Humane Practices
AGRIBUSINESS SEGMENT
Soy ComplexThis Unit sells and processes soybeans and other grains and oilseeds and is one of the largest exporters and processors of the commodity in the Country. It operates in more than one hundred locations in Brazil, by means of port terminals with standalone facilities, transshipment hubs, warehouses and processing units. The greatest highlight in 2009 was the inauguration of the factory in Primavera do Leste (state of Mato Grosso) with an investment of R$ 210 million. Site selection was influenced by the fact that this is the main soybean-producing region in Brazil and with a view to new prospects for entering markets in which Cargill is not yet strongly established.
During the year, the Soy Complex sold 9.1 million metric tons of grain.
Installed in an area of 60 hectares with 25,000 m2 constructed space, it has a processing capacity of 3,000 metric tons of soybeans per day, producing meal and oil. The unit also relies on an oil refining and packaging unit which is marketed under the Liza brand, facilitating direct supply to the Central-West, North, and Northeast markets. The unit created 200 direct jobs, plus hundreds of indirect job opportunities. Investment was made in the introduction of a boiler where 62% of the energy needed for its operation will be supplied from burning biomass. During the year, the Soy Complex sold 9.1 million metric tons of grain, against 7.15 million metric tons in 2008.
Another relevant point in the year was winning the bid to retain administration of the Guarujá Terminal. For this purpose, the company formed a joint venture with Louis Dreyfus and together they offered R$ 288 million. With this victory, Cargill holds the right to operate the terminal used for shipping bulk solid grains, (preferably soybeans and corn) for 25 years, which can be renewed for another 25. The two companies have already participated jointly in the Sugar Export Terminal of Guarujá (Teag), which also served as an incentive for the new partnership.
CottonCargill operates in the cotton market purchasing products directly from producers and reselling to national and international textile industries.
In 2009, the Unit sold 54,000 metric tons a 55% increase on the previous year. Of this total, 30,000 metric tons were sold abroad. One of the strengths of the Unit is that it has developed, ahead of its competitors, a different method of negotiation in reais with the cotton farmers. It consists of purchase for future delivery with the ability to make hedge transactions on the New York Stock Exchange and in local currency at the same time, made possible by Cargill’s structure.
Sales growth was also tied to increased demand for domestic products. In 2009, 504,000 metric tons were exported by Brazil, and Cargill participated with 6% of this total.
To enhance connectivity with other areas of the company and to approach and gain market share in new production areas, such as Bahia, the Business Unit relocated its office in Rondonópolis (state of Mato Grosso) to São Paulo, also relocating its entire workforce. The trade desk employs professionals for buying and selling cotton and hedge positions, allowing for greater focus by region of production.
Cargill Cotton has a partnership with the Soy Complex in the movement of cotton to the ports of Paranaguá and Santos or to the spinning regions where it operates, drawing on the experience of Soy Complex logistics both in the Primavera do Leste unit in Mato Grosso and in Luis Eduardo Magalhães in Bahia.
Sugar and ethanol
Cargill operates in the sugar and ethanol market through this Business Unit and through the Vale do Sapucaí Energy Plant (Cevasa), a joint venture with Canagril, a company formed by local farmers.
2009 was favorable to this Unit’s business, primarily due to the price of sugar. The crop failure in India, which became an importer rather than being an exporter, altered the geography of the market and significantly increased the value of the commodity. With respect to ethanol, the domestic market absorbed almost all the product in the fiscal year.
In respect of anhydrous alcohol, the company managed to expand Cevasa’s production efficiency by 23%. The unit also invested in the expansion of the plant, which should be completed in 2010, and in increasing its processing capacity from the current 1.3 million metric tons to 2.6 million metric tons. The gain in volume produced will be used to manufacture sugar to meet food sector demand.
The Unit’s concern with sustainability issues led to contracting, in 2009, a professional exclusively dedicated to this matter. In response to customer demands, the unit also promoted sustainable shipment of sugar, certified by audits.
In the logistics area, Cargill increased its participation in the Santos Alcohol Export Terminal (Teas), used exclusively to improve the loading of fuel alcohol. The company gained control of 33% through the purchase of stock from other partners.
Cargill also chose to discontinue its activity in the T-33 sugar terminal at the same port. The measure stems from the change in market profile where there is a growing demand for sugar exports in containers. The big advantage for buyers is that with containers they can reduce the volume with each order. Selling this way also facilitates the handling of client specifications such as packaging, in addition to the fact that the container itself can be used for product storage.
Efforts were also made to improve the flow of containers from the origination of sugar, in the interior of the country, to its loading at the port. One of the measures successfully tested was the use of rail transport.
