May 22, 2015

Ag Cooperatives in Rio Grande do Sul Increase Market Share

Author: Michael Cordonnier/Soybean & Corn Advisor, Inc.

The 2013/14 growing season in Rio Grande do Sul was good for the both the soybean producers in the state as well as for the state's numerous agricultural cooperatives. According to the Federation of Agricultural Cooperatives in Rio Grande do Sul (FecoAgro/RS), the cooperatives in the state had a 40% market share for grain handling in the state in 2014/15, which is up from a 35% market share in 2013/14. The agricultural cooperatives in the state received 6 million tons of grain from the 2014/15 crop compared to 4.5 million tons a year earlier.

The president of FecoAgro/RS, Paulo Pires, attributes the improved market share a higher level of confidence the associates have for the programs offered by the cooperatives. He also feels the greater transparency offered by the agricultural cooperatives gives them an advantage over traditional grain companies.

The cooperatives in the state also offer a high level of technical assistance to their associates. Pires estimates that the cooperatives in Rio Grande do Sul employ 1,500 professionals including: agronomists, agriculture and livestock technicians, veterinarians and animal technicians. These professionals disperse their expertise to associates all across the state especially to smaller farmers.

In their May crop report, Conab estimated that the 2014/15 soybean crop in the state at 14.68 million tons, but some local analysts feel it is over 15 million tons. The majority of the producers in the state harvested a very good soybean crop in 2014/15 with two exceptions. One exception was the far southern part of the state where dry weather at the end of the growing season cut into the soybean yields. The other exception were areas of central Rio Grande do Sul where soybean rust was a significant issue this growing season. In fact, the state recorded the highest number of confirmed cases of soybean rust of any state in Brazil this past growing season.

Rio Grande do Sul is the third leading soybean producing state in Brazil responsible for approximately 14.5% of Brazil's total soybean production. The leading state is Mato Grosso at 29.3% followed by Parana at 18%.