Chains (Agribusiness Systems) Analysis and Methods Chapters: 25, 26 Prof. Dr. Marcos Fava Neves University of São Paulo, Brazil Visiting International Professor at Purdue University

The ChainPlan method for strategic planning and management of chains 1 Initiatives of Leaders, Government, and Research Institute/ Universities in planning the future of the Chain. 2 Description, Mapping and Quantification of the Chain 3 Creation of a Vertical trade Association 4 Elaboration of the Strategic Plan for the Chain 5 Management of Strategic Projects

SUGAR-CANE CHAIN IN BRAZIL GDP in 2008: USD 28 billion; Financial Movement of the Chain in one year: US$ 86 billion Before Farms USD 9.252,42 mm Gross Revenue Farms: Production USD 11.509,75 mm After Farms Industrial Inputs: USD 6.414,39 mm Industry: USD 22.639,17 mm Ethanol Distr.: USD 19.738,56 mm Sugar Distri.: USD 4.003,15 mm Fertilizers USD 2.259,09 million Sugar cane Production Own: USD 6.387,91 million Suppliers: USD 5.121,84 million INDUSTRY/DESTILLERY USD 22.639,17 million FINAL CONSUMER Equipaments USD 3.400,99 million Defensives USD 768,44 million Ethanol USD 12.417,36 million USD milhões Internal Market Steam Generator: 667,13 USD million Lime USD 50,56 million Distributor USD 8.624,05 million Gas Station USD 11.114,50 million Hydrous: 6.615,58 Extraction: 568,13 Resale and Cooperatives USD 477,54 milhões com defensivos Anhydrous: 2.972,89 Auto-parts and maintenance services USD 2.851,19 million Distillery: 469,13 Not Energy: 438,78 Beverage industry and cosmetics Sugar Industry: 354,38 Mercado Externo Energy Generator: 274,5 USD million Harvesters USD 426,52 million Assembly: 411,75 Hydrous : 1.179,91 Maintenance: 655,98 Anhydrous : 1.210,20 Tractors USD 320,87 million Automation/Instrumentation USD 269,76 million Sugar USD 9.765,08 million Retail USD 3.259,26 million Internal Market Attachments USD 425,66 million Electrical Installations USD 366,00 million USD million Wholesale USD 743,89 million Industry: 2.037,88 Building USD 594,75 million Wholesale: 580,57 Food industry and other Trucks USD 331,36 million Retail: 1.663,66 Assembly Services and Maintenance USD 1.110,35 million External market USD million Bodies, trailers and semitrailers USD 233,36 million Gross Sugar: 3.649,55 Free Consumer Quimical Products USD 463,82 million White: 1.833,41 Bioelectricity USD 389,63 milhões Distributor Special Consumer Diesel and Lubricants USD 1.054,01 million Fuel oil and lubricants USD 94,19 million Yeasts and Additives USD 63,61 million PPI USD 53,80 million Bags USD 45,42 million Internal Market USD million Feed industry Feed Industry: 21,41 Big Bags USD 14,67 million External Market USD million Feed Industry: 42,20 Lab materials USD 15,46 million Facilitating agents USD 13.275,58 mm Carbon Credit USD 3,48 million PPI USD 38,96 million Bio plastic (non commercial scale) Facilitating agents – USD million BNDES: 3.530,79 CCT Outsourced 1: 916,32 Road Export Freight: 539,03 Exports Toll (Santos): 79,96 Port Cost (Santos): 213,52 R&D: 79,15 Events: 5,32 Magazines: 3,99 payroll : 738,33 Health plans 3: 125,51 Meals4: 188,26 Aggregates tax in SAG: 6.8 billion 1- South Center region. 2- Exports by Portos de Santos e Paranaguá. 3 e 4 – Only São Paulo state. Source: Neves, Trombin, Consoli, 2009.

Sumary of ChainPlan plan (step 4) 6 Production, Products, Research and Development, and Innovation Projects 1 INTRODUCTION AND UNDERSTANDING 2 Market Analysis with the Chain Approach 4 OBJECTIVES FOR THE CHAIN 5 STRATEGY FOR THE CHAIN 11 CHAINPLAN BUDGET 12 STRUCTURE THE GOVERNANCE (EXECUTION) OF THE CHAIN PROJECTS 7 Communications Projects 8 Distribution and Logistic Projects 3 Analysis of Internal Situation and Competitors 9 Human Resources and Qualification Projects 10 Institutional Environment and Coordination Projects

3- Doing a Strategic Plan for a Chain 1 – Warm Up: Planning in 15 P’s... 2 – The Structure of a Chain 3- Doing a Strategic Plan for a Chain 4 – Scenario Analysis as Part of the Strategic Plan 5 – Final Message: In Search of Efficiency...

FINAL CONSUMERS DISTRIBUTION MARKETING INDUSTRY PROCESSING INDUSTRY How will the consumer look like? What will be value for them? How new products can affect the market? What are the trends in income? What will be the effect in developing and emerging countries? What changes will occur in buying behavior (conscious, environment, sustainable)? How demographic trends affect consumption? How preferences will change? How will be the acceptance to GMO’s and other technologies? DISTRIBUTION What are the trends in retailing? Will retail concentration and global operation movement continue? What to expect from private labels? Which will be the effects of technology and price transparency? Which will be the policies toward supply chain (purchasing)? How competition among retailers will affect the chain? What will be the role of foodservice? MARKETING INDUSTRY FOOD INDUST Which will be the speed of New Product Development (NPD)? How will consolidation look like? How will costs margins and profitability of product-lines look like? How will be the relationship with retailers and agro- industry? What are the roles of regional companies? Who are the new players diversifying to this market? Which is the growth expectation for this industry? How to solve the logistics problems to supply the emerging markets? PROCESSING INDUSTRY AGRO - INDUSTRY How industry will be the structured? Will the agro- industry be concentrated? The agroindustry would operate in global scale? How would be the logistics to the clients and purchasing behavior? Who will be new players? Where they may come from? What will be the degree of own production of inputs? How will operating costs and margins look like? FARMERS How production will be structured? How will concentration happen? Will it be more professional? What will be the most competitive areas in the world? Which are the growing areas and declining areas? What will be the role of cooperatives and associations? Crops will be substituted in some areas? How plagues and diseases will affect the chain? How to expect from regulation changes? How production costs will look like? INPUTS SUPPLIERS What innovations will come to market? What movements upward the supply chain will be done? How will the selling and distribution channel structure look like? The concept of offering integrated solutions for farmers will be the most suitable one? How will the situation of genetic modified organism (GMO) be?

Question of the day Based on the list of major uncertainties (PEST), choose a product (chain) and list 10 major challenges you seen in 2026…