Chilterra Dairy Farm Syndicate in Chile. Another New Zealand Chilean Success Story or a disaster?
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A Chilean farmer had given those on the New Zealand Prime Minister’s tour of Latin America an entertaining insight into farming in the country, saying when he first got involved with a New Zealand company, his father warned him, “they will take your land and your wife.” ( some truth in that )
Ricardo Rios is a farmer in Chile and the CEO of Chilterra, a dairy company in Chile that had backing from New Zealand investors.
On Sunday, Mr Rios spoke to the Prime Minister’s delegation at a barbecue held on a farm owned by Fonterra’s company Soprole near Puerto Montt.
He said he became a farmer because his wife only agreed to marry him if they bought a farm.
“I said, ok if those are the rules of the game, I will do it. I was a computer engineer.”
He said he had believed owning a farm was as simple as buying a piece of land and milking cows or growing potatoes.
“It’s not as easy as that. We started losing money straight away.”
He had turned to New Zealand’s style of milking after a friend told him he was wasting his time and should look into the farming techniques of New Zealand.
“So I went to New Zealand. I was impressed with the number of milk tankers on the roads. There was one tanker for every corner.”
After that, he hunted out a New Zealander to advise on his farm, “and I decided to follow the Kiwi system as a religion.”
Mr Rios said he set up Chilterra deliberately somewhat similar to Fonterra “because I wanted to grow something big.”
“Why not? So, with many litres of Pisco Sours, I invited some New Zealanders to become partners. We have grown from nothing to 4.500 hectares, and we are a business that is quite profitable.”
He said Chilterra directly employed 130 people and had broken in the previously unproductive land.
He said it had been challenging to make a profit in farming in Chile. Chile’s milk production is very low compared to New Zealand’s for its number of cows.
“This is not an easy country. If you want to be a farmer, it’s not easy because we don’t have the industry and all the support that the New Zealanders have.”
“I thank the support I have received from the New Zealanders. I hope this dream – no, not dream – this instruction I received from my wife 20 years ago becomes successful. One day we could be like Fonterra _ who knows?.”
Chilterra is one of several dairy companies in Chile with New Zealand investors involved in a union intended to help drive up milk production in Chile by using New Zealand farming techniques and technology.
Chilterra owns and operates six dairy farms on 1091 hectares and 3144 hectares of dairy runoff. The six dairy farms are fully developed and currently support 3300 cows.
Chilterra is a joint Chilean/New Zealand enterprise with technical expertise provided by Kiwi investors for the Kiwi pastoral farming system practices. The company is managed by Chilean business partners and governed by directors from both countries.
The farms are within a 100 Km radius of Osorno in Region X of the South geographical zone. This area is known for its dairy farming and similarities to New Zealand soils and climate. It also boasts eye-catching scenery.
Comments: The above article was written some years ago, and since then, several other New Zealand and local farm syndicates have been put together in Chile. Some have been very successful, like nearby Manuka, owned and managed by New Zealanders, but others have not, like Chilterra.
Not because they are not good farms but due to poorly thought-out financial and legal structures. The defining issue of success has always been how much thought has gone into the Article of Association ( controlling document ) that governs any syndicate or unique partnership.
Sometimes they are poorly thought out or slanted to favour the larger investors or, worse, have no mechanism for investors to exit, meaning there is only one buyer for their shares. In these cases, the investors will be sorely disappointed.
GTSA works very hard to guide investors away from these slanted syndicates where we see them being promoted.
Sadly Chilterra was one of the poorly conceived syndicates and has more recently gone into administration due to the poor management of the Rios family controlling interests and the inability of the New Zealand shareholders to control him when it became apparent he was out of his depth.
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Fonterra’s ( A New Zealand Dairy Exporter which is now the largest in the world ) have a dairy farm close by run by Sopole. It is run according to New Zealand farming practises. The New Zealand Government has announced it is keen to promote more farm investment in Chile. Contact us if you are interested.