February 1, 2005

 

 

Brazil Agrenco to expand soy exports through increasing port capacity

 

Brazilian commodities trading company Agrenco plans to invest US$25 million to triple capacity at its grains terminal in the Sao Francisco do Sul port in Santa Catarina state, Agrenco President Antonio Iafelic esaid.

 

The expansion of the port is part of Agrenco's strategy to continue to increase its soy sales by offering differentiated products and services to its clients.

 

This strategy is clearly paying off. In 2005, Agreco expects to sell an estimated 12.5 million metric tons of soy, up from 5.9 million tons in 2004.

 

The investment in ports is essential for the company to be able to offer differentiated services, Iafelice said, adding that the company needs to have its own terminal to guarantee delivery.

 

During the peak of the harvest season, ships can wait up to 50 days to dock at the port of Paranagua, one of Brazil's top soy exporting ports.

 

The company also has infrastructure investments outside of Brazil, including Europe and Asia.

 

Earlier this month, the company acquired a 40% share of Unikon, the largest soy crushing plant in Norway. This gives Agrenco control of the company's port terminal.

 

The Unikon plant, which will be supplied with Brazilian soy, will help increase the company's access to the European market, Iafelice said.

 

In addition to expansion in Europe, Agrenco is also eyeing the Chinese market, the largest market for its soy.

 

The company recently signed a five-year 500,000-ton-per-year soy contract with China Grains & Oils, according to Iafelice.

 

Iafelice attributes the company's success to their concern about the quality of the product they deliver.

 

In the face of growing concerns about sanitation risks and chemical contamination, buyers are increasingly willing to pay more for a guarantee that the product they receive is of the highest quality, Iafelice said.

 

In Brazil, Agrenco works with a network of more than 5,000 farmers who are willing to vouch for the quality of the soy, helping to eliminate potential problems which can occur at the time of delivery.

 

Agrenco is also preparing to begin offering European clients GMO-free soy from Brazil.

 

While Brazil does not have a system that allows producers to get a premium for non-GMO soy, Iafelice said that as early as 2006, a system could be created.

 

Brazil is the world's second largest soy producer and exporter.