An agro-industrial co-operative located in Brazil's southwest, Copagril has harvested decades of success via a savvy strategy of diversification. As the company celebrates 45 years in business, president Ricardo Sergio Chapla talks to Michael Sommers about how recent forays into poultry - and Japan - have borne profitable fruit.
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Copagril came into being just as Brazil’s “Wild West” was making the transition from manual to mechanical agriculture and from subsistence to commercial farming. Founded in 1970, in Marechal Cândido Rondon, a small town in western Paraná, the co-operative emerged in response to the incipient need for agricultural equipment, supplies and storage facilities. In the beginning, Copagril specialized in the drying and storage of grains such as soy, corn, wheat. However, as agriculture developed throughout the region in the 1970s, accompanied by expanding mechanization and production volumes, the co-op grew along with the segment, becoming increasingly structured.
An Opportunity for Diversification
Unfortunately, as the ‘80s dawned, a major setback occurred that threatened the very livelihood of Copagril not to mention the region’s agribusiness as a whole; the construction of Itaipu Dam, until recently the largest operating hydro-energy dam in the world. “The impact of this project was enormous,” recalls Ricardo Sergio Chapla, president of Copagril. “So many farms were flooded. And many farmers had to relocate. As a result, there was a major drop in harvest volumes. We knew that if we were going to survive we would have to quickly branch out into new products and activities.”
Although the company initially took a major hit, Copagril also recognized that the construction of the dam was, quite literally, a watershed moment that compelled it to seek out new opportunities for diversification. As such, while the co-op continued to deal with grains, it also began working with two other important agricultural segments: dairy and pork. At the time, it had little inkling that western Paraná would grow into one of the current leading producers of both dairy and pork in all of Brazil. Meanwhile, at the same time as Copagril began branching out into new areas, many of the region’s smaller co-operatives joined forces to create the Sudecop Central Cooperative, today known as Frimesa. As their activities expanded to embrace the entire production cycle, so did Copagril’s.
Beginning in the 2000s, the company began investing in new units, equipment, and technology in addition to upgrades and expansions of pre-existing infrastructure such as drying and storage facilities. Most recently it enlarged its feed production facility, doubling the monthly production capacity of feed for pigs, dairy cows, and poultry from 40,000 to 70,000 tons. Copagril also owns and operates three gas stations and five supermarkets, investments that not only round out its offerings to co-op members, but also provide extra income from sources that don’t depend on sometimes volatile agricultural cycles.
In terms of agribusiness, although it passes along all pork and dairy products to Firmesa for processing, industrialization, and commercialization, today Copagril is large enough and specialized enough to carry out these activities for all other products. Apart from grains, these days the company’s principal product – and main source of revenue – is poultry.
“In 2005, we invested in an abattoir and started slaughtering and processing chicken,” says Chapla. “As a result, today we process 173,000 birds a day and sales of poultry are our biggest source of income, representing 32 percent of all revenues.”
Additionally, expansion into the poultry segment provided Copagril with the leverage it required to seriously expand into international markets. Currently, the company exports chicken to more than 35 countries around the world. The largest volume of sales is to Japan, where Copagril has a contract with a single, but very important, client. Europe is the second most significant market (with Germany providing the largest percentage of sales) while Hong Kong is third.
“When we set up this poultry project, initially we did so with the possibility of exporting up to 70 percent of our products, while commercializing the remaining 30 percent here in Brazil,” explains Chapla. “This ratio is always fluctuating; in 2014, for example, we exported a lot, around 60 percent. But we always make an effort to work both markets with equal diligence.”
Although production processes are uniform regardless of a product’s final destination, Copagril does take regional and cultural preferences into consideration when deciding what will sell better in any given market. In Brazil, for instance, consumers are accustomed to purchasing thighs and drumsticks with the bones intact, whereas in Japan – where legs are popular – they have to be deboned. Meanwhile, European customers have a predilection for breasts over thighs (which also need to be deboned).
“Meat is meat and chicken is chicken,” declares Chapla when asked what sets Copagril apart from the pack. “What does differentiate us is quality and in that respect we’re Number One. In addition to complying with all of the certification standards required for exports, we have a rigorous control system in place at all points of the supply chain, from production through commercialization.”
The Human Factor
Apart from constantly staying abreast of the latest global equipment and technology, Copagril’s commitment to quality is reflected in a corporate philosophy whereby growth and improvement are only possible via human resources. “We invest millions of hours in the training and preparation of our employees,” says Chapla. “Increasingly, it’s collaborators that make a company; we want our people to be prepared to solve any problem and overcome any adversity.”
Despite Copagril’s emphasis on the human factor, according to Chapla, one the biggest challenges currently facing the industry in Brazil is the scarcity of labor. The situation is so acute that the company finds itself scrambling to encounter technological solutions for industrial and processing tasks in which labor can be substituted with machines. “It’s not that we don’t want to hire qualified people,” argues Chapla. “But there just aren’t that many.”
Fortunately, in terms of the people who supply the products upon which Copagril’s livelihood depends, the numbers are constantly growing. Today, the company works with over 5,000 members spread throughout Paraná and the neighboring state of Mato Grosso do Sul. “Of course, there are always competitors and we have to do our part,” admits Chapla. “But because we do serious work, our producers are very loyal to the co-op and our products compete very well.”
This year, Copagril will celebrate 45 years of activity with the knowledge that it has played a significant role in the economic and social development of the region in which its members work and live. “Our co-operative has had a major impact and we’re very proud of our contribution,” says Chapla. “Meanwhile, as we look back at what we’ve accomplished, we’re also looking ahead with great optimism as we prepare to grow and evolve even further, albeit always step-by-step, with our feet firmly planted on the ground.”