Agribusiness Management: How can we combine tradition with professionalization?

Agribusiness increasingly combines professionalization with tradition, aiming to improve its management and continuous development. The focus is on how to maintain high productivity and competitiveness in one of our planet’s most relevant sectors.

For producers and other agents involved in commodity markets, evaluating factors such as production costs, price volatility, the ESG agenda, and new technology make all the difference in obtaining better results.

Given this scenario, the constant search for knowledge, and the adoption of ESG practices along with new technologies, have proven essential. The use of hedging tools has also gained strength, bringing you protection through products applied to risk management.

In this text, we’ll explain how all these factors have become allies in agribusiness’s professionalization.

Keep reading to find out!

Knowledge: Constant improvement in agribusiness

Knowing how to manage in stages, the best ways to allocate resources, and how to conduct operations more strategically, are all keys to business success. Using knowledge combined with work in the field, it’s possible to adopt even more efficient agribusiness management practices.

Let’s take soybeans as an example: it’s simply not enough to just plant and harvest. It’s also essential to understand the dynamics at both local and global levels to follow market movements, as this commodity is sensitive to global laws of supply and demand and price volatility. Having a broad view of the business allows you to act more tactically.

Faced with the challenges of dealing with such an uncertain context, it’s necessary to generate knowledge that goes far beyond just processing information. To this end, companies seek to educate and train their professionals. These initiatives include:

• Teaching technical skills;
• Understanding key market concepts: Returning to the case of soybeans, issues related to the commodity’s specificities come into play, such as seasonality, historical price fluctuations, as well as storage and production optimization, for example;
• Providing financial education: Rural producers and agribusiness companies need a solid understanding of financial concepts to make more assertive decisions and carry out long-term planning. The agribusiness sector is always subject to volatility, so financial education can help us understand and mitigate these risks through hedging instruments, like the use of derivatives.

With this quest for knowledge, producers and agricultural companies can analyze data and obtain valuable insights. In other words, it means turning the focus of agribusiness management into analyzing information before acting, with an emphasis on constant training.

Agribusiness and the ESG Agenda: What’s the relationship?

The significant role of agribusiness in the economies of different nations has made it urgent to adapt to the growing demands of the environmental, social, and corporate governance agenda, better known as ESG.

Just to give you an idea of the relevance of the ESG agenda, a survey by consultancy firm PwC conducted in 2021 showed: that by 2030, agribusiness is expected to require a 50% increase in water demand and a 40% spike in energy demand. In this context, it’s a sector that must immediately address diverse topics, such as pressing environmental issues, more transparent governance policies, consumption habit changes, and innovation initiatives.

Some parts of the ESG agenda that are demanding the professionalization of agriculture include:

• Reduction in Carbon Emissions: Companies must invest in actions to further reduce emissions, looking for alternatives capable of eliminating waste and increasing the reuse of products, while highlighting the growing demand for renewable energy.
• Corporate Governance: This is a relatively new term in agriculture, yet it’s present now in the daily lives of numerous agricultural companies and rural properties. Governance refers to the ability to govern transparently, through the application of techniques, observance of best practices, and definition of structured procedures that define guidelines for better relations between partners, boards of directors, shareholders, supervisory bodies, and suppliers, among others.
• Impacts on Society: Companies need to evaluate the consequences of their activities, seeking ways to prioritize the well-being of everyone involved.

Establishing parameters and standards, based on a governance process that incorporates socio-environmental responsibility, is vital for company assets that are to be used strategically. Combining tradition with agricultural management excellence is a challenge that requires adherence to the ESG agenda, a factor that’s driving complex paradigm changes in commodity markets.

Technology drives sector improvement

The digitalization of business can also generate important agricultural solutions. The use of sensors and software, for instance, can help producers achieve more profitability, accelerating processes while reducing costs.

Some benefits of better technology to further professionalize agribusiness are:

• Increased productivity through task automation, the increased use of advanced machinery, and implementing information systems that make activities more agile.
• Digitally integrated management for more strategic decision-making based on data collection and systems analysis, allowing up-to-date information on crops, climate conditions, markets, and other relevant variables.
• Agribusiness gains greater precision, taking advantage of instruments such as GPS, sensors, and drones that are used to collect real-time data. This information can more efficiently direct the application of agricultural inputs to have less socio-environmental impact, thus connecting to the ESG agenda.
• Technology allows traceability, monitoring, and recording of all production stages in a unified way, and allows the possibility of access in different locations.

Would you like to know more about technology trends in commodity markets?

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hEDGEpoint: Extensive understanding of agribusiness

hEDGEpoint manages agribusiness risks, combining extensive knowledge in agribusiness markets with financial expertise to offer you the best possible experience in future operations.

Aiming to democratize access to information for the agricultural and energy commodity sectors, we’ve created the hEDGEpoint HUB. This is our newest content hub that brings together both market intelligence reports and insight.

Moreover, it offers online classes to those who want to understand the market in more depth, aiming to develop and improve themselves using more sophisticated tools. The courses are 100% remote and can be accessed from any device and location.

To find out more, click here!