Acquisition of Nativa to Expand Agricultural Input & Service Business in Brazil
01 August 2022, Tokyo: Sumitomo Corporation (Head Office: Chiyoda-ku, Tokyo; Representative Director, President and Chief Executive Officer: Masayuki Hyodo) has reached an agreement with shareholders of Nativa Agronegócios & Representações LTDA. and Nativa Agrícola e Representação LTDA. (collectively, “Nativa”), an agricultural supplies distributor in southeastern Brazil, to acquire all shares of Nativa to make it a wholly owned subsidiary. The acquisition is through Agro Amazonia Produtos Agropecuários S.A., a wholly owned subsidiary of Sumitomo Corporation and is scheduled to be completed by the end of the 2022 fiscal year once necessary approvals from relevant authorities are obtained.
With population growth and rising income levels, especially in developing countries, global food demand is expected to increase approximately 1.7 times from 2010 levels by 2050. Amidst the demand for increased food production, an expansion in farmland is vital to increase unit yield, as is the demand for agricultural materials. Brazil boasts the world’s fifth largest export value of agricultural products, with soybeans, corn, sugarcane, coffee, oranges, and beef. In addition, Brazil is likely to become even more important as a food production area, as it leaves room for agricultural land expansion without deforestation.
Established in 2000, Nativa is an agricultural supplies distributor with eight locations and a fertilizer manufacturing facility in the state of Minas Gerais, located in southeastern Brazil. In addition to soybeans and corn, the state of Minas Gerais is a region where coffee, fruit tree, and vegetable cultivation and seed production are thriving, especially among small and medium-sized farmers. Nativa has built a strong customer base rooted in the community through the development, manufacture, and sale of unique products that meet customer needs, and through support for farming by agronomists (sales staff with knowledge of agricultural production technology).
Agro Amazonia has been in business since in 1983 and is one of the largest agricultural supplies distributor in the Midwest of Brazil, operating 50 outlets in eight Brazilian states, mainly in the Mato Grosso region. Sumitomo Corporation acquired full ownership of the company in 2018 and has since contributed to the expansion of Agro Amazonia’s business by leveraging its financing, procurement, and business management expertise.
Agro Amazonia contributes to the sustainable development of agriculture through the expansion of its product and service portfolio. It has grown its customer base to approximately 20,000 households, mainly consisting of livestock farmers and large-scale soybean and corn farmers with 1,000 to 10,000 hectares or more. The company is emerging as an industry leader in Brazil, with sales expanding more than five-fold since 2015.
With this acquisition, Sumitomo Corporation aims to expand the operation’s sales territory in Brazil and achieve further business growth by linking Agro Amazonia’s extensive product portfolio based on its strong relationships with agrochemical suppliers with Nativa’s fertilizer development and manufacturing capabilities and new customer segments.
In its medium-term management plan “SHIFT 2023,, Sumitomo Corporation has positioned agriculture as one of its next-generation growth fields and “Agricultural Input & Service” as a steady business growth category. In the agrochemicals field, Sumitomo Corporation started its agrochemical export business in the 1970s and currently operates an import and wholesale business in 37 countries overseas. In Europe, the company has expanded its value chain by acquiring agricultural supplies distributors. In the fertilizer field, since starting the fertilizer raw material import/export business in the 1950s, Sumitomo has built an integrated business base from importing fertilizer raw materials to manufacturers and selling direct to farmers, mainly in Japan and the Asia-Oceania region.
As part of its commitment to contribute to society, Sumitomo will continue to support stable and sustainable food production and the development of local communities and industries around the world. The company is intent on providing products and services that meet the agricultural needs of each country and region, while utilizing its expertise in the agricultural materials field for business expansion.
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