“In other words, the farmer already starts the year knowing that they will lose money…”
Bernardo Nogueira is the commercial director at Kepler Weber, graduated in agronomy from the Centro Regional Universitário do Espírito Santo do Pinhal, with a specialization in leadership from Fundação Dom Cabral.
AgriBrasilis – What led to the 42% drop in the company’s profit in the 3Q of 2023?
Bernardo Nogueira – It is important to say that the 3Q of 2023 represents the second best quarterly result in Kepler Weber’s history. Now, the basis for comparison with 2022 takes place in different business environments. Last year was exceptional for Brazilian agribusiness, with commodity prices at levels never seen before, and farmers were capitalized. This made the 2022 results extraordinary.
In 2023, with commodity prices accommodating, the “Farming Sector”, which accounts for around a third of our business, fell back to normal levels. Within the strategy of diversifying territories and revenues, the company has managed to deliver the second best year in Kepler Weber’s history, behind only 2022, despite the more challenging scenario.
AgriBrasilis – Kepler Weber officially entered B3’s “Novo Mercado” in August. What does this represent for the future of the company?
Bernardo Nogueira – It is an achievement to access the New Markets listing segment (“Novo Mercado”). This allows for a greater liquidity for the company’s shares and increases shareholder confidence.
We understand that Kepler Weber’s sustainability and the creation of shareholder value require responsibility in business management. It also requires social commitment, integrity, care for each of our employees, respect and commitment to all our customers. These are principles that are part of our journey.
AgriBrasilis – How do you see the demand for silos and the scenario of storage deficit in Brazil? What are the long-term trends?
Bernardo Nogueira – Storage, which was already essential for farmer efficiency and food security, went from necessary to critical. At the beginning of the year, we saw, for the first time, agricultural production surpass the country’s static capacity already in the first harvest. This scenario made it even more urgent to invest in grain processing and storage units.
We are heading towards a harvest approaching 320 million tonnes. Without having anywhere to store the grains, the farmer faced, throughout 2023, negative soybean premiums. At the request of Kepler Weber, an independent consultancy estimated US$ 6 billion in losses caused to agribusiness due to logistical problems. For 2024, estimates once again indicate negative premiums. In other words, the farmer already starts the year knowing that they will lose money due to a lack of efficiency.
“At the request of Kepler Weber, an independent consultancy estimated US$ 6 billion in losses caused to agribusiness due to logistical deficiency”
AgriBrasilis – 61% of farmers do not have structures to store grains. Why is the storage scenario in Brazil not evolving?
Bernardo Nogueira – There are historical factors that need to be considered. The farmer has always been very concerned about expanding land, i.e., using what they gained from the harvest to buy more areas. With the advancement of technology, agricultural production leaped. As a result, the farmer realized that investing in post-harvest represents the possibility of improving revenue, maximizing results at this stage by up to 15%. Storage culture began to be discussed with the rigor it deserves.
A study by the Brazilian Association of the Machinery and Equipment Industry, based on 2020 production, revealed that investments of US$ 2 billion per year, for ten years, would be necessary for Brazil to be able to eliminate its storage deficit. The study considered grain production for the 2020/21 harvest, which was of 272.5 million tonnes. Today, we are already harvesting 320 million tonnes.
Even though the sector has managed to increase static capacity every year, based on farmers’ investments and contributions from the “Plano Safra” (Brazilian Government’s yearly harvest agricultural credit plan), the pace is not enough to keep up with the growth of the harvest.
AgriBrasilis – What are the risks of a storage deficit in Brazil?
Bernardo Nogueira – The storage deficit in Brazil is a critical problem, which threatens the country’s competitiveness and directly affects Brazil’s food security. Not having a place to properly store a large part of Brazilian grain production impacts the farmer’s logistical efficiency and profitability. With nowhere to store it, they need to dispose of the production immediately after harvest, paying more for shipping and having to sell the grain at low rates. In addition to harming farmers’ profitability, the storage deficit can also lead to losses in grain quality, due to exposure to climatic factors and natural deterioration.
To mitigate the impacts of the storage deficit, it is necessary to invest in infrastructure. In the case of Brazil, financing facilitates farmers’ access to grain processing and storage units. In this year’s “Plano Safra”, US$ 1.3 billion was allocated to the PCA line (Warehouse Construction and Expansion Plan). As an innovative alternative, Kepler Weber, BNDES, and BTG Pactual Asset launched a US$ 60 million Fiagro/FIDC in December 2022. This Fiagro finances the complete post-harvest project: for both the equipment and the plant’s infrastructure works.
AgriBrasilis – Recently there have been cases of explosions in agricultural silos. What technologies guarantee the safety of agricultural silos? Is it possible to prevent this type of situation?
Bernardo Nogueira – Storage units move millions of tonnes of grains each harvest and require maintenance to ensure their efficiency and safety. Furthermore, the operation must follow protocols, with qualified labor, which is a challenge for farmers.
We have invested in the development of equipment and technologies that allow us to increase the efficiency and safety of the units. One example is the launch of the “Rosca Varredora” (screw sweeping equipment), an equipment that is located inside the silos and eliminates the need for workers to work in a confined environment.
This year, Kepler Weber was involved in the creation of Brazil’s first standard for silo sizing, ABNT 17066. Previously, regulatory guidelines for this market used to come from outside the country. As a result, the company developed a new line of silos, with gains in operational safety.
AgriBrasilis – How have grain monitoring sensors changed the storage and post-harvest scenario?
Bernardo Nogueira – This is a fundamental point for the development of the market. The use of technology in agriculture has allowed for a revolution in the farms in recent years. Farmers who have data at their disposal when making decisions are able to achieve their objectives in a much more assertive way. That is why in 2023 we completed the process of purchasing 50% plus one share of the company Procer, the main player in Latin America with a specific focus on automation and monitoring for grain storage. With Procer’s technology, we have already connected more than five thousand silos and the expectation is to reach 50% of the country’s static capacity in the coming years.
Connectivity brings storage to a new level, improving the quality of the grain, because it can determine temperature and humidity inside the silos, in addition to reducing energy consumption.