Day 2: Mercado de Liniers and AACREA

By: Dylan Kitchen, Jordan Champion, Erica Rogers, and Justin Arnold

Yesterday, we visited the Mercado de Liniers in Buenos Aires.  It is the largest livestock market in the world, running over 10,000 head of cattle daily.  This market is unique in many aspects, including their shipping methods, sales approach, technological use, and economic impact. The auctions at the market are held 5 days a week, and buyers from all over the country attend. There are 55 brokers currently involved in the sale and purchase process, in total employing around 2,200 people.  This means that the market has an outstanding impact on the local community and economy.

The livestock auctions take place in a large grid of hundreds of pins, with the auctioneer walking above and throughout the pins with most of the buyers.  Herdsmen also move and evaluate the cattle, which are sold by the lot rather than individually.  Selling prices on Tuesday were around $0.80-$1.00 per pound.  After a sale, the cattle are moved to an electronic scale so that their final weight can be recorded before exiting.  The cattle are the full responsibility of the buyer from that point on.

The Mercado represents sales of 15% of Argentina’s beef supply.  Without this market, thousands of people would not have jobs or a way to conduct their business.  Although the market was chaotic and messy, it was still amazing to witness an important piece of the country’s beef price discovery.

Next, we headed to the Argentine Association of Regional Consortia for Agricultural Experimentation (AACREA).  This regional association of farmers, businesses, and corporations works to improve productivity, overcome industry challenges, and share useful research and information.  Members form groups of 8 – 12 led by a knowledgeable advisor and cooperate to tackle local farm business management issues.

Although AACREA requires paid membership to join, their research results are free to the public.  They have also implemented a program, EduCREA, tasked specifically with educating the local community about sustainable practices.  This is very beneficial because agricultural education is not nearly as developed in Argentina as it is in the United States.  The Association only represents 1% of Argentina’s farm population, but it is estimated that their work impacts over 50,000 people annually.

AACREA’s members are very advanced, with many certified agronomists serving as advisors and many professional members.  Over 60% of the members have a college education.  Membership is also showing increasing levels of corporate involvement, although 80% of members are still family farms.

CREA markets themselves as an association of businessmen rather than an association of farmers.  They have been instrumental in advancing agriculture practices in the country and in other territories.  As the organization grows and expands, so will Argentinian agriculture.

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Day 1: Let the fun begin!!

Alex Butler, Marisa Hendrickson, Zach Utterback, and Josey Moore

 

Our introduction to Argentinian companies began with Aceitera General Deheza, a company who specializes in the refinement of vegetable (soybean and peanut) protein meals, pellets, glycerine, and biodiesel. AGD has similar aspects to America’s Cargill because they are both involved with plant oil products on a large scale. One of the primary differences between the two companies resides in the fact that AGD is a vertically integrated company who grows some of its own product. The presentation at the company included a video, great powerpoint, and commentary by Carlos “Billy” Haeberle and his colleague, Santiago, who discussed various factors that contribute to the success of the company. The company is especially prominent in the soybean market seeing as it accounts for fifty percent of Argentina’s soybean meal and oil, but they are currently experimenting with expanding into the livestock industry, starting with swine. The company discussed how the government involvement in the agriculture industry is sometimes an asset and since they are able to negotiate prices with farmers quickly due to the extensive records the government collects about crops for taxation. On the flip side, the government’s instability makes attempts to be an international competitor challenging because of the frequent swings in political parties in office and their stance on reducing debt/increasing trade.

After our visit had concluded with AGD, we visited with the Schutter Group. Schutter is a significant player in supply chain management with locations worldwide. In the US, many of the services that Schutter provides for Argentina are provided by the USDA. These services include grading agricultural commodities and certification, in Argentina, those processes are provided by a privatized companies like Schutter. Schutter prepared a presentation for our group, which began with general information about trends in Argentinian grain markets and where they foresaw the market going; this covered topics such as the 1 million hectares being added to production and the historical corn crop that is anticipated. The presentation then went into information particular to Schutter, detailing all the countries they are involved in, their important markets, and what services they offer. After their presentation, we had an opportunity to network and discussed in-depth with them similarities and differences between the US and Argentina.

 

Before traveling to the Instituto de Promocion de la Carne Vacuna Argentina (IPCVA) we stopped to have a great lunch at the Galerias Pacifico Mall where we enjoyed some of the local eateries.  Once we were full, the group continued on to IPCVA where we discussed many of the intricacies of the Argentine cattle market.  IPVCA is similar to the American Cattlemen’s Association where they concentrate on helping farmers within the industry.  Farmers came together to build this institute because of the volatility and lack of knowledge of the cattle market.  Unlike the US cattlemen’s the IPCVA is only made up of 12 employees who take up approximately 5% of their total budget and a cattle herd of 52 million head.  Additionally, the IPCVA does a check-off like the US where every cow or steer that is slaughtered allocates a dollar to the institute, and they don’ t receive any money from the government.  This was one of institution we visited that is highly relatable to the US in many ways and was fascinating.

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The View from IPCVA

After our visit with the Argentine Institute for Beef Promotion, we hopped on a train and headed to the Congress building for a private tour.  The sheer beauty of the building was breathtaking. The palace they call it is a neoclassical style, utilizing materials from all over the world with elaborately furnished interiors. The Congress of the Argentine Nation (Congreso de la Nación Argentina) is the legislative branch of the government of Argentina. Similar to the United States Congress, Argentina runs a bicameral legislature composed of the Senate and the Chamber of Deputies.

Ordinary sessions span is from March 1 to November 30. The Congress is in charge of setting taxes and customs, which must be uniform across the country. It rules the Central Bank of Argentina, manages internal and external debt payment, and the value of a national currency (currently the Argentine peso).

 

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Congress

Why study Argentina’s agricultural economy?

Dr. Todd D. Davis

The 1989 movie “Field of Dreams” has a moment where a ghostly baseball player asks Kevin Costner if this baseball park in the middle of a cornfield is heaven. Mr. Costner replies that it is not heaven – it is Iowa.  Based on general appearances it could also be Argentina.

I have had the pleasure of getting to know Argentina’s agriculture, agribusiness, and policymakers over the last fifteen years.  As a native Iowan, I have always been amazed at the similarities of the Argentine pampas with the rich, prairie soils of Iowa. Consider the photos of two soybean fields – one is from Argentina and the other from my family’s farm in Iowa. Can you identify which field is in either country?Picture2

At the farm-level, Iowa and Argentina are interchangeable. You see that both have flat, prairie soils. Both have adopted a no-till or minimum till glyphosate-resistant soybean production system. Both have very similar yield potential. Both farms have access to the same seed companies, chemical companies, and machinery companies.

Beyond the farm gate is where the similarities end. While in Argentina, we will visit with farmers, agribusiness, and policymakers to understand the factors that support US agriculture and those factors that limit or punish Argentinian agriculture.  The study of supply chains will help us understand the importance of a low-cost and efficient transportation and logistics channel to keep exports competitive in global markets.

We will also talk with farmers to learn more about how they manage their farm business. How do they finance their production? How do they manage yield risk and price risk? Are their supporting institutions like the Land Grant University system to help farmers with applied research and Extension information? How effective are commodity organizations or farm organizations in lobbying the Argentine government on behalf of the farmers?

This year’s course will be the fifth time I have taken students to Argentina. The personal and intellectual growth in both the students and instructors continues to amaze me. I am excited to share once again this learning experience with future leaders in American agriculture.

Last year’s visit witnessed the excessive late summer rains in Argentina that contributed to massive flooding and abandonment of corn and soybean fields on the cusp of starting harvest. The weather events in Argentina and Brazil in 2016 provided a much-needed boost to the US corn and soybean futures market. Will we see something similar this year?  The importance of the answer to that question is one reason we study Argentina’s agricultural system.

By the way, the photo on the left is from Argentina, and the photo on the right is from Iowa.