The largest retailer of agricultural input products in Latin America, Lavoro Agro recently went public via a SPAC deal with backing from The Production Board, the investment company of Climate Corp founder David Friedberg.
AgFunderNews managing editor Louisa Burwood-Taylor caught up with CEO Ruy Cunha in São Paulo, Brazil, to discuss how Lavoro stands out in a disaggregated retail market, new products it is bringing to farmers in the region, and how it’s partnering with The Production Board and its portfolio companies.
According to Cunha, the ag retail market in Latin America remains fairly fragmented: “In a market like North America, five main players have a big chunk of the market. In Brazil, Lavora is the largest player and we still only have approximately 10% market share.
“We have a large number of players, usually small family-run companies, and we’re going through the first wave of consolidation.”
But he added: “Farmers in South America are making a lot of money and they’re willing to invest in their properties… so there’s a big opportunity for companies like Lavoro.”
‘We’re analyzing opportunities to bring advanced soil testing to Brazil’
Asked about working with The Production Board (TPB), he said: “We’re analyzing opportunities to bring advanced soil testing to Brazil. The first is [via soil microbiome-testing company] Pattern Ag, and we want to bring this product [to Brazil] in the second half of this year. We’re also looking into other companies in TPB’s portfolio so we may announce other partnerships very soon.”
The challenge for farmers in Latin America is “how to continue increasing productivity as farmland gets more expensive,” said Cunha.
“We have the large farmers in Brazil that are very sophisticated, and very up to date in terms of technologies. But farmers still have a technology gap to be closed and they depend on the ag input retailer to make [technologies] available to them in [the form of] equipment, services, and digital technology.
“I think Lavoro has a lot of space to grow in the markets where we already operate, but in the near future we also have a large avenue in terms of services and digital technology.”
‘We have seen our business in biologicals more than double year over year’
He added: “Biologics are also becoming very, very relevant, transforming from a niche market to the mainstream. We see an increase in rate of adoption driven by farmers understanding the benefits and also by higher availability of products.
“We have seen our business in biologicals more than double year over year and we have invested in a factory that will be the largest biologicals factory in Brazil. So we want to accelerate the penetration of those products starting next year.”