THE POTENTIAL OF ADDED VALUE STRATEGIES TO AID LATIN AMERICA NR INDUSTRY IN CHALLENGING THE LIMITATIONS OF SECULAR DECLINE OF COMMODITY PRICES

DIOGO ESPERANTE1

14.11

2019

1- Diretor Executivo Apabor, Consultor Técnico responsável pelo Programa de Monitoramento Estatístico da ABRABOR

; representante da ABRABOR na Diretoria do International Rubber Research and Development Board (IRRDB) e da

APABOR no International Rubber Study Group. Atua como Consultor em Estratégia Comercial na Consultoria Planthec

Rubber com atuação em países da América Latina, África e Asia

CONSUMPTION CONCENTRATION

4896

1185

1033

932

711

677

650

601

506

428

381

194

157

142

103

China

EU-28

India

US

Others

Japan

Thailand

Indonesia

Malaysia

Brazil

Korea

Vietnam

Turkey

Sri Lanka

Canada

0 1000 2000 3000 4000 5000 6000

Distribuição do Consumo Mundial 2016 ( ‘000 ton)Fonte: ANRPC/FAO/IRSG Adaptation: ESPERANTE, D.

Image01. Percentage of Natural Rubber Production in Latin America.

Source: APABOR

Latin America NR

Prod CountriesConsumption Production Deficit

Brazil 405 185 -220

Guatemala - 100

Colombia 17 6 -11

Mexico 158 18 -140

TOTAL 580 309 -271

Table01. Latin America NR Fundamentals per year 2018

('000 tonnes)

Import concentration

42%

34% 10% 8%3% 1%

0%

10%

20%

30%

40%

50%

Indonésia Tailândia Costa do Marfim Malásia Vietnã Guatemala

Importação Borracha Bloco Brasileira Primeiro Semestre 2019NCM: 40012100 a 40012990

Fonte. MDIC

Adaptação Diogo Esperante ABRABOR

TABLE02. Brazilian Savanna Degraded Cattle Pasture (EMBRAPA)

States Millions of há % of the Total Planted Pasture Area

BA 1,55 71%

DF 0,07 60%

GO 8,8 70%

MA 1,3 74%

MG 5,82 50%

MS 6,52 58%

MT 4,25 67%

PI 0,34 68%

PR 0,05 51%

SP 1,09 42%

TO 2,13 51%

Total 31,92 60%

0,59

2,21

1,8

4,52

1,404

0

0,5

1

1,5

2

2,5

3

3,5

4

4,5

5

1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019out

TSR 10 Cingapure Front MonthSource. SGX Adaptation Diogo Esperante

184

244

337

450

560 540

461

629

602

675

417386

308264 269

0

100

200

300

400

500

600

700

800

0

50

100

150

200

250

300

350

400

450

500

2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017

SMR20 vs Natural Rubber Planting in Asian Countries

Área plantada(‘000 ha)

PreçoSMR 20

(US$/100 kg)

AREA NEWLY ATTAINING MATURITY VS AREA UPROOTED (‘000 HA)

337

436 430

537477

619 604

676

426389

307278

197 190241 220 227

260 251 272236 215 212 208 204 208 201 203

0

100

200

300

400

500

600

700

800

2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025

Risk01.

Supply crises

RUBBER SUPPLY PROJECTIONS(‘000 TONS)

World

Supply

World

ConsumptionAftermath Stock

Consumtion

of Stock in

Months

2016 12,492 12,725 -233 2909 2,74

2017 13,386 13,294 92 3001 2,71

2018 13,770 13,979 -209 2791 2,40

2019 14,511 14,409 102 2893 2,41

2020 15,255 14,884 371 3263 2,63

2021 15,737 15,329 408 3672 2,87

2022 16,070 15,846 224 3896 2,95

2023 16,349 16,433 -84 3811 2,78

2024 16,652 17,084 -432 3378 2,37

2025 16,901 17,775 -874 2505 1,69

DR. NGUNEN BICH IRC 2019

NATURAL RUBBER CONSUMPTION CONCENTRATION IN SOUTHEAST ASIAFONTE: ANRPC/FAO/IRSG ADAPTATION: ESPERANTE, D.

15% 21%29%

48%

76%

85% 79% 71% 52% 24%

0%

20%

40%

60%

80%

100%

120%

1960 1970 1980 2000 2016

Asia Others

2018

CONSUMPTION CONCETRATION INCREASE

Top 4 NR Consuming

Countries in Asia 2016 2018 Var%

China 5011 5670 12%

India 1033 1218 15%

Thailand 650 720 10%

Indonesia 619 680 9%

Risk02.

Supply crises in

countries import-dependent

JACKS, David S. 2019. "From boom to bust: a typology of real commodity

prices in the long run," Cliometrica, Springer;Cliometric Society (Association

Francaise de Cliométrie), vol. 13(2), pages 201-220, May.

JACKS, David S. 2019. "From boom to bust: a typology of real commodity

prices in the long run," Cliometrica, Springer;Cliometric Society (Association

Francaise de Cliométrie), vol. 13(2), pages 201-220, May.

0,462

0,555

0,726 0,727

0,666 0,668 0,684

0,7570,79 0,779

22,60%

12,30%

9,20%

4,70% 3,80% 3,80%

0,00% 0,00%

-8,00%

-22,70%-25,00%

-20,00%

-15,00%

-10,00%

-5,00%

0,00%

5,00%

10,00%

15,00%

20,00%

25,00%

0,00

0,10

0,20

0,30

0,40

0,50

0,60

0,70

0,80

0,90

Ivory Coast Cambodia Thailand China Vietnam Philipines Indonesia Sri Lanka India (Kerala) Malaysia

NR Expansion vs HDISource: ANRPC/PNUD Adaptation: Diogo Esperante

IDH Growth %

TRIANGULAR MODEL OF VALUE CREATION, CAPTURING AND SHARINGMARCO FAVA NEVES (2014)

Cost of Production

Colective

Action

Diferentiation

DIFERENTIATION.

COST OF PRODUCTION.

COLLECTIVE ACTIONS.

(1) listing the activities directly related to production, central

competence, and develop strategies to improve them.

(2) analyze assets and find ways of using them better.

(3) search for gains in scale

(4) material quality

(5) manpower performance

(6) continuous reformulation of practices and operations

(7) new technologies to improve company’s efficiency

(8) improving financial architecture to reduce the cost of capital,

(9) improve competition with in the value chain

(10) Use of learned experience

(11) reducing the cost of transaction with the usage of contracts.

(1)among the supply chain,

(2)internal management,

(3)products, brands, packages and services,

(4) marketing channels,

(5)prices,

(6)communications

(7)associations and cooperatives.

Integrated relationship(1)

Products and solution(2)

People and services(3)

Packaging(4)

Image and branding(5)

Activities/Cases APABOR BRAZIL GF TRADING

GUATEMALA

GRELCO

COLOMBIA

PROGOMEX

MEXICO

DIFERENTIATION

(2) Product and

Solutions:

Sustainability project

with top Environmental

Certifications (i.e. FSC)

COLLECTIVE

ACTION

(2) Internal

Management: Quality Project,

consisting in the advertisement

of a culture of good practices

done across the whole

productive chain with

engagement from all relevant

stakeholders

(1) Collective Activities

within the Supply Chain:

parting up with client to

develop a program to

enhance productivity and

quality among Raw

Material Suppliers

COST OF

PRODUCTION

(g)Creation of new Technologies

to improve efficiency:

Support to Institutes and

Universities to fund researches that

can enhance productivity and

product performance within the

short and long term

(b) Better use of

company assets:

production of

manufactured products

or markets that are

already paying for

Sustainability

(b) Better use of

company assets:

integration of

different products

for different

markets within the

same company

Collective Action (2) Internal Management: Quality Project,

consisting in the advertisement of a culture of good

practices done across the whole productive chain with

engagement from all relevant stakeholders

Activities/Cases APABOR BRAZIL GF TRADING

GUATEMALA

GRELCO

COLOMBIA

PROGOMEX

MEXICO

DIFERENTIATION

(2) Product and

Solutions:

Sustainability project

with top Environmental

Certifications (i.e. FSC)

COLLECTIVE

ACTION

(2) Internal

Management: Quality Project,

consisting in the advertisement

of a culture of good practices

done across the whole

productive chain with

engagement from all relevant

stakeholders

(1) Collective Activities

within the Supply Chain:

parting up with client to

develop a program to

enhance productivity and

quality among Raw

Material Suppliers

COST OF

PRODUCTION

(g)Creation of new Technologies

to improve efficiency:

Support to Institutes and

Universities to fund researches that

can enhance productivity and

product performance within the

short and long term

(b) Better use of

company assets:

production of

manufactured products

or markets that are

already paying for

Sustainability

(b) Better use of

company assets:

integration of

different products

for different

markets within the

same company

1. Compliance with laws

2. Tenure and use rights and responsibilities

3. Indigenous peoples' rights

4. Community relations and worker's rights

5. Benefits from theforest

6. Environmental impact

7. Managementplan

8. Monitoring andassessment

9. Maintenance of high conservation valueforests

10. Plantations

Diferentiation (2) Product and Solutions:

Sustainability project with top Enviromental Certifications (i.e.

FSC)

Activities/Cases APABOR BRAZIL GF TRADING

GUATEMALA

GRELCO

COLOMBIA

PROGOMEX

MEXICO

DIFERENTIATION

(2) Product and

Solutions:

Sustainability project

with top Enviromental

Certifications (i.e. FSC)

COLLECTIVE

ACTION

(2) Internal

Management: Quality Project,

consisting in the advertisement

of a culture of good practices

done across the whole

productive chain with

engagement from all relevant

stakeholders

(1) Collective Activities

within the Supply Chain:

parting up with client to

develop a program to

enhance productivity and

quality among Raw

Material Suppliers

COST OF

PRODUCTION

(g)Creation of new Technologies

to improve efficiency:

Support to Institutes and

Universities to fund researches that

can enhance productivity and

product performance within the

short and long term

(b) Better use of

company assets:

production of

manufactured products

or markets that are

already paying for

Sustainability

(b) Better use of

company assets:

integration of

different products

for different

markets within the

same company

BENEFICIO

Transformacion

Empresas de guantes

Empresas de bombas

Empresas de pegantes

Distribuidoras de latex

CULTIVO

Beneficio

Beneficio Latex

Beneficio Caucho Seco

VALUE CHAIN

StrategyChemicalTechnique

Investigation and

developmentCommercialization

Plantations Processing ManufacturingDistribution y

Commercialization

FinancialPurchase

HumanResources

Tech Support

Strategic Process

Support Process

Core Proces EL CLIENTE

Environmental Management

AgricultureTechnique

Technical Advice

Activities/Cases APABOR BRAZIL GF TRADING

GUATEMALA

GRELCO

COLOMBIA

PROGOMEX

MEXICO

DIFERENTIATION

(2) Product and

Solutions:

Sustainability project

with top Enviromental

Certifications (i.e. FSC)

COLLECTIVE

ACTION

(2) Internal

Management: Quality Project,

consisting in the advertisement

of a culture of good practices

done across the whole

productive chain with

engagement from all relevant

stakeholders

(1) Collective Activities

within the Supply Chain:

parting up with client to

develop a program to

enhance productivity and

quality among Raw

Material Suppliers

COST OF

PRODUCTION

(g)Creation of new Technologies

to improve efficiency:

Support to Institutes and

Universities to fund researches that

can enhance productivity and

product performance within the

short and long term

(b) Better use of

company assets:

production of

manufactured products

or markets that are

already paying for

Sustainability

(b) Better use of

company assets:

integration of

different products

for different

markets within the

same company

QUE PROVEE PROGOMEX A LOS GRUPOS DE

PRODUCTORES

MATERIALES Y EQUIPO

Planta injertada de hule de clones productivos (brasileños,

guatemaltecos y asiáticos)

Yemas de clones de hule

Coagulantes de la producción (ácido acético y/o fórmico)

Cuchillas de pica (diferentes medidas)

Ethefon (ácido 2-cloroetil-fosfónico)

Tasas recolectoras (diferentes medidas)

Canalejas de escurrimiento del látex

Fungicidas

Insecticidas

Lámina para elaboración de banderolas (plantilla del ángulo

de inclinación).

Alambre cal. 12, para fabricación de soportes de la tasa

ASISTENCIA TÉCNICA A PRODUCTORES

SE IMPARTEN CURSOS DE CAPACITACIÓN SOBRE LOS

DIFERENTES TÓPICOS DE INTERÉS PARA LOS

PRODUCTORES:

• Establecimiento de jardines de multiplicación de hule

• Establecimiento y manejo de viveros para la producción de

planta injertada con clones altamente productivos.

• Capacitación sobre plantaciones de hule en explotación

(pica), considerando apertura de paneles, pica, uso de

estimulantes de la producción, uso de coagulantes, etc.

• Capacitación sobre manejo de principales plagas y

enfermedades

• Asistencia técnica directa en las plantaciones de los

productores

(1) Collective Activities

within the Supply

Chain: parting up

with client to develop

a program to

enhance productivity

and quality among

Raw Material

Suppliers

CONCLUSION

Activities Variable Factor Identified Factor %

Cost of Production 11 2 18%

Collective Action 7 2 29%

Diferentiation 5 2 40%

Total 23 5 26%

THE POTENTIAL OF ADDED VALUE STRATEGIES TO AID LATIN AMERICA NR INDUSTRY IN CHALLENGING THE LIMITATIONS OF SECULAR DECLINE OF COMMODITY PRICES

DIOGO ESPERANTE1

13.11

2019

1- Diretor Executivo Apabor, Consultor Técnico responsável pelo Programa de Monitoramento Estatístico da ABRABOR

; representante da ABRABOR na Diretoria do International Rubber Research and Development Board (IRRDB) e da

APABOR no International Rubber Study Group. Atua como Consultor em Estratégia Comercial na Consultoria Planthec

Rubber com atuação em países da América Latina, África e Asia

GRACIAS!