotton, soybean and corn. 30 years after its foundation, in 2007, the firm listed on Brazil’s BOVESPA stock exchange – making it an industry reference both in Brazil and internationally.
We recently caught up with Frederico Logemann, Investor Relations Manager at SLC Agricola, who took time out to tell us about the company, its commitment to sustainability and its plans for the future. Mr. Logemann began by outlining the company’s operations in Brazil, spread across six separate states and extending from the North East right down to Porto Alegre in the South.
A diversified approach, a nationwide presence
SLC Agricola has developed a hybrid business model, which can be divided into three separate categories: agricultural operations on its own land, agricultural operations on leased land (and joint ventures) and the acquisition of raw/pasture land for transformation and sale. The total size of these operations, according to Mr. Logemann, is just under 400,000 hectares.
He says: “We currently operate 14 production units located across six Brazilian states, totalling 395,141 hectares. The breakdown is roughly 230 thousand hectares of soybeans, 87,500 hectares of cotton, 72,000 hectares of corn and nearly 5,000 hectares of other crops such as sunflower, wheat, corn seed, soybean seed and sugarcane.”
The company has well-developed sales channels for all of its output both domestically and internationally, as Mr. Logemann explains: “The grains are mostly sold do trading companies, which then export a good part of the product. On cotton, we sell only a minor portion of our output to the domestic market, and export around 50% directly to the Asian textile market, delivering the product on the Asian port. The balance is also sold to trading houses, that the export the fiber.”
Mutually beneficial and long-lasting partnerships
SLC Agricola’s partnership with John Deere, when it still produced, machinery, back in 1977 was one of the catalysts behind mechanization in the Brazilian agriculture industry and it was just one of many partnerships which the company has developed over its history, to its own benefit, but also to the benefit of the wider Brazilian community.
The company has two joint ventures: the Planeira Farm, which it operateswith the Dois Vales Group, and SLC-MIT, which it operates with one of Japan’s largest industrial conglomerates, Mitsui. And although SLC Agricola employs over 2,700 people – sustaining many Brazilian companies indirectly as a result – most, but not all, of its partnerships are with international firms.
Mr. Logemann tells us: “Most of our largest suppliers are multinationals with operations in Brazil. To name a few, we have names like Monsanto, Bayer, Yara, Kepler-Weber and Syngenta. We also buy fertilizers from large trading companies, such as Bunge and ADM. What we source locally, or close to the farm sites, is labour, while some of the employees on the operational level come the farm vicinity.”
Sustainability in inputs and outputs
As one might expect from a company of SLC Agricola’s size and industry, sustainability is at the heart of its operations. It regards it as a core competency, and is one of the pillars of the company’s growth strategy. The company’s management now have to consider sustainable development in every aspect of the planning, implementation and operation of their proejcts or areas.
This commitment is also in evidence by several ongoing programs that SLC Agricola implements. Among them are the “Sowing the Good” Program, which was founded in 2011 by the Social Cotton Institute (SCI) to improve social and environmental action among cotton producers. SLC Agricola won the Best Landfill and Waste Management award in 2016.
SLC Agricola also actively participates in the Water Producer Program, which aims to reforest deforested areas of the river basin on the Queima Pé river in the state Mato Grosso. As Mr. Logemann points out: “supported the Project by building level curves, aiming rain water contention avoiding erosion and soil silting.”
Even at non-agricultural company sites, SLC Agricola is making an effort to improve sustainability. In 2016, it began installing photovoltaic roofs on many of its buildings to absorb heat and reduce the energy consumption of its buildings. Its buildings have also moved towards maximizing natural lighting with translucent tiles and natural ventilation systems.
Where waste is concerned, the firm has invested nearly US$1m in a state of the art effluent treatment system, which repurposes effluent for garden irrigation and road humidification. It also has put in place strict measures for kitchen oil and solid waste, where it recently invested around US$500,000 in infrastructure for temporary storage of waste and briquetting.
SLC Agricola prides itself on its CSR initiatives. Mr. Logemann says: “we encourage our employees to work as volunteers through the Social and Environmental Action Group (GAS) implemented at all units, where citizenship projects related to environmental and social issues are carried out, with a focus on improving the quality of life of local communities. This Group is formed by around 100 volunteer employees.”
He continues: “Until now, around 5,000 people per year are benefited by the GAS projects. A good example is the Furnishing Lives Project, where the Company employees teach volunteers how to produce manually a shower and feed chair made from PVC adapted for children with multiple disabilities who received assistance from Kinder, a philanthropic organization in the city of Porto Alegre.”
The company is also probably the most inclusive in Brazil, employing over 90 disabled people among its ranks and actively promotes awareness of diversity and inclusion on its campus, through lectures, workshops, training teams, on-campus sign language professionals and in-house publications.
The initiatives have gained awards outside the company, as Mr. Logemann notes: “In 2016, the Company was elected by its employees one of the 10 Best Companies to Work For in Rio Grande do Sul (Great Place to Work) and received the Top Human Being Award from the Brazilian Human Resources Association in Rio Grande do Sul (ABRH-RS) for the internal communication case study “Our Way of Being.””
Plenty on the horizon for SLC Agricola
Mr. Logemann tells us that “a major difference between SLC and the rest of the market is that we have a “corporate approach” do farming, in contrast with the usual “family estate” approach, which is by far the most common way to do farming (not only in Brazil, but worldwide).” This also makes careful planning for the future even more of a necessity. And according to Mr. Logemann, the firm has plenty of things on the horizon, telling us:
“Our main focus is to continue expanding the operation (overall planted hectares) on the regions where we operate, both through the development of our land bank (which today stands at around 45 thousand hectares of undeveloped land) and also through new leasing contracts.
We also view “certified production” as an important trend in the market.”
“Furthermore, we currently study the possibility of “adding value” to our products. That opens up to several possibilities, ranging from entering the protein markets and the seed “multiplication” businesses. These are all alternatives under study. We also see strategic possibilities on the renewable energy scope, that is, on on-farm generation of energy (solar and/or wind, and also biomass).”
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