The big picture – The importance of quality and consistency in supply chains

March 17-18 (part 3)

Todd Davis and Tyler Mark

The third big picture topic from our visits with genetic and microbial suppliers is the role of having a high quality and consistent product in the supply chain.  We received a lot of information from all of our visits and this topic may have been presented in a more subtle way than the focus on genetics and business arrangements. It is still worth a few words to complete the picture from the last two days.

Rizobacter is concerned about quality and consistency throughout their production process. Rizobacter tests the quality of the inputs used to grow the microbials in the laboratory that will eventually become the seed treatment and other products.

Rizobacter also tests the quality of the treated product to ensure the same germination as prior to the treatment. The testing lab is an important part of Rizobacter’s business and their testing even statically validated that the shelf-life of their microbes was much longer than advertised. The ability to trace the product back to the production batch and date is also a way to maintain quality control and recall if a problem is discovered to pull product off of the market.

Dow seed also practices quality control throughout the production process. The seed is grown in a way to preserve the genetic lines and not cross-contaminate (complete with isolation from other corn/soybean fields and set-back from roads). The seed corn is harvested on the cob at 35% moisture and delivered to the plant directly from the field. Care is taken to slowly dry the corn without damaging, cracking, stressing the kernels.

The drying process can take up to 72 hours and much care is used to dry the wet corn slowly to minimize stress cracks and broken kernels which would be unviable seed. Dow has four large dryers, like the one on the left, which use either natural gas or LP. The diversified fuel source reflects the country’s uncertainty of which fuel will be available as urban areas receive priority over industry if there is a shortage.

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Dow has the ability to trace poor quality seed back to the lot bagged and even the field where the corn was produced is available through the seed label. This is important to maintain control over the product after leaving the seed plant.

CIAVT also practices quality control by testing each sample collected. Each bull provides two samples a day twice a week. For example, the class viewed the collection process CIAVT uses for beef and dairy genetics. Testing is performed to view the motility, health, and potency of the sample. The minimum standard is that 60% of the dose must be alive. This sample only had 56% alive and was rejected as a way to ensure a better quality and consistent product.

The Big Picture – The role of business alliances, partnerships and other arrangements in supply chains

March 17-18 (Part 2)

Todd Davis and Tyler Mark

A common theme emerged from our meetings with Rizobacter, Dow and CIAVT — these businesses identify and use several business arrangements to continue to grow and improve their company through increased market share domestically and globally.

Rizobacter uses multiple partnerships and alliances to broaden their presence in the market. For some products, they use strategic alliances with seed companies within Argentina and globally. Another business arrangement is where Rizobacter sells their technology under a different label. In other forms, Rizobacter provides their products as an input to a seed company and the seed is then branded and marketed with this value added seed treatment.  Rizobacter is a niche provider of microorganisms and has the quality reputation to be able to form these partnerships but maintain their own corporate identity.

CIAVT also stressed the role of business arrangements in the competitive market of beef and dairy semen. Their philosophy is that they preferred to be “colonialized but not conquered” by competition. CIAVT has the reputation in Argentina for quality and consistency as well as a focus on customer service. CIAVT has been able to defend market share even when foreign competitors enter the Argentine market for beef and dairy genetics. CIAVT uses partnerships with the US and EU to source the best genetics for use in Argentina and globally. As the US can’t export live animals to Argentina due to the Mad Cow restrictions and Argentina is restricted in exports due to Foot and Mouth disease, importing the genetic material is an efficient alternative.

AACREA started the group to the concept of sharing ideas among individuals that would normally be competitors (farmers in the land rental market) in a way to achieve mutual growth of ideas and skills. The visits with Rizobacter, Dow and CIAVT further taught this group that while business is competitive, sometimes the most profitable solution is to form business partnerships or strategic alliances for mutual gain.

The Big Picture – The importance of genetics in supply chains

March 17-18

Todd Davis and Tyler Mark

One theme from the last two days is the role of genetics in the supply chain. We saw this in the form of seed corn/soybeans, dairy and beef cattle genetics, and the thoroughbred industry.  The trip to Dow provided an opportunity to understand how seed companies harvest, dry, shell, bag and ship seed corn throughout Argentina and South America.  We talked about the role of technology fees in compensating technology companies for their research and development. Argentine farmers historically retain soybean seed so farmers do not pay the technology fees. As a result, some seed companies have attempted to collect from farmers at their first point of sales either at the local elevators or the export ports. This heavy-handed collection methods has eliminated any goodwill the farmers had towards this seed/chemical company.

Genetics is crucial with respect to the chemicals used in the production process. By visiting Rizobacter, we learned how seed treatments can be used to improve nitrogen fixation in the soybean plant. Rizobacter provides many type of soybean treatments designed to work with specific corn and soybean genetics that will improve the plant’s ability to use soil nutrients. As the technology improves, farmers may be able to reduce the quantity of chemicals and use seed treatments to meet the same production goals.

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There are thousands of microbials in the soil that have yet to be fully understood by agricultural microbiologists. This suggests an exciting future for this industry which may further change the production process by having farmers bundle seed technology with chemical and microbial products. Given the variability of soil types, the opportunity for site-specific prescriptive recommendations exists. The onus will be on farmers, consultants and Extension to understand the agronomic and economic potential of these bundled products

For the livestock industry, we visited CIAVT which is the largest cooperative in Argentina that sources beef and dairy semen. We learned how the dairy sector relies on AI for genetic improvement far more than the beef sector. The efficiency gains of genetics come from production systems that removes stressors from the cattle’s environment. Hence, the most productive dairy herds are in the US, Canada, Germany and Holland that have the ability to provide comfortable temperatures for the dairy cows.

Finally, the horse industry is an industry built upon advertising of genetics through the animal’s pedigree. The thoroughbred industry relies on the pedigree to establish premiums for horses; especially those animals with limited history on the track. This market is a niche and high-end market which makes the genetics particularly important as the pedigrees of the best horses are known among potential buyers.

For the livestock industry, we visited CIAVT which is the largest cooperative in Argentina that sources beef and dairy semen. We learned how the dairy sector relies on AI for genetic improvement far more than the beef sector. The efficiency gains of genetics come from production systems that removes stressors from the cattle’s environment. Hence, the most productive dairy herds are in the US, Canada, Germany and Holland that have the ability to provide comfortable temperatures for the dairy cows.

Finally, the horse industry is an industry built upon advertising of genetics through the animal’s pedigree. The thoroughbred industry relies on the pedigree to establish premiums for horses; especially those animals with limited history on the track. This market is a niche and high-end market which makes the genetics particularly important as the pedigrees of the best horses are known among potential buyers.

Genetics and their importance

March 18th, 2016

By: Ashleigh Blausey, Lexington Everett, Dakari Howard, John Marsh

Today our journey had a planned start at 8:40 am, but we were delayed as we had a traveler fall back asleep after the wake up call. We headed on our way to the first stop of the day once all travelers were in the vans.

The first stop of our day was CIAVT in Santa Fe Province, Argentina. CIAVT is an agribusiness in Argentina that specializes in Artificial Insemination (AI). The company was founded in 1961 with a main focus on the gathering and selling semen of dairy and beef cattle.  When the company was founded, artificial insemination was an emerging technology gaining global adoption..  CIAVT brought technology from England to start there business in the early 1960’s and over the years has become a well-established and best AI company in Argentina because they were the foundation of artificial insemination expertise.  The first company CIAVT connected with for their selling and expansion semen abroad was ABS.  After some time, ABS decided to leave Argentina when it was purchased by another competitor.

As we listened to the speaker representing the company, it was quite apparent that he had great pride in this company. At first we believed it to be a facade that every company worker is forced to express. But as the meeting went on, their attention to detail seem to us, to go beyond other companies. One example of striving for excellence is when they milked the bull, and tested the sperm. They used a technology that takes pictures of the sperm with the stats of how healthy that specific batch is. They said that they were the only ones in the field that gave their customers this type of “Sperm Vision”, a term they coined. To us this is a clear example of CIAVT going over and beyond for the customer, and they didn’t say that they implemented this in order to increase sells or gained a competitive edge in the market. (Although that could have been their intention). We felt that what they expressed was that they simply did it because they cared about their customers, and thought it would be nice for them to see this “Sperm Vision”. Another example of the company’s pride and attempt for perfection can be seen in how they treat their animals.

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They treat the bulls with care that was uncommon in the field. As our speaker boosted “Do you see these fields? When we bring Americans to see our operation, they all say that four or five bulls could fit in the same area that we have one in.” He continued “I always reply. Our bulls are happy! You can always see them prancing and gallivanting. Do your bulls do that?” This is when we saw what was really important to CIAVT. Their main concern was how they did business, not if they made the most money. We have seen the same mindset within most of the Argentinian companies that we have toured throughout the entire trip. So this contrast is between the U.S.A. and Argentina, not between other Argentinian companies. It’s an Argentinian mindset or pride, that you must be the most ethical in the field and do things the right way. (Although right and wrong is subjective). Don’t get us wrong we don’t believe that companies like CIAVT keep profits in the forefront of their mind. But we do believe that they do business on a foundation, composed of values and morals at its center, and less about profits. At the end of day it comes down to, not what you do, but why you do it. Where we see a lot of American companies do things that are seen as ethical for profits. While in Argentina we feel that a lot of companies are doing ethical things because they believe that it’s the right thing to do, and are following a strict moral code, that sometimes contradicts economic growth and profitability. We think the key word is strict. Because some of the choices they make are for lack of a better word, foreign to us.

Next on our trip was Dow Agro-Science. This company is was well known to many of us students before coming to Argentina.  Dow has branded and expanded themselves throughout the world. The facility that we had the pleasure of touring housed four ear corn pits, seventeen dehusking beds, and four dryers. With all the set up and organization that Dow had at this facility they are able to condition ten tons of crop per hour and bag six-thousand seed bags per day.  All of this soon to be corn seed is coming from the five thousand and seven hundred hectares of land.  When Dow harvest the corn to turn into seed corn, it is harvested out of the field at thirty-five percent moisture in order to allow the kernels to be properly dried for the best germination in the next growing season.  Once we finished touring the facility we got to go through a presentation and learn about the new technology that Dow is going to be selling called Enlist.  This technology is to help kill the herbicide resistant weeds that over use of herbicides has created. From these stats you can clearly see that Dow is an international powerhouse. But with all their money, market share, and power. They still have problems with the most basic economic trait – payments of technology fees. In Argentina, they said in is hard to get the farmer to pay for the seed product after they use it. The only type of seed that causes the problem is soybeans, because the soybeans can be saved and planted the next season.

They have tried many different approaches to collecting the technology fees but with limited success. Although this problem persists, I don’t see them slowing down their progress in the near future.

 

After the two wonderful tours we had today we loaded up the vans and started the last leg of our trip to Mendoza.  We had about a seven hour drive until we finally reached our destination for the night. With this long drive, many used the time wisely to catch up on some sleep. Once we caught up on some sleep, we started to play a game called town’s people and mobsters.  This game is really entertaining since we have a narrator who comes up with a town name and then decides who is the mobster, nurse, electrician, and town’s people. The only catch is that when the characters are being decided everyone’s eyes are closed so no one knows who is who.  Then it is up to the towns people to try and eliminate the mobster before the mobster eliminates them.  Eventually we finished with games and sleep and made it to our hotel where we settled to prepare for the next day.

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A little white water and some air miles

March 19th

We have a little downtime on the weekend in Mendoza.  Why not get in some time on the river and do a little flying. These two activities were amazing. We had the opportunity to see people cross things off their bucket list like whitewater rafting and then overcome fear of heights while zip lining. Truly awesome day!

Whitewater rafting in the Mendoza River!

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A few pics of zip lining over ravines and the river.

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To the countryside we go..

By: Megan Harper, Shelby Wade, Cori Green, and Lauren Nickell

March 17

With stomachs probably still full from the steak dinner last night, this morning, we packed our things and headed out on our first cross country venture. Souped up to look like Mercedes, our two fully packed vans left for our first visit of the day. Before we could even get out of the city, both buses were soft asleep dreaming of wine, zip lining, and all the other adventures that are to come.

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For the first time we were out of the city and finally got to see some of the Pampas that we had been described all week. Imagine a mix between the rolling hills of Kentucky and the flat Corn Belt seems to be the perfectly way to describe it. Unless you looked at an Argentinean license plate, the combination of horse, cattle, grain bins, farm machinery and row crops being harvested, our route simply felt like traveling in the United States.

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Today we visited Haras La Leyenda which is a Thoroughbred horse farm. The operation is on 250 hectares in which they carry out a breeding, boarding, and studding business in the  horse racing industry. The farm was bought in 2007. They did research in 2008 by spending two weeks in Lexington at the major horse farms and then came back and created a team to develop a business plan and  farm plan.  In November of 2008, they bought their four foundation mares at Keeneland.  To date they still come to Lexington for the sales every year twice a year. (In fact one of the other classmates helps them export horses from Lexington to Argentina.  By the numbers this farm has 19 employees, 90% pregnancy rate, and 250 horses. They have been very successful in the horse racing in Argentina and are selling breeding stock all over.

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Unlike Polo games – horse races, jumping events, and dressage are for everyone. Many parents even send their kids to learn about dressage. Owner says the three keys to his success were Good Labor, Good Pasture Control, and Genetics.  There were several differences to the operation to how we do horse racing in Lexington. One is the horses eat 20% hay, 15% concentrate, and the rest is from grazing soybeans and corn on rotation during the Summer months (January to February).  They graze down to 40% of the stems and don’t want them too full because they want the horses to move around the pasture. They want 17-18% alfalfa hay which is mostly stems.  Horses are weighed every 2 months to monitor their nutrition and pasture effectiveness. Horses are almost always kept on pasture. The exceptions are if they are preparing them for sales and breeding. They also still do the pony beside pre-sale training even though it involves more use of resources and labor.  The team was very cultural loyal aware of Argentina and history of Argentina and more or less used it as a guide in decisions.

After the thoroughbred farm, we visited Rizobacter microbiology company which specializes in seed treatment. Their mission is to supply technology and solutions to farmers. They are the pioneers of the production of liquid inoculations which are when plants have symbiotic relationships with bacteria. Rizobacter works mostly with soybeans. In the United States, the biology is driven by the chemical where as in Argentina it is inoculant/bacteria driven. This is because we have to deal with weather temperatures, and disease during planting season.

Rizobacter uses 50% of their profits for research and development. They are committed to environmental care and high quality standards. They modeled their company structure much like the symbiotic relationship of the soybean and bacteria. They have many alliances. Syngenta is one that is popular in the United States. Rizobacter sells more of Syngentas products in Argentina then they do themselves. Both companies benefit from one another. A few of the companies that Rizobacter develops technologies for us Dow, DuPont, and Monsanto.

Overall, today was exciting and informational. The group enjoyed visiting our first Argentine farm, and took lots of pictures of the Kentucky bred stallions. We watched a 3D informational video on the process of inoculation at Rizobacter, listened to a presentation given by  marketing manager Lionel Thomas. After our two hour van ride to Venado Tuerto, we arrived to our hotel and walked the 10 blocks to our restaurant where we feasted on pork chops, grilled chicken, and T-bone steaks. We then ran through the pouring rain back to our hotel lobby where we proudly watched the cats beat the Stoney Brook Seawolves. Go Cats!

The Big Picture – Price Discovery, Executive Power and Role of Public Sector Information

By: Todd Davis and Tyler Mark

March 16

The day started with an early trip to the Liniers Cattle market located just outside the Capital Federal limits but still part of the greater city of Buenos Aires. About 20% of Argentina’s cattle are sold through this market in an auction style similar to the Chicago stockyards of 40 years ago. One unique feature of this stockyards is that all animals sold through the market are terminal animals or no breeding stock is sold through this market. Many slaughter facilities are located near the market for the next step in the beef supply chain.

Liniers is the primary point of price discovery in the cattle market with the auction price serving as a reference price throughout the country. US commodities use the futures market for price discovery with basis serving to adjust the local price.

The class toured the Government House (aka the Casa Rosada) to see the executive branch of government. Argentina’s constitution is based on the US constitution in form, but not necessarily in spirit. Argentina has had several administrations that had strong executive powers that implemented farm policy without congress providing a check and balance. Hence the conflict between government and farmers over policies to promote cheap food which result in commodity price distortions and unprofitable production. This also creates a very unstable agricultural sector that requires long term investments and stable policies. Farmers and agribusiness hope that the new president, Macri, will be more market friendly which will result in more investment in agriculture and farmers making decisions based on economics instead of responding to political forces.

The final stop was with the Ministry of Agriculture, similar to the USDA. Some American farmers view the USDA reports as being wrong and intentionally trying to distort production in a way that lowers commodity prices. The rest of the world envies the transparent and consistent methodology used in USDA’s surveys of production, consumption, and potential supply and demand balances.  The private sector in Argentina tends to fill the information void by doing specialized estimations and surveys that lack the statistical validity of USDA reports. The point of this visit is that unbiased information improves the function and transactions within the supply chains. As USDA responds to budget cuts and reducing the frequency of some surveys, will the US farmers and agribusiness step in to fill the void in providing market information?