By Diogo Esperante
The processing plants in Brazil through dealers, who are mostly Agronomists, play an important role in transferring technologies to the domestic rubber farmers, thus creating a sense of loyalty which helps ensuring the supply volume, stability and quality of rubber
Recently I had a consultation with Liu Rui-JinRaykin of the Rubber Research Institute, Chinese Academy of Tropical Agricultural Sciences.
Liu told me he had some information about Brazil NR Industry which he had received from a presentation Madam Sheela Thomas (then Secretary-General of ANRPC) had made at the IRRDB Annual Conference in Cambodia.
That information was the result of the impression left on Jom Jacob’s (ANRPC Senior Economist) mind after his latest visit to Brazil when we had the chance to tour around some rubber plantations and processing plants in the Northeast of the São Paulo State.
What Liu had learned from the presentation was that the dealers in Brazil played an important role in transferring technologies to the rubber farmers. Since the introduction was very limited, he asked me to provide him more specific information regarding this. And it was such a great pleasure to do so which now I would like to share with Rubber Asia and its readers.
Role of dealers
In fact, it is not the dealers but the processing plants themselves that play this role through the dealers. In this regard, it is important to underscore the fact that these dealers are mostly Agronomists.
What is most interesting about this Brazilian experience is that each processing plant used to have big teams of Dealers/Agronomists that worked exclusively for them.
To some extent, that is still true even nowadays, of course, with some changes since the number of plants is diminishing with the consolidation processes the sector has experienced in the past few years.
Nonetheless, although processing plants don´t hire exclusively the dealers so much anymore, they still preserve a close relationship in the sense that, in most cases, the dealers don´t buy rubber directly from the farmer. Instead, they operate as sales representatives and receive fees based on the quantity of rubber they bring into the processing plant.
To guarantee that the farmer won’t choose a different dealer, the Dealer/Agronomist himself offers Technical Assistance and Technological Transfer, thus creating a sense of loyalty. That loyalty helps with the supply (a) Volume and (b) Stability and, obviously, that is perceived as something of a high-value throughout the supply chain.
That phenomenon is partly facilitated because here in Brazil we have more demand than production. So in this regard, guaranteeing volume stability might be considered a key strategical factor.
Nonetheless, (c) Quality is also a key factor. To be able to guarantee good quality, it is important for the Dealer/Agronomist to ensure that the farmer has compliance with good production practices witch again induces the dealer to develop an important role in the transfer of technology.
In conclusion, since the dealer fees are calculated based on the (a) Volume, (b) Stability and (c) Quality, and since these are strategical factors for the processing plants, the values are often attractive enough to stimulate the Dealer/Agronomist to fulfill his task very efficiently and effectively.
There are also cases where the farmer might have some special technical demands costing the Dealer/Agronomist more visits or interaction. In those cases, it is common for the farmer to pay for that difference. In the cases where the farm holding is too small and incapable of paying for the service, cooperatives and clusters have been effective solutions
Two interesting questions.
After this short explanation, Mr.Liu had two interesting questions. And those were:
1) What kind of technologies are frequently transferred by the Dealers/Agronomists? Variety, tapping skill, fertilizer, plantation management or processing technologies?
2) What are the main sources of technologies of the dealers and agronomists? In China, the dealer in countryside don’t have enough knowledge to provide technology service to the rubber farmers. The technology transfers are mainly done by the staff in the local governments and public organizations.
Regarding question number one: Usually, the Dealers/Agronomists operate as links between the farmers and the various sources of information such as Researach Institutes, Common Bibliography, Congress, Workshops etc.
In that sense, (i)Varieties and other planting-related issues (ii) Tapping Skills and (iii) Plantation Management are among the most common technologies transferred. To this latter note it is very important to add Chemical Stimulation Orientation as an important sub-topic.
Processing is not a relevant topic. That is because, it is not common among farmers to do any processing activities in-house. To that extend we can affirm that most Brazilian farmers sell their cup lump directly to the processing plants, the so called “Usinas”. Fertilizing for that is a seldom practice in Brazil (although it has become more common during these last few years).
With regard to the second question: As I previously mentioned, (I) Local Research Institutes, (ii) Common Bibliography, (iii) Workshops and other Events organized by Associations of Farmers and Governmental Institutes are the main common sources of knowledge.
We may conclude that having dealers with college-level education on Agronomy (or equivalent technical and scientific training) is the main difference between the Brazilian model and the one most commonly found in Southeast Asia.
The fact that most of the farmers have an average 50 hectares each per farm is also an important characteristic. That makes easier for the dealers to sustain good income from their practice. Good income is the attraction of professionals with higher education to the practice.
In the case of farms with smaller areas, clustering and Cooperatives are a solution to the size, volume and eventually attractiveness for dealers to operate as Technology Supporters.
It is common for a dealer to make an average US$ 2,000 a month out of his practice.
That can go up to US$ 5,000 or even US$ 10,000 depending on how many farms he has under his clientele.
This model has suffered some changes recently with the rise of Technical Support Offices that don’t deal rubber and, to that extent, advertise that as a valuable characteristics as to their impartiality and commitment only with the best technical aspects not “getting distracted” by commercial issues. This has attracted the attention of bigger farmers who are able to pay for such service, and for that, it is not yet the most common model.
Liu later wrote to me that the areas per household in Brazil were much larger than in China, and the area in China is less than two hectares in the smallholding sector. He also stated that the willingness to pay for the technological service is weak and processing factories do not pay enough attention to the quality control of rubber materials.
This was certainly a great opportunity for learning and a simple example of how we can benchmark from each other’s experience in the pursuit of learning more about our own practices.