01.28.08

A bit of an unusual topic for me, but this was too good not to share.  Fortune Magazine recently did a wonderful article on the rise of the soy industry in Brazil.  What I found so fascinating about this article is how many trends can converge in a large agricultural area with “bad roads”:

• International competition:  US agriculture (soy is a major crop) versus Brazil’s growing dominance in soy (largest exporter since 2006)
• Eco-friendly business:  from the dark days of deforestation, the entire soy industry is striving to be environmentally friendly and energy-independent.  But there remain struggles to balance supply chain efficiency and the environment (see below)
• Innovation and sustainability:  while I think of soy as tofu, the products that now include soybeans as a critical component include:  cotton blends, spandex, shampoo, conditioner, soap, flashing tape, caulk, outdoor paint, glue for plywood cabinets, foam (including for a forth-coming Ford Mustang) and more!

Of particular interest in this article however is the critical role of the supply chain (physical, the article did not explain how information was moved).

Following on the trend from my last post, one “self-contained” supply chain uses soy products to produce fuel and feed for the largest chicken operation in South America.  The farm, processing plant and chicken buildings are literally built in one continuous line, with the trucks carrying the product to market fueled by bio-diesel — talk about a localized supplier network.

The second set of supply chain issues are more complex however, as actual soy consumption within Brazil is very limited.  The challenge is to export the bounty in a cost efficient manner through some of the most environmentally sensitive forests and rivers in the world.  The extensive discussion of the struggle to get the product to market without arousing the ire of the major markets (Europe, US) because of environmental damage is a fascinating twist on the influence globalization has.

We do a lot of business in Brazil, and I hope we have the opportunity to continue to grow in one of the world’s most exciting economies.