MARKET SIZE IN TERMS OF NUMBER OF GROWERS

• There were 4,550 apple growers in Brazil in 2017.
• Brazilian Association of Apple Producers (ABPM), which represents 90% of the total Brazilian production of apples, noted that most of the growers in Brazil are small-scale. However, commercial units, though few in number, still account for 40% of the production.
• According to ABPM, the following are the best producers and exporters of apple in Brazil: Agroban Agroindustrial, Agropecuária Schio Ltda, Agropel Agroindustrial Perazzoli Ltda, Agrospe Agro Industrial São Pedro de Vacaria, Castel Frutas Comercial, Bortolon Agrocomercial Eireli, Fischer S/A Agroindústria, Fruticultura Malke, Frutini - Fruticultura Aliprandini, Pomagri Frutas, and Rasip Alimentos.

OTHER HELPFUL FINDINGS

• Brazil produced 1.1 million tons of apple in 2018. This is the normal annual production level of apple in the country.
• In terms of value, the market size of the apple industry in Brazil is worth $384.3 million (R$ 1.6 billion).
• In terms of geographic breakdown, Santa Catarina is the largest apple producing state in the country with 575,700 tons of apple produced in 2018. Sao Joaquim region, part of the state of Santa Catarina, is responsible for 35% of the national apple planting with 2,400 fruit growers on 12,000 hectares planted.

Research Strategy:

USEFUL FINDINGS

• According to the Food Innovation Online Corp on the PotatoPro platform, in Argentina, the potato output has changed very little in 50 years. Since the early 1960s, the national harvest was on average around 2 million tonnes, with only occasional peaks.
• The potato production in the country in 2017 was reported to be 2,454 million tonnes, the potato yield was reported to be 323,003 hg/ha (hectogram per hectare), and potato was harvested from an area of 75,975 ha, according to data from the FAO based on the imputation methodology.
• Analysis from the past year shows that the only changes marked in the potato production in Argentina are the yield which was reported to be 291,312 hg/ha in 2015 and increased to 323,003 hg/ha by 2017. However, a steady drop in the size of the harvested area is noticeable as the size has decreased from 200,000 ha in 1961 to around 68,000 ha in 2007.
• The potato production in Argentina can be characterized as large-scale and highly mechanized and takes place around Buenos Aires and Santa Fe.
• According to the FAO, Argentina has 39.2 million ha of arable land of which 1 million ha is under permanent crops and 108 million ha of land is under permanent meadows and pastures.
•  ADRagricola, an Argentinian company, produces and markets potatoes.
•  HZPC América Latina S.A., a subsidiary of the Dutch potato company HZPC Holland BV, is another company that produces potatoes in Argentina.
• According to Mordor Intelligence, Argentina's major crop production comes from soybean and maize, which are considered the most profitable oil seed and cereal. Consequently, the growth of other market segments has been minimal in the past 20 years. The most important fruits and vegetables are grapes, apple, limes and lemons, pears, onions, garlic, potatoes, and tomatoes.
• The lemon and potato exports have been showing a CAGR of 7% and 46% respectively between 2011-2016, which indicates that it has a high future potential in Argentina.

RELATED INFORMATION

• According to eFarm News, the Argentinian potato seed market is segmented into two large segments: fresh consumption and industrial use. Currently, the Dutch company HZPC, based in Buenos Aires, is renewing the potato seed market in the country.
• Farmers plant an estimated 76,000 hectares with potatoes and 25% of this area supplies the industry while 75% supplies fresh demand.
• According to HZPC's annual report, its business in Argentina is taking huge steps forward and the company is principally applying to grow under license in this area.
• Argentina is ranked at #27 in the potato production in the world with 2.5 million tons volume in 2017.
• The Servicio Nacional de Sanidad y Calidad Agroalimentaria (SENASA), translated in English the National Agrifood Health and Quality Service, is a government organization. SENASA approves and supervises private inspection bodies and offers various resources related to agribusiness. It also offers real-time producers statistics and resources along with imports and exports of various products in the country, but no information on the potato growers is found.
• In Argentina, one of the oldest farmer organization is Movimiento Argentino para la Producción Orgánica (MAPO) translated in English the Argentine Movement for Organic Production.
•  MAPO and SENASA had an important role in formulating and implementing the National Programme for the Development of Organic Agriculture in Argentina.

RESEARCH STRATEGY

Findings

1. The Data for Our Triangulated Calculation

• As was mentioned above and explained in detail below, we couldn't determine the market size for almonds in Peru. However, we were able to determine the number of almond farms among an "other" category of countries, which logically would include Peru (explained below). The following findings explain how we formulated and conducted that triangulated calculation.
• We were able to find that California has approximately 6,800 almond farms, according to the Almond Almanac 2017 citing data from the USDA Agricultural Census.
• We were also able to find some data published by Statista about almond production by country. While no data was specific to Peru, the data enabled us to formulate a triangulated calculation because there was an "other" category of countries (list of countries not specified) which would logically include Peru (because Peru produces almonds, yet is not listed individually within the data graph).
• That data from Statista stated that the U.S. produced 1,029,650 metric tons of almonds between 2017 and 2018. That translates to an 80.15% market share (1,029,650 metric tons (U.S. almond production) divided by 1,284,650 (global almond production, which we calculated by adding up the almond production for each country plus the "other" group of countries) multiplied by 100).
• For our calculation, the number of California almond farms represents the number of U.S. almond farms because "California is the only place in North America where almonds are grown commercially."
• To calculate "other" countries' collective almond production market share, we divided 11,500 ("other" countries' collective almond production, in metric tons) by 1,284,650 (global almond production, in metric tons) and multiplied that value by 100 (to covert into a percentage), which equals 0.9 (rounded to the nearest hundredth).

2. Our Triangulated Calculation

• Our triangulated, cross calculation, in written format, was as follows: U.S. almond production is to the number of U.S. almond farms as "other" countries' collective almond production is to X (triangulated number of "other" countries' almond farms; value we were calculating for).
• That formula, in numerical format, was as follows: 80.15 (U.S. almond production market share) / 6,800 (number of U.S. almond farms) = 0.9 ("other" countries' almond production market share) / X (triangulated number of almond farms among "other" countries collectively).
• As such, we multiplied 6,800 by 0.9 and divided that value by 80.15, which equals 76.36 (rounded to the nearest hundredth).
• Therefore, according to our triangulated calculation, the estimated number of almond farms among "other" countries amounted to 76.36 between 2017 and 2018.
• As was mentioned above, it's logical to assume that Peru is included in those 76.36 almond farms because the country produces almonds, yet was not listed individually in the data graph.

Your Research Team Applied the Following Strategy:

RELEVANT INSIGHTS

• In 2016, the United States Department of Agriculture (USDA) forecasted a rate of return of 1.25% for the agriculture sector from current income.
• The total products produced by the agribusiness in the United States was valued at $388.5 billion in 2017.
• The agribusiness industry also contributed over $159 billion in 2018, to the United States economy in export sales.
• Foreign direct investments (FDI) into the industry was $14.1 billion in 2017.
• In 2018, the U.S. Agriculture industry had total farm assets (physical assets and financial assets) valued at $3 trillion.
• The total production expenses for the agribusinesses in the United States was $369.1 billion in 2018.
• In 2018, the total gross revenue for the industry was $435.4 billion.
• In 2017, the U.S. agribusiness industry contributed $1.053 trillion to the gross domestic product (GDP) of the U.S.; a share of 5.4%.

Research Strategy:

KEY RELEVANT INSIGHT ON AGRIBUSINESS IN MEXICO

• The gross domestic products (GDP) from agriculture in Mexico increased to MXN 617,592.06 million in the second quarter of 2019 from MXN 589,837.74 million in the first quarter.
• The GDP from agriculture in Mexico averaged MXN 464,463.56 million from 1993 until 2019, with an all-time high seen in 2018 of MXN 712,278.12 million.
• According to the World Bank, the average value added in the agricultural sector as a percent of GDP for Mexico during the period of 1965-2018 was 6.36%; in 2018, the rate dropped to 3.34%.
• The average value added in the agricultural sector for Mexico during the period of 1965-2018 was MXN 377.774 billion and was seen at MXN 796.225 billion in 2018.
• Mexico saw an average annual growth of about 6%; the country is the third-largest exporter in Latin America behind Brazil and Argentina.
• Major export crops include tomatoes, corn, coffee, and sugarcane, whereas wheat and cotton are amongst some of its most profitable crops.

ADDITIONAL INSIGHTS

• The average return on assets for the sector was 8%. The average rate of return from income was 3%, and the average rate of return from real capital gains was 1.75 times the rate of return from current income for US Agriculture.

RESEARCH STRATEGY

USEFUL FINDINGS

• Some major crops produced in Ecuador are rice, sugar, coffee, bananas, palm oil, and cacao.
• In the absence of publicly available information on the overall rate of return for the agribusiness industry in Ecuador, the following crop-specific information was collected to get an idea on the industry.

Coffee

• The production cost of coffee in Ecuador is around $1.91 per pound, while the international market price for commercial coffee is $1.099 per pound.
• The international market price, or price C, reached $1.1171 per pound on June 11, 2018.
• In Ecuador, a producer given the price C as mentioned above could have experienced a loss of about -38.7%.

Bananas

• Although the exact rate return from a trader's perspective was not available, a farmer who invested around $300 weekly received $315 with a percentage return of ($15/$300) or 5%.
• However, the investment would go up by $200 more if he had to invest in workers, freight, and fertilizers.

Cocoa

• For cocoa that was sold for between $2,700 and $2,800, a producer witnessed a profit of $120.
• According to Rubén Flores, Minister of Agriculture, Ecuador, the profit margin for cocoa producers was around 6% in 2018.

Palm

• While the production cost of palm ranges from $125 to $135, a grower generated about $105 per ton. This indicates that the grower lost $20 to $30 on every $105 taking the lost percentage somewhere between ($20/$105) ($30/$105) (i.e., 19.05% to 28.57%).

Rice

• While producing a block of rice cost a farmer in Ecuador $1,000, his profit was merely $250 per block, implying a margin of 25% ($250/$1,000).

Additional Insights

• As per the latest available information for 2007-2015 (published in 2019) agribusiness in Ecuador underwent the best economic performance among all sectors. It experienced an average growth rate of 4.3% during the period, which was notably higher than the 4.1% growth rate of the country's economy.

Research Strategy:

Government sources of Ecuador

Industry Stakeholders: Agribusiness Companies

Insights relating to Traders or Producers

Academic Reports

Findings

1. Overall Rate of Return for Brazil's Agribusiness Industry

A. The Data

• To calculate the rate of return for Brazil's agribusiness industry, the first data point we needed was the amount of money invested in the country's agriculture industry. We were able to find the total 2018 funding from Brazil's Agriculture Ministry, as part of the farm program maintained by the Brazilian government, which totaled $58 billion.
• The second data point we needed for calculating rate of return was Brazil's total value of agricultural output in 2018. For that, we found that overall agribusiness accounted for 23.5% of Brazil's GDP in 2017 (the closest year we could find to 2018). To determine the dollar value that 23.5% equates to, we multiplied Brazil's overall GDP in 2017 ($2,053,210,000,000) by 0.235 (representing 23.5%), which equals $482,504,350,000 (Brazil's agribusiness GDP in 2017).
• With those data points, we were then able to conduct the rate of return calculation, which is described below.

B. Rate of Return Calculation

•  The formula we used for calculating rate of return, in words, is as follows: Brazil's agriculture output total minus industry investment total divided by industry investment total multiplied by 100.
• Accordingly, the first step of that calculation was as follows: $482,504,350,000 (Brazilian agriculture industry output total 2017) — $58 billion (industry investment) = $424,504,350,000.
• Second, we divided $424,504,350,000 by $58 billion, which equals 7.319.
• Lastly, we multiplied 7.319 by 100, which equals 731.9.
• Therefore, according to our triangulated calculation, the overall rate of return for Brazil's agribusiness industry was 731.9% in 2017/18. We listed the year as 2017/18 because the calculation was based on a combination of data from 2017 and 2018.

2. Rate of Return Breakdown by Segment

A. Top 25%

• To calculate the rate of return for the top 25% of Brazilian agribusiness industry performers, we calculated the top 25% of the GDP total, as that value was proportional to such.
• Accordingly, the first step was to calculate the top 25% of the Brazilian agriculture industry's GDP share. To do so, we multiplied 23.5% (Brazilian agriculture's GDP share) by 0.25 (representing 25%), which equals 5.875(%). Then we subtracted 5.875% from 23.5%, which equals 17.625%
• To determine the Brazilian GDP total for the top 25% of industry performers, we multiplied Brazil's overall GDP in 2017 ($2,053,210,000,000) by 0.17625 (representing 17.625%), which equals $361,878,262,500.
• Next, we used the same rate of return calculation included above, but with the previously calculated GDP data corresponding to the 17.625%.
• Accordingly, the first step of that calculation was as follows: $361,878,262,500 (Brazilian agriculture industry output total for the top 25% of industry performers 2017) — $58 billion (industry investment) = $303,878,262,500.
• Second, we divided $303,878,262,500 by $58 billion, which equals 5.24 (rounded to the nearest hundredth).
• Lastly, we multiplied 5.24 by 100, which equals 524.
• Therefore, according to our triangulated calculation, the rate of return for the top 25% of Brazil's agribusiness industry performers was 524% in 2017/18.

B. Middle 50%

• We used the same logic as we did for the top 25% in calculating the rate of return for the middle 50% of industry performers.
• Accordingly, the first step was to calculate the middle 50% of the Brazilian agriculture industry's GDP share. To do so, we divided 23.5% (Brazilian agriculture's GDP share) by 2 (to calculate for 50%), which equals 11.75(%).
• To determine the Brazilian GDP total for the middle 50% of industry performers, we multiplied Brazil's overall GDP in 2017 ($2,053,210,000,000) by 0.1175 (representing 11.75%), which equals $241,252,175,000.
• For the rate of return calculation, the first step was as follows: $241,252,175,000 (Brazilian agriculture industry output total for the middle 50% of industry performers 2017) — $58 billion (industry investment) = $183,252,175,000.
• Second, we divided ($)183,252,175,000 by ($)58 billion, which equals 3.16 (rounded to the nearest hundredth).
• Lastly, we multiplied 3.16 by 100, which equals 316.
• Therefore, according to our triangulated calculation, the rate of return for the middle 50% of Brazil's agribusiness industry performers was 316% in 2017/18.

C. Bottom 25%

• We used the same logic as we did for the top 25% and top 50% in calculating the rate of return for the bottom 25% of industry performers.
• Accordingly, the first step was to calculate the bottom 25% of the Brazilian agriculture industry's GDP share. To do so, we multiplied 23.5% (Brazilian agriculture's GDP share) by 0.75 (representing 75%, which yields the value corresponding to the bottom 25%), which equals 17.625%. Then we subtracted 17.625% from 23.5%, which equals 5.88% (rounded to the nearest hundredth).
• To determine the Brazilian GDP total for the bottom 25% of industry performers, we multiplied Brazil's overall GDP in 2017 ($2,053,210,000,000) by 0.0588 (representing 5.88%), which equals $120,728,748,000.
• For the rate of return calculation, the first step was as follows: $120,728,748,000 (Brazilian agriculture industry output total for the bottom 25% of industry performers 2017) — $58 billion (industry investment) = $62,728,748,000.
• Second, we divided ($)62,728,748,000 by ($)58 billion, which equals 1.08 (rounded to the nearest hundredth).
• Lastly, we multiplied 1.08 by 100, which equals 108.
• Therefore, according to our triangulated calculation, the rate of return for the bottom 25% of Brazil's agribusiness industry performers was 108% in 2017/18.

Your Research Team Applied the Following Strategy:

Findings

1. Overall Rate of Return for Argentina's Agribusiness Industry

A. The Data

• To calculate the rate of return for Argentina's agribusiness industry, the first data point we needed was the amount of money invested in the country's agriculture industry. We were only able to find that data for 2016 (which is why we used that year as our metric) and the amount invested in the industry that year totaled $58 billion. For continuity, we used 2016 as the year for the remaining data points we needed.
• The second data point we needed for calculating rate of return was Argentina's total value of agricultural output in 2016. For this, we found that agriculture accounted for 6.26% of Argentina's GDP in 2016. To determine the dollar value that 6.26% equates to, we multiplied Argentina's overall GDP in 2016 ($556.774 billion) by 0.0626 (representing 6.26%), which equals $34,854,052,400 (Argentina's agriculture GDP in 2016).
• With those data points, we were then able to conduct the rate of return calculation, which is described below.

B. Rate of Return Calculation

•  The formula we used for calculating rate of return, in words, is as follows: Argentina's agriculture output total minus industry investment total divided by industry investment total multiplied by 100.
• Accordingly, the first step of that calculation was as follows: $34,854,052,400 (Argentinian agriculture industry output total 2016) — $58 billion (industry investment) = -$23,145,947,600.
• Second, we divided -($)23,145,947,600 by ($)58 billion, which equals -($)0.39906806206.
• Lastly, we multiplied -0.39906806206 by 100, which equals -39.91 (rounded to the nearest hundredth).
• Therefore, according to our triangulated calculation, the rate of return for Argentina's agribusiness industry was -39.91% in 2016.

2. Rate of Return Breakdown by Segment

A. Top 25%

• To calculate the rate of return for the top 25% of Argentinian agribusiness industry performers, we calculated the top 25% of the GDP total, as that value was proportional to such.
• Accordingly, the first step was to calculate the top 25% of the Argentinian agriculture industry's GDP share. To do so, we multiplied 6.26% (Argentinian agriculture's GDP share) by 0.25 (representing 25%), which equals 1.565(%). Then we subtracted 1.565% from 6.26%, which equals 4.695%
• To determine the Argentinian GDP total for the top 25% of industry performers, we multiplied Argentina's overall GDP in 2016 ($556.774 billion) by 0.04695 (representing 4.695%), which equals $26,140,539,300.
• Next, we used the same rate of return calculation included above, but with the previously calculated GDP data corresponding to the 4.695%.
• Accordingly, the first step of that calculation was as follows: $26,140,539,300 (Argentinian agriculture industry output total for top 25% of industry performers 2016) — $58 billion (industry investment) = -$31,859,460,700.
• Second, we divided -$31,859,460,700 by $58 billion, which equals -0.54930104655.
• Lastly, we multiplied -0.54930104655 by 100, which equals -54.93 (rounded to the nearest hundredth).
• Therefore, according to our triangulated calculation, the rate of return for the top 25% of Argentina's agribusiness industry performers was -54.93% in 2016.

B. Middle 50%

• We used the same logic as we did for the top 25% in calculating the rate of return for the middle 50% of industry performers.
• Accordingly, the first step was to calculate the middle 50% of the Argentinian agriculture industry's GDP share. To do so, we multiplied 6.26% (Argentinian agriculture's GDP share) by 0.5 (representing 50%), which equals 3.13(%). Then we subtracted 6.26% — 3.13%, which equals 3.13%
• To determine the Argentinian GDP total for the middle 50% of industry performers, we multiplied Argentina's overall GDP in 2016 ($556.774 billion) by 0.0313, which equals $17,427,026,200.
• For the rate of return calculation, the first step was as follows: $17,427,026,200 (Argentinian agriculture industry output total for the middle 50% of industry performers 2016) — $58 billion (industry investment) = -$40,572,973,800.
• Second, we divided -($)40,572,973,800 by ($)58 billion, which equals -0.69953403103.
• Lastly, we multiplied -0.69953403103 by 100, which equals -69.95 (rounded to the nearest hundredth).
• Therefore, according to our triangulated calculation, the rate of return for the middle 50% of Argentina's agribusiness industry performers was -69.95% in 2016.

C. Bottom 25%

• We used the same logic as we did for the top 25% and top 50% in calculating the rate of return for the bottom 25% of industry performers.
• Accordingly, the first step was to calculate the bottom 25% of the Argentinian agriculture industry's GDP share. To do so, we multiplied 6.26% (Argentinian agriculture's GDP share) by 0.75 (representing 75%, which yields the value corresponding to the bottom 25%), which equals 4.695%. Then we subtracted 4.695% from 6.26%, which equals 1.56% (rounded to the nearest hundredth).
• To determine the Argentinian GDP total for the bottom 25% of industry performers, we multiplied Argentina's overall GDP in 2016 ($556.774 billion) by 0.0156 (representing 1.56%), which equals $8,685,674,400.
• For the rate of return calculation, the first step was as follows: $8,685,674,400 (Argentinian agriculture industry output total for the bottom 25% of industry performers 2016) - $58 billion (industry investment) = -$49,314,325,600.
• Second, we divided -($)49,314,325,600 by ($)58 billion, which equals -0.8502469931.
• Lastly, we multiplied -0.8502469931 by 100, which equals -85.02 (rounded to the nearest hundredth).
• Therefore, according to our triangulated calculation, the rate of return for the bottom 25% of Argentina's agribusiness industry performers was -85.02% in 2016.

Your Research Team Applied the Following Strategy: