Although the adage “the customer is king,” has been around for a long time, Kuhn do Brasil has given it a new lease on life. In doing so, this leading Brazilian manufacturer of agricultural equipment has seen its growth rates skyrocket. Michael Sommers takes a look at how the company’s new consumer-friendly focus is translating into profits and transforming the agricultural segment.
In 2011, the agricultural equipment manufacturer, Kuhn do Brasil not only doubled its revenues, but racked up more sales than any of the other seven international affiliates of the Dutch-based Kuhn Group. Moreover, it accomplished this feat by radically shifting its focus to make its business all about its customers.
While such a strategy might seem obvious, the truth is that within the context of Brazil’s agricultural equipment segment it’s also quite vanguard. “Like everyone else in the industry, we attend a lot of trade fairs, but beginning last year, we inaugurated a whole new approach,” explains Kuhn do Brasil’s managing director Filipe Freitas de Carvalho. “Instead of treating these events as direct sales opportunities, we transformed them into opportunities where we could strengthen our relationships with our clients.”
GROWTH ON ALL FRONTS
In 2005, with the desire of conquering the growing Latin American market via its biggest and most thriving member, Kuhn acquired a Brazilian company called Metasa, whose facilities were located on a 12-hectare site in Passo Fundo, Rio Grande do Sul. While its main focus was manufacturing metallic structures, Metasa had an agricultural division that was renowned throughout Brazil for designing and producing direct seeding equipment, specifically precision drilling machines for important crops such as soya, cotton, and corn. What sealed the deal for Kuhn was that the group possessed no direct seeding technology of its own. As a result, while today Kuhn do Brasil (which went by the name of Kuhn Metasa until 2010) produces crop spraying, fertilizing and soil preparation equipment for the domestic market, 70 percent of its output is devoted to direct seeding machinery such as min-till and no-till seed drills that are commercialized both at home and overseas.
Indeed, while most other Brazilian manufacturers have seen exports dwindle due to a combination of an inflated Brazilian real and rapidly rising domestic costs, international sales have been booming for Kuhn do Brasil. Currently, the company supplies equipment to markets as diverse as Latin America, Africa, Australia, and Eastern Europe, all of which boast large farms that most benefit from direct seeding. “Last year, exports grew by 15 percent,” points out Carvalho. “Aside from being the only Kuhn affiliate that produces direct seeders, we benefit enormously from the group’s extensive logistics and distribution network.”
Although last year exports accounted for only 20 percent of business, this number only wasn’t greater because the company’s domestic performance proved so stellar. “Ideally, we’d like to have a balance where sales are split 50-50 between international and domestic sales.”confesses Carvalho. “That way, when the market here is slow, we can fall back on exports – and vice-versa.”
Traditionally, in Brazil, farmers have always sought to increase production capacity by increasing their territory. However, Kuhn is at the forefront of a new tendency by which farmers are adhering to the wisdom of vertical, as opposed to horizontal, expansion. The idea is to optimize the land one already has by adding new crops as well as livestock.
In 2012, Kuhn is throwing all its weight behind this concept known as “agropecuária inteligente”(intelligent agriculture and cattle raising).
An equally important part of this optimization involves developing new technologies and equipment that allows growers to increase the yield of the crops they already have.
We’re striving to provide producers with the information they’re looking for, and then to supply them with the solutions they require. A lot of Brazilian producers are still doing things they did in the past without stopping to consider why. We help them to stop and think – and then we show them how things can be done better. We want to create this discussion because doing so will not only end up generating more profits, but it will also develop an agriculture that is more efficient, more sustainable, and better for all of us.”