South America has been a special part of my life for four decades. I have lived many years in Brasil and Peru. I am married to an incredible lady from Argentina. I want to share South America with you.
Even after 120 years, the annual show staged by Argentina’s Rural Society is a highlight of the agricultural calendar. Crowds flock through huge halls packed with agricultural machinery. In pens, farmhands use air blowers to gently remove sawdust from the pristine hides of some of Argentina’s most cosseted livestock.
But this year’s event in Palermo was notable not just for its exhibits — visitors spotted a very rare breed: a government minister.
For more than a decade, no one from government came to the show, amid a deepening conflict with farmers. The presence of Ricardo Buryaile, the agriculture minister, was an indication of a big change in sentiment towards Argentina’s powerful rural sector. The rapprochement has been helped by the decision early on in the presidency ofMauricio Macri — in office since last December — to remove most of the agricultural export taxes that crippled commercial relations with the world.
Optimism abounds. “We have a lot of reasons to be happy, for there to be a change of mood — it is going to be a different landscape,” says Luis Miguel Etchevehere, president of the Rural Society. “We are back,” said Buryaile. “The conflict between the government and farmer is over.”
Farmers’ protests erupted in 2008 when the previous government pushed through big tax hikes on agricultural products to fund social programmes. Later the rift came to be exemplified by government anger at the appearance across the countryside of white, sausage-shaped “silo bags” — a way for farmers to store produce rather than export it under what they considered unfavourable conditions.
Ernesto Ambrosetti, chief economist at the Rural Society, lists signs that confidence is returning. Sales of agricultural equipment are up 30 per cent, he says, and demand for fertiliser has risen. One-fifth more wheat has been planted. The cattle herd — which had shrunk alarmingly, while beef exports fell below those of most neighbouring countries — is growing once more.
Alfredo Rodes, executive director of Carbap, an organisation that represents 40 rural associations in two of Argentina’s most productive provinces, expects big increases in output of many crops. “We can have commercial relations with the rest of the world and we can begin to look forward,” he says.
That would be welcome. Since the days of the 19th century when Argentina began exporting huge quantities of refrigerated beef, agriculture has usually been one of the most dynamic and outward-looking parts of the economy.
While the gaucho costumes and riding displays at the Rural Society show may speak of continuity and tradition, they barely reflect much of the country’s agricultural sector today, where pragmatic agroindustrialists on large farms have built some of Argentina’s most successful businesses, accustomed to competing aggressively in export markets. “It is Argentina’s innovative farmers that have made it a successful country in agriculture. Farmers have embraced new techniques,” says Gonzalo Ramírez Martiarena, chief executive of Louis Dreyfus Company (LDC), one of the world’s largest agricultural commodity trading houses.
The grand scale and readiness to innovate are evident in places such as Rosario, the port city 300km upriver from Buenos Aires, where swaths of riverfront are given over to huge plants that process tens of thousands of tonnes of soya beans each day, prior to loading them on ships for export. This cluster — including international companies such as Glencore, LDC and Bunge but also sizeable Argentine counterparts such as Vicentin and Molinos Río de la Plata — is one of the “biggest and most efficient on the planet”, according to Andrés Alcaraz, corporate communications manager at Ciara-CEC, a chamber that represents oilseed producers and exporters.
In Argentina’s fields, the sector’s ability to compete is reflected in the extensive use of technology, including what is known as siembra directa — sowing seed without ploughing as a method of retaining nutrients in the soil. Argentina has overwhelmingly adopted genetically modified crops, while fields are monitored via satellite or drones so fertilisers can be applied in precise locations and doses. “There are no gauchos left any more — it is people in 4x4s controlling everything with laptops and WiFi,” says one worker in the sector.
There is more to do in terms of raising some crops for livestock for meat exports
Modern Argentine farming is exemplified by entrepreneur Gustavo Grobocopatel, the so-called “king of soya” and business school case study, whose Los Grobo company once farmed half a million hectares of soya without owning the land. He is confident the country will play a full part in a coming green revolution. Latin America, he says, “is a massive area of photosynthesis where sunlight is transformed into products that benefit humanity”.
Soya — which is still taxed on export, although the rate is set to decline — is at the root of about half of Argentina’s agricultural exports. As Grobocopatel points out, the country’s soya meal — used for animal feed — helps to produce everything from Norwegian salmon to French cheese and Italian prosciutto. Soya oil is sold around the world.
Macri wants more of the country’s exports to add value, making Argentina “the supermarket of the world”. Javier Racciatti, head of LDC’s regional operations, says: “Argentina has been adding a lot of value in its oilseeds through production of products such as biodiesel and glycerine. In some crops there is probably more to do in terms of using them to raise livestock for meat exports, as a way of adding value to what is grown here.”
While private businesses continue to invest — LDC opened a port terminal at Bahía Blanca, 600km south of Buenos Aires, in July — farmers lament poor public infrastructure. “We have a totally inadequate old rail and road system,” says Carbap’s Rodes.
Argentina also has to win back markets. Beef sales have tumbled so dramatically the country does not even fulfil its quota for sales to the EU. Overall agricultural exports have fallen 23 per cent since 2011, says Marisa Bircher, secretary for agroindustrial markets, while the number of registered exporters has fallen from 16,000 to 9,500. “We want to diversify markets, diversify the number of our exporting companies and, of course, diversify products,” she says. There are promising signs: Argentine grape producers have won access to the Chinese market, and Argentina can again sell beef to the US after a 15-year ban linked to foot-and-mouth disease. In total, says Bircher, Argentina is talking to 33 countries about improving market access.
While trade talks could be slow, overall confidence in the sector is at least more palpable than in the recent past. LDC’s Martiarena — who is Argentine — says: “You have efficient producers, a government that is pushing agriculture to grow, private companies that are developing the export infrastructure and a world where demand keeps on rising. Everything is coming together in a way that gives very good prospects for Argentina to grow.”