If you hear about opportunity knocking in the booming country of Brazil, open the door carefully. Right now there's plenty of dealer competition in the new frontier territory of Mato Grosso, about the size of Texas and Kansas combined.

The city of Rondonopolis, population 156,000, in the heart of this booming soybean-growing area, is home to nearly 20 dealers. Some offer generics, but most are affiliated with a single chemical company.

It's almost an unwritten rule, however, that those dealers only service smaller farms. Yes, 2,000 to 3,000 acres is considered small for that part of Brazil.

“If you buy more than $30,000 worth of products, like I do, you buy direct from the company,” explains Chris Ward, who grows soybeans and cotton on 14,000 acres just south of Rondonopolis. “That smaller-sized farmer would probably finance himself through a trader like ADM or Cargill and buy from a local dealer. Dealers are basically just sellers.”

Ward, a native of New Zealand who migrated to Brazil in 1977, buys direct from companies. “But you need to stay in favor with a local dealer in case you run short or you won't get any [chemicals],” he says.

The big bonus of being a dealer in this part of the world is that they have nonstop sales because of year-round crops. Frost is a foreign word to these farmers.

According to Ward, most dealers make good money and work off a 20 to 25% margin, with a 10 to 15% net. In this northern growing area, few dealers offer anything other than product. It's rare they provide any agronomic consulting or custom chemical application. Most farmers in that area of the country have their own application equipment.

In the southern state of Mato Grosso do Sul, farms are smaller and dealers provide a multitude of services, like soil testing and pest scouting.

“We have four agronomists in this office, each with their own territory,” says Mareclo da Costa Nogueira, manager of Agricola Panorama at Sidrolandia. “We sell fertilizers, fungicides and herbicides, but we don't spray. Some dealers do.

“Farmers don't buy direct here, either, like in Mato Grosso,” Nogueira explains. “They're not interested [in direct purchasing] because they want our agronomic advice. It comes free if they buy our products.”

Further south, in the state of Paraná, farmers often buy through COAMO, the country's largest co-op. Nearly 80% of the region's farms are small, averaging about 85 acres; larger farms are about 250 acres.

At COAMO retailers, farmers buy not only crop inputs (fertilizers, chemicals and seed), but as members they're also able to buy parts, obtain credit and even store their grain.

COAMO, which has 18,000 members throughout Brazil, charges a flat 1% fee on the grain it sells for members to cover all the extended services. At the end of the year, if the co-op is profitable, it returns dividends to members — usually in the range of 1 to 3%.

COAMO retailers also offer a social element to their members, providing schools for families as well as health care, parks and recreation. In addition, the co-op runs its own field trials and has a fleet of nearly 250 trucks at its Toledo outlet.

“We have the lowest interest rates in agriculture,” says Zanoni Buzzi, COAMO general manager. Most loans, however, are short term, just for the growing season. After harvest, farmers have 60 days to pay off their debt.

Joao Francisco Seibert, a local farmer from Toledo, likes getting credit through the co-op because he doesn't trust the changing interest rates banks charge. He farms 140 acres and likes the one-stop shopping COAMO offers.

Seibert likes being part of a farmer co-op. “If I was alone, I could not survive,” he says.

Greg Lamp is the editor of The Corn & Soybean Digest.

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