March 26, 2010 Sowing Seeds for the Future

Volume 13 | Issue 2

Having consolidated its reputation as one of Brazil’s top producers of planters and other agricultural equipment, Jumil is going after new m

When four brothers, Justino, Herval, Ermelindo, and Moacyr Morais, together with their friend Thomaz, first opened a small farm equipment business called Jumil (Justino de Morais Irmãos S/A), the planters it produced relied on animal labor. The year was 1936 and the five partners, whose enterprise was based in the town of Batatais, São Paulo, were determined to conquer the market for agricultural equipment.

Three-quarters of a century later, the company they built has not only survived, but is now among the top five companies in its segment in Brazil. Needless to say, Jumil has come a long way. Moreover, as a result of its pioneering instincts and willingness to constantly expand, it has often propelled the entire industry along with it. In the 1950s, the company was one of the first manufacturers in Brazil to begin producing equipment that relied on engines instead of animals. Decades later, in 1992, it was the first company to introduce pneumatic (vacuum-suction) seed distributors to the Brazilian market.

“This system brought great benefits to Brazil’s grain producers,” recalls Jumil’s director of exports, Flávio Trezza. “The precise distribution of seeds eliminated competition between plants that grew too closely together and allowed farmers to use their resources better, which resulted in less waste and bigger harvests. As you can imagine, this was a really big breakthrough and it helped make the Jumil brand name synonymous with state-of-the-art technology.” Yet another “first” occurred in 1996, when Jumil became the first company in its segment to receive IS0-9000 certification for all its key processes.

DIVERSIFICATION AND EXPANSION
Having spent decades consolidating its name and reputation, in the last 10 years Jumil has turned its attentions upon diversification and expansion – both in terms of its product lines and its target markets. Traditionally, the company’s main business had involved the production of planters, seeders, and fertilizer distributors for Brazil’s important grain and cereal sector. However, in recent years, it has branched out into equipment for livestock, vegetable, and sugar cane sectors, at the same time, adding new types of machinery, such as harvesters, brush cutters, and residue grinders. In order to give due attention to each individual sector, in 2003, Jumil restructured the company, creating specialized teams capable of focusing on each niche.

“Aside from being able to attend to clients’ needs with greater specificity, this multi-team strategy allows us to devise budgets for and develop new products more quickly,” confesses Trezza. Indeed, while Jumil’s main product line continues to be equipment for the cereal segment – which represents 50 percent of the company’s business – the company’s other lines have quickly increased in importance. According to Trezza’s rough estimates, today fertilizers and livestock lines account for 15 percent each while harvesters and vegetable lines each represent 10 percent(sugar cane represents less than 3 percent of business).

Currently, the niches in which the company is investing the most are livestock and vegetables. “Brazil’s livestock industry is experiencing rising demand. As a result, there is a real need to increase the number of animals grazing per hectare – which in turn means there is a need for new technology,” says Trezza, adding that the company is currently developing a new forage harvester for medium-scale livestock farmers whose necessities are not yet being catered to.

As for vegetables, this is another growing segment that has seen production increase as greenbelts have developed on the outskirts of Brazil’s major cities. “We’ve been investing in products that can be used to plant and harvest crops such as onions and carrots. In terms of this market, we have an interesting advantage in that there are no other Brazilian companies operating in the segment – all of our competitors are from overseas.”

THE TROPICAL EDGE
In fact, being a Brazilian company with close to a century of experience is a major bonus when dealing with a segment whose defining characteristic is a tropical climate. “Manufacturers from Europe and North America make equipment to be used in temperate climates where, due to extreme and changing temperatures, the soil requires preparation for planting,” explains Trezza. “In countries with tropical climates, no preparation is necessary. You plant directly, without moving the soil, and this requires a more robust system capable of working the soil in its natural state. While foreign manufacturers sell equipment made for temperate climates in Brazil, our approach is to take the vanguard technology created abroad and adapt it to the specific needs of a tropical country.”

Jumil’s strategy has proved to be a winning one. In recent years, the company has experienced annual average growth rates of around 20 percent. After a tough year in 2009 due to the effects of global crisis, this year it expects to experience rates of close to 40 percent. (Currently, at its two Batatais plants – with a combined total constructed area of 220,000 square feet – the company produces approximately 70 (roughly 20 large and 50 small machines) a day.) Meanwhile, in spite of the crisis, last year the company still managed to earn revenues of R$122 million (roughly US$68 million).

Having met with success at home, especially in the vast and booming grain and cereal growing regions of the Brazilian Central-West – due to the size and scale of the farms, demand
for its largest planters and other machines is strongest in the states of Goiás and Mato Grosso– Jumil is now quickly conquering the international market as well. Once again, its strategy has been to sell itself as a world-class equipment manufacturer that is also a specialist in tropical conditions.

GOING GLOBAL
“Exports are actually nothing new for us,” explains Trezza. “But for years, they were quite sporadic, only occurring as a result of clients approaching us at trade fairs, for example. We never began actively courting the international market until 2000, when we created an international division – with its own team of managers, sales reps, and technical assistants – whose mission was to focus specifically on exports.”

In the ten years since it began actively seeking out foreign customers, Jumil has seen international business climb from 4 to 20 percent of its total revenues. “Right now, the company’s biggest project is to increase exports because we think this will bring us more financial stability in the long term,” confesses Trezza. “The Brazilian market has always experienced a lot of ups and downs, and it’s difficult to sustain growth. For instance, in 2004, there was very high demand for our products among grain and cereal producers. Then suddenly, there was a steep cut in credit lines for the purchase of agricultural equipment in general, which had a big impact on the segment. No sooner had things recovered when along came the global crisis. For this reason, we want to diversify and increase the markets in which we operate. Even though right now the Brazilian economy is experiencing very healthy growth, we don’t want to put all our eggs in one basket.”

Moreover, the company has discovered that there exists a strong demand for its products in some foreign markets, which up until now hasn’t been met. Jumil already has a strong presence in much of Latin America, with a special focus on Mexico, where it has an affiliate. Most recently, however, the company has set its sights upon expanding throughout Africa. With this objective in mind, it recently opened a South African affiliate where it stocks replacement parts and employs sales reps and technical assistants capable of dealing with clients’ pre- and post-sales concerns. “The African market has great potential,” declares Trezza. “Like Brazil, Africans also need technology that’s adapted to a tropical climate. Moreover, Africans are more interested in Brazilian technology than in technology from the Northern hemisphere countries.”

“Ultimately, no matter where we’re operating, our growth is sustained by helping farmers to increase their production. We want to be in the fields together with our clients in order to understand their problems and offer them solutions,” says Trezza. “What really sets us apart from our competitors is that we care about the details – and ultimately you can only work on details if you know the people who are using your machines.”

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