Takashi Tanaka joined Sumitomo Corporation in 1998 and constantly been involved in the agriculture-related business. “I have been working in the same field for 18 years but the job is still interesting. This is because the work environment always allows me to take on new challenges. I hope to continue to tackle new challenges as I move forward.”
Responsible agricultural investments (RAI)─The first time Japan’s Ministry of Foreign Affairs (MOFA) posed this concept was at the G8 summit held in L'Aquila, Italy in July 2009. Most countries in the world require agricultural investments to improve the productivity of agricultural crops. However, these investments must not destroy the local environment or community. In addition, there must be balance between the benefits reaped by agricultural producers, countries receiving investments, and investors. This is the principle of RAI. The business investments being conducted by Sumitomo Corporation in the food and agriculture sectors in countries such as Romania, Brazil, and China, are an effort to fulfill this responsibility as an integrated trading company.
The AgriScience Department, which mainly handles Sumitomo Corporation’s agrochemicals business, acquired Alcedo, the largest agricultural materials wholesaler in Romania. The company first adopted a business model for directly selling farmers various products essential to agriculture in 2011. Later on the multi-support system for agricultural production, as this business became known, expanded to financial services, including payment for products on behalf of farmers, and crop collection services. These services, which mimic those offered by Japan’s agricultural cooperatives, support the broad scope of activities that are carried out by agricultural producers.
“The goal is to improve agricultural productivity by comprehensively supplying products and services essential to farmers, including fertilizers and seeds for the preproduction stage, agrochemicals for the crop nurturing process, and crop collection services after harvest.”
This explanation was provided by Takashi Tanaka, who heads up the Investment & Development Team in the AgriScience Department. These multiple services were realized through Sumitomo Corporation’s distinct integrated corporate strength, which is a combination of capabilities, including product procurement, financing, and business development. Tanaka proudly states that Sumitomo Corporation is the only trading company that provides comprehensive services that fulfill the needs of agricultural producers to this extent.
In 2015, the AgriScience Department fully launched operations in South America, which was the second round of its multiple support for agricultural producers. This consisted of undertakings in the state of Mato Grosso, a grain-producing region in the Midwest of Brazil. The AgriScience Department invested in Agro Amazonia, which is Brazil’s leading agricultural materials wholesaler. In May of the same year, a business model similar to that employed at Alcedo was implemented and sales of various agricultural materials got underway, including the delivery of agrochemicals, fertilizers, seeds, and products for animal husbandry to agriculture and livestock farmers.
“The state of Mato Grosso is a globally-known as a region for producing soy beans and corn. Going forward the development of agricultural land in the region is also greatly promising. Mato Grosso is 2.5 times the size of Japan. We believe that by increasing crop yields in this region it will be possible to deliver food to many people around the world.”
This is according to Kaoru Hosoda from the AgriScience Department, who was a part of the team that carried out the 18-month long negotiations for the capital alliance with Agro Amazonia. Hosoda, who works directly under Takashi Tanaka, learned from Tanaka’s experiences in Romania. He successfully carried out negotiations through persistent dialogue with Agro Amazonia in Brazil.
Hosoda said that his goal is to become an asset that provides solutions for the various problems that confront farmers. Sumitomo Corporation’s integrated corporate strength is naturally at the top of his mind. On the one hand, there are the diverse and compelling needs of farmers, while on the other hand, exist the various business lines operated by Sumitomo Corporation. Hosoda believes that by successfully bringing these two together, it will be possible to devise a system that boosts agricultural productivity and globally supplies crops that consumers will feel safe about buying.
Agro Amazonia was established in 1983. It is an agricultural material wholesaler with a sales network in the state of Mato Grosso, which is Brazil’s largest grain-producing region.
“There are a number of different specialists that work at Sumitomo Corporation. We consult with the best specialist for our needs so that we can maximize the value we deliver to our customers. I believe this is the role of the company that makes these types of business investments.”
Kaoru Hosoda says that “He is truly grateful that he was assigned to this department because he was given the responsibility to be in charge of a major project despite having no experience in the field.” Hosoda joined the company in 2009. He was transferred to the AgriScience Department around 18 months ago. He enthusiastically told us “I want to encounter a project that will make me want to devote my life to this company.”
Takahiro Kanno is a veteran employee, having joined the company in 1990. His career has solely focused on feed additives, agrochemicals, fertilizers, and agriculture-related products. “In the field, a number of problems pop up daily. I feel a great sense of accomplishment when everyone pulls together to solve these issues.”
The Sumitomo Corporation Group acquired at 65% stake in Agro Amazonia. The Crop Science Department participated in carrying out this investment. While the AgriScience Department handles agrochemicals, the Crop Science Department mainly deals in fertilizers.
“By participating in the multi-support business for agricultural producers, we aimed to develop a new multiple support scheme that centered on the fertilizer business.”
This came from Takahiro Kanno of the Crop Science Department. Thus far the Crop Science Department has invested in fertilizer-related companies in Japan, Australia, China, and Malaysia, and developed fertilizer production and sales operations locally. In particular, the department established plants in Qingdao and Foshan, China. Today, it is delivering high quality fertilizer to nearly all of China.
“In China, the excessive use of fertilizers is currently an issue. The overuse of fertilizer results in soil deterioration. It also contributes to the pollution of underground water and rivers. We not only supply high-quality fertilizer to effectively increase crop yields but we also teach farmers methods for properly fertilizing their land. In China, our goal is to improve farming quality.”
Takafumi Kiuchi of the Crop Science Department explained the objective of his department’s activities. China is the world’s largest agricultural nation with nearly 300 million people engaged in farming. The goal is to build a number of businesses based on the fertilizer business platform it has developed in this country and design a multiple support system for agricultural producers in China. According to Kiuchi, this is the long-term goal of the Crop Science Department. Department members believe they can achieve this goal by having the AgriScience Department, which is already carrying out its business model in Eastern Europe and South America, and the Crop Science Department, which has a solid foothold in China, to form a scrum.
We frequently visit farms together with local staff in China. We communicate face-to-face with the producers.
Tanaka and Hosoda of the AgriScience Department and Kanno and Kiuchi of the Crop Science Department all agree that communication with agricultural producers in the field is crucial. They believe that it is important to genuinely listen to the needs and concerns of farmers and to pour all their energies into finding solutions so that together they can improve the quality of agriculture in the region. In other words, they are dedicated to do all they can for the farmers. In addition, their goal is to reap mutual benefits for the company that Sumitomo Corporation has a stake in and the producer. This is the fundamental goal of the scheme to provide multiple support to agricultural producers and the responsibility that the employees of Sumitomo Corporation must fulfill.
However, consumers should also benefit from these endeavors, other words the end users that buy and eat agricultural crops. In the regions where multiple support is provided to agricultural producers in Romania and Brazil, currently efforts are limited to farms in these two countries. Once this business connects to Sumitomo Corporation’s global logistics and food sales network, it will create a flow that will deliver these products to everyday dinner tables. When this happens, Sumitomo Corporation’s food and agriculture business will complete a value chain that connects producing regions with consumers. The individual food and agriculture businesses Sumitomo Corporation is operating around the world will one day become part of this value chain. That includes the grain collection and export business in Australia, the milling business in Vietnam, and the refrigerated transport system that is used to ship bananas to Japan from the Philippines.
Currently, world population stands at 7.3 billion people. This number is expected to rise to 10 billion people in the next 50 years. Securing food to feed this growing population will soon become an issue for all of mankind. What role should an integrated trading company plan to ensure sufficient safe food supplies and ongoing production? ──Sumitomo Corporation looks to form a scrum that transcends the boundaries of its business fields and to leverage the strength of this scrum to provide solutions to this impending issue.
(Run October 2015)
Takafumi Kiuchi has been playing rugby since he was a student. He likely understands the meaning of scrum better than any other employee. “Since I joined the company in 2008, I have been involved in the fertilizer business. My colleagues have passed the ball to me and let me take the business forward using my own strength. I am happiest when I experience this.”
Leveraging the integrated corporate strength of Sumitomo Corporation in various domains, this is the Sumisho Scrum.
“Integrity is of the utmost importance. This mindset is shared by all employees at Sumitomo Corporation. Sharing the same mindset is what makes it possible for use to form cross-organization alliances.”
──Takashi Tanaka, head of the Investment & Development Team, AgriScience Department
“A unique characteristic of Sumitomo Corporation is that the barriers between organizations and employees are virtually non-existent. There are many people in the company that are more than happy to provide consultation.”
──Kaoru Hosoda, Investment & Development Team, AgriScience Department
“Employees get along well and are not inhibited by organizational boundaries. I think these personal connections are the backbone to Sumitomo Corporation’s integrated corporate strength.”
──Takahiro Kanno, Fertilizer Affiliate Support Team, Crop Science Department
“Employees stationed in regions around the world and who have strong connections with the local community are responsible for coordinating the organization locally. This is what makes the Sumisho Scrum so strong.”
──Takafumi Kiuchi, Crop Science Department (stationed in Pingdu, China)
We tend to forget that the materials used to prepare the delicious meals we eat every day are all grown by somebody, somewhere. Sumitomo Corporation’s activities show us that it is very important to support the farmers that grow this food to ensure that we have access to safe and high-quality food. Regardless of where it is carrying out its business activities, whether it be Romania, Brazil, or China, Sumitomo Corporation employees all share a common goal—deliver safe food to people’s dining tables using their own strengths. This article clearly showed us that this is the strength of the Sumisho Scrum.