Canadian Nutrien says that investment in Brazil can go beyond US$1 billion

Canadian giant Nutrien, one of the largest fertilizer suppliers in the world, landed in Brazil in 2018, aiming to be big.

And it hasn’t been out of step.

An aggressive acquisition project, expected to cost US$1 billion in the country, has pushed the company’s Brazilian subsidiary from about US$600 million at current exchange rates in revenue in 2021 to US$1.5 billion last year.

The multinational bought more than ten companies, almost all of them agribusiness input resale networks with solid performances in their regions, among them Casa do Adubo, Safra Rica, and Agromercantil.

Besides fertilizers, this account includes seeds, biologicals, and agrochemicals.

André Dias, president of Nutrien for Latin America, an executive with extensive experience in mergers and acquisitions, is ahead of the company’s growth project in Brazil.

He says he travels less than he would like “because I have a team that travels a lot”.

But, at least one week a month, the executive who has worked in the agribusiness sector for almost 30 years is on the road seeing and observing the most diverse scenarios.

A few days after the Forbes interview, he would be in Argentina to open a Nutrien office and then to Chile.

However, his most significant time is with Brazil, where the company focuses on integrating the acquired companies and formatting its culture.

And, of course, keeping an eye out for opportunities.

Nutrien’s global headquarters are in Saskatoon, in the region where its potash mines are located, with an installed capacity to produce 18 million tonnes.

It is a strong potash leader and one of the largest fertilizer manufacturers on the planet, with operations in 14 countries.

Last year, Nutrien had worldwide revenues of US$38 billion, up 37% over 2021, with a net income of US$7.6 billion, up 142%.

Dias spoke with Forbes at the company’s headquarters in São Paulo.

Check out the main excerpts from the interview:

In 2018, when Nutrien arrived in Brazil, it was announced that the company would invest US$1 billion. How much of that amount has already been spent?

I can’t reveal that number, but we have already invested significantly.

But I can say that we are still committed to investing even more in Brazil, even if we exceed this amount, because this amount is not a limit.

It was an initial commitment.

The Brazilian market, which in our case we are with retail operations and fertilizer blenders, is vast and continues to grow.

The global focus of growth, in terms of expansion, is Brazil. India and China are super interesting markets, but you must focus somewhere.

At this moment, we are focused on Brazil.

Even if we close the year, as we did in 2022, with US$1.5 billion in sales – huge for a reseller and distributor – this is 2%, maybe 3% of the Brazilian market.

It is very little.

Does this mean that the company will continue buying input resellers?

We will continue to grow.

And we grow in two ways: organically and through mergers and acquisitions.

Last year, we made many acquisitions, which took us from R$3 billion in 2021 to R$5 billion in 2022 organically, with another R$3 billion coming from acquisitions.

So, this is a balance that we try to maintain. There were 8 acquisitions in less than three years (Nutrien has bought 10 chains since 2018).

For 2023, the intention is to focus on the integration of the businesses, on increasing efficiency, and from there, to continue growing.

Because we bought many companies, and they have different CNPJs, headquarters, benefits, salaries, and cultures.

Integrating this patchwork quilt to create a stronger, more efficient company is a lot of work.

Today we are 3,000 people, 1,000 agronomists in the field.

What trend scenarios are you looking at for the next decades?

This is one of the reasons why the company is investing in Brazil.

Traditionally, it is a much more North American-based company.

With Brazil’s dependence on imports of fertilizers, especially potash, there are mining and exploration projects here, in Minas Gerais, in the Amazon, and the Northeast. Does Nutrien have plans in this direction?

No, because we have highly competitive mines.

Our mines, like Saskatchewan (Canadian province), as Ken Seitz (global CEO) never tires of announcing, have products for over 200 years.

We have no reason to do this because the mines have a long life, have reasonable costs, and are safe.

For Nutrien, it makes no sense to mine potash anywhere else.

We follow, and there is a discussion about mining in the Amazon, but I believe that even considering logistics, it does not make sense.

Nutrien does not intend to invest in mining in Brazil.

I was in Brasilia a few weeks ago, and I repeated this once more.

Our best way to contribute to the crops in Brazil is to continue with very efficient mines in Canada and make long-term partnerships to bring products in more efficiently.

The Ukraine invasion by Russia scared the market a lot in 2022, as they represent important markets for fertilizers and grains. Do you still see impacts?

Today, there is a normalization of fertilizer prices.

There was a lot of fear at the beginning of last year, mainly of fertilizer shortages and a significant price increase between February and May.

But from then on, they started to decline. Today they are basically at the pre-war level.

There was also a reduction in consumption, which helped in the supply and demand balance.

If the war ended today – which would be very welcome – what lesson would it leave for agriculture?

I hope this happens.

From the market point of view, there may be an incremental volume available.

I don’t know if it would be significant because Belarus is suffering a little more to sell, but with Russia, it is flowing.

Sales continue almost normally to Brazil, an important country for Russia.

Regarding geopolitics, with Russia moving closer to China, could this redraw a global fertilizer market?

I’m not an expert in international relations, but you can see this movement.

For example, a lot of fertilizer goes from Canada to China today.

There might be a re-accommodation of fertilizer flow, but I don’t know if it would be a shift of volumes or if there would be a significant change from what is already happening today.

China has been investing in Africa, and the Asian country looks at this continent as a land reserve. What weight does this have on fertilizer distribution?

Although there is not much water in China, there is still much room for Chinese agriculture to grow in productivity, with research into drought-resistant varieties with high water stress.

That’s for Africa, China, and Eastern Europe.

I spent a lot of time in Asia. I visited China several times, and it grows a lot of corn. In total area, it is second only to the US.

But even in growth, even with the evolution in productivity, there is no way to meet the internal demand, especially in the swine industry, which has been undergoing significant professionalization.

Concerning the African continent, there is a long way to go for agriculture that is still very fragmented in terms of rural module size.

And with meager consumption of fertilizers per hectare.

It takes a considerable alignment of technologies and institutions for them to plant more.

But in terms of trend, it is set that Africa should start producing more and more, but it will hardly be able to repeat what Brazil did after the 1970s when it went from being a net importer of food to what it is today.

With information from Forbes