Renewed optimism within Argentine’s heartland farming region
A farm interview of a master farmer in Argentine’s heartland farming region
In a ceremony held recently in Pergamino, Buenos Aires, Argentina’s new president, Mauricio Macri, gave a strong breath of confidence to the Argentine farming community. The president informed the expectant public about the elimination of export produce Retentions ( Super Taxes ) .
To follow that thread of hope, I conducted an interview with a life-long farmer in the zone known as ‘the heart of the pampa humida’.
JT: ‘Why does Pergamino have such rich and fertile land?’
EC: ‘Pergamino has had a lifetime reputation of excellence as the nucleus of corn production in Argentina, and as of 20 years, of soy as well. I always say, it’s the nucleus of the Argentine agri business. There are a number of excellent conditions for high yield production of farm crops.
– The area has between 800 to 2000 ml of rainfall per year
– It has a desirable climate for growing a wide range of crops
– It has very good humidity throughout the growing season
– It has excellent quality of soils meaning that less fertiliser is needed
– Good latitude and altitude meaning we can grow a wide range of crops, harvesting two crops a year
JT: ‘A perfect combination of conditions then?’
EC: ‘Yes, it is. There are few places in the world like here, maybe three at the most.’
JT: ‘What crops are most commonly grown in the area and do you feel that there’s room for more diversity and new initiatives?’
EC: ‘This area is suitable for growing a lot of different varieties, not only in agricultural crops, but also with horticultural and fruit, meats and more. But all this depends on future political decisions. We come from 12 years of very poor and constricting agricultural policies. Local producers, without support, prefer to stay with traditional products. Up to now, there was a lack of confidence to do something different on a large scale in this region.
There needs to be serious change in the agricultural policies. Support has to come from above to make these changes at the producer level, and instead of growing soybean and corn crops, do something else like parsley, for example, and products that are sought-after outside the country. We have been living in a situation of survival; this has to change, farmers cannot grow soy after soy as we have been.’
JT: ‘With this political change, do you see better and newer equipment, more use of fertilizers and new technologies?’
EC: ‘As regards to machinery, the area is well served already. We have a modern machinery fleet. The producers in this area are aware of new fertilizer types and the application of advanced technologies. However, in the last year and a half, there has been a lowering in the level of technology used for reasons of cost; the margins were just not there for farmers.
JT: ‘I understand. It seems that the past few years have been difficult for agriculture, what do you think the future holds for this area and for Argentina as a whole?
EC: ‘What we have to do is stop being an exporter of raw materials and become an exporter of value-added products.’
JT: ‘As the new President Macri said recently, “We must stop being the breadbasket of the world and become the supermarket”.’
EC: ‘Exactly. Pergamino is the capital of the seeds, and should try to be a brand of value-added products; such as organic, frozen goods and products that the world is consuming. With logistical and commercial assistance and ‘know-how’ we can move from traditional production, to say 90% traditional and 10% differentiated in the first year, and with time this difference will improve. The Argentine farmer is the most efficient producer with the technology and policies he is working with, but to do something different he would have to have the necessary support. If not, he won’t do it.’
JT: ‘Argentina is placed second in the world for organic farming, and for reasons of climate and irrigation it would be possible to take the title in the coming years. What do you think of organic farming, and what future is there in this zone, and in the country as a whole?’
EC: ‘Argentina has a lot of ability to grow. Here, there’s no lack of land or conditions limiting production or anything else. The limits are those we have discussed; the socio-political conditions, lack of development, and a need for improved infrastructure, as well. I have no doubt that we can improve and reach position number one in the world.’
JT: ‘Foreign investors have been very cautious about investing in Argentine farms in recent years. For example, at one point, investors in New Zealand (especially in the dairy industry) were interested in expansion into South America, and finally they choose Uruguay, Chile and Brazil rather than here. However, I think that might change now. What do you think?’
EC: ‘The truth is, foreign investors have been restricted and hindered by two major barriers.
– La ley de tierras (The land law), which limits buying land in Argentina, which is stricter than in other countries.
– And on the other hand it has been very difficult to move earnings back to their country of origin ( dividends ).
For these reasons Argentina ceased to be so attractive, despite having the best agricultural conditions. We are missing the other part, an improved agricultural policy and more openness, to achieve better conditions for all.’
JT: ‘And with this new government, things will change?’
EC: ‘Yes, there have already been changes, like removing the Retentions ( Super Taxes ). The playing field is different now. They are eliminating all import and export barriers. It may take some time. Farming is a long-term business and the Argentine farmer is very conservative. They won’t take a chance until the conditions are met.
JT: ‘Do you see changes that will facilitate foreign investment? How do you think the working relationship with foreign investors/owners will be?’
EC: ‘There must be a levelling of the playing field, and I think that will come with this new direction. I think, if the money comes from domestic or foreign sources, for example, to build a processing plant, it’s not going to change anything. What the Argentine farmer wants is, that they allow us to produce and earn, like in all other businesses. There are a lot of opportunities for foreigners here. Commodities will always have value, and there is a world in constant growth that we have to feed. Argentina is an impressive agricultural engine, which just needs to be cranked up.’
JT: ‘With a serious change from above, anything you can imagine can be achieved here?’
EC: ‘That’s right. What this new government brings is:
– Well qualified people with considerable agricultural experience
– Knowledge of the industry and its needs
– They have studied the area in depth before getting into office
– And they know what the problems are and how to solve them.
I believe they will accompany us with all the measures they are able to make, and they will reduce the negative burdens on the sector as well. It’s going to take time, but we are now on the right track.’
JT: ‘What do you see in the short term?’
EC: ‘I think the country will grow over the next four years, with a rise in production in all sectors of 30-50% in export tonnes. Also, there will be more products some with added value. ‘
JT: ‘Final words?’
EC: ‘I’m feeling very positive. With better conditions from above, development and support, I see years of growth. And, after a decline of land prices in recent years, the land will make a return to previous prices and then from there appreciate even more.’
JT: ‘We work a lot with foreign investors. Do you think it’s a good time for them to invest in the country and this zone?’
EC: ‘I believe so, they have to put a foot in our country and have patience but I believe they will be well rewarded.’
JT: Jessica Talbot is a GTSA Farm Broker living in Pergamino [email protected]
EC: Conrado Elustondo was born and raised in a well-known family from Pergamino, in the province of Buenos Aires. He is passionate about farming and has farms in the zone and in other parts of the country.
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, Chile, Paraguay, Peru and Uruguay, providing expert advice on property acquisition and investment tours.