Argentine group El Tejar became the biggest soy farmer in Mato Grosso´s region
Argentina-based Ag company El Tejar harvested approximately 680,000 metric tons (25 million bushels) of soybeans in Mato Grosso -Brazil’s main producing state- during the 2010-11 season, ending the decade-long reign of Erai Maggi, whose Bom Futuro group produced 576,000 tons (21 million bushels), according to data compiled by the Mato Grosso Soybean and Corn Producers Association (APROSOJA).
El Tejar has operated in Brazil since 2003, largely adopting the Argentine model of renting land. The company has 21 farm units across Mato Grosso where it plants soybeans, corn and cotton.
Thousands of foreign companies seeking to expand their global footprint, while obtaining needed commodities to sustain growing food demand, recognize the strong potential for growth in the region. Furthermore, many governments, like China, India, Russia and Kuwait, are encouraging movement into South America through the signing of multiple regional Free Trade Agreements. South America is the biggest producer of soybeans in the world with Brazil and Argentina the second- and thirdlargest soy exporter after the United States. Argentina is also the world No. 1 soymeal and soyoil supplier.
According to Brazil´s government data, properties run by companies, instead of individual farmers, rose to 131,000 from 67,000 between 1998 and 2008. In Mato Grosso, the 20 largest landowners detained 533,700 hectares (1.3 million acres), or 9% of planted area in 2005. Five years later and the top 20 own 1.2 million hectares (3.0 million acres), or 20% of planted land, according to the Mato Grosso Institute of Agricultural Economy (IMEA).
In addition to El Tejar, other Argentine groups, including Los Grobo and Adecoagro, have moved into Brazilian farming, identifying major agricultural investment opportunities in Mato Grosso, Goias and the new frontier regions in Maranhao, Tocantins, Piaui and Bahia.
Los Grobo had already announced their plan to transfer some assets to a new company and sell shares of the business in an initial public offering in Brazil. The company will be called LG Agronegocios & Participacoes SA. Adecoagro SA, a farm company with headquarters in Argentina and operations in Brazil, held its IPO in New York in January, and closely held Saladillo, Argentina-based El Tejar said it may hold an offering as early as 2012.
Private capital investment in farming in expected to more than double to around $5-$7 billion in the next couple of years from an estimated $2.5-$3.0 billion invested in the last couple of years. South America is likely to lead the global expansion in agriculture with surplus land and existence of large-scale farm operations in the region, even though investors are also looking at Africa for growth.
However, foreign corporate purchases stalled from March last year when the attorney general banned large land purchases by non-Brazilian groups. Agriculture Minister Wagner Rossi is pushing for adaptations to the rule, which would allow ‘productive’ investments by foreigners. But the issue has fallen out of the spotlight as the farm lobby attempt to force a new Forestry Code through Congress.
Contact the Gateway to South America team to learn about the best investment opportunities in the region. The company is a benchmark for foreign investors wishing to invest in Argentina, Brazil, Uruguay and Chile, providing expert advice on property acquisition and investment tours.
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