SECTORAL ROUNDTABLE Agribusiness SEPT 13TH, 2016
AGENDA (TUESDAY SESSION) 10 min. Introduction: Global and Regional Context Presented by Federico Eisner, Managing Partner, Bain & Company 20 min. The Government s Agenda Presented by Ricardo Buryaile, Minister of Agroindustry 30 min. The Private Sector Perspective Alejandro Elsztain, Cresud Amancio Oneto, Molinos Gonzalo Tanoira, San Miguel Antonio Aracre, Syngenta 30 min. Q&A to Minister of Agroindustry & Private Sector Speakers
AGENDA (WEDNESDAY SESSION) 10 min. Introduction: Global and Regional Context Presented by Federico Eisner, Managing Partner, Bain & Company 20 min. The Government s Agenda Presented by Ricardo Buryaile, Minister of Agroindustry 30 min. The Private Sector Perspective Mariano Bosch, AdecoAgro Christophe Dumont, Bayer Gustavo Grobocopatel, Los Grobo 30 min. Q&A to Minister of Agroindustry & Private Sector Speakers
Introduction Presented by Federico Eisner, Managing Partner, Bain & Company
GLOBAL TRENDS & ARGENTINA S POTENTIAL
ARGENTINA HAS BEEN LAGGING BEHIND Exports for main agricultural categories (indexed to 1985, in tons; includes soy, corn and wheat) 13x 8x 3x Source: USDA
THE LAG HAS BEEN GREATER IN LIVESTOCK Exports for main livestock categories (indexed to 1985, in tons; inc. beef, poultry and pork*) 14x 8x 3x 1.4x Note: * Paraguay indexed to 1996 exports (1 st year with positive trade balance) Source: USDA
STILL, AGRIBUSINESS IS CORE AND DEVELOPED Agribusiness sector is key to Arg., has high adoption of technology and professionalism ~60% exports (~US$36B) #1 soybean meal and oil exporter +90% satellite guidance for spraying machines +60% sowing and yield monitoring +80% hire technical advisors ~45% have university degrees Source: USDA
RECENT POSITIVE MEASURES Export taxes on main agricultural categories ranged from 15% to 35% Export taxes either eliminated or reduced Currency exchange rate lagged behind market values Exchange rate at market values Export quotas to limit agricultural exports Export quotas eliminated Price controls in place for the domestic market Price controls eliminated Impossibility to repatriate dividends Restrictions to dividends repatriation removed
AS A RESULT, COST POSITION IMPROVED Previous export tax impact Soybean export cost to China (Per ton, indexed to Argentina 2016 cost*) Poultry export cost to Hong Kong (Per ton, indexed to Argentina 2016 cost*) Corn export cost to China (Per ton, indexed to Argentina 2016 cost*) Beef export cost to Hong Kong (Per ton, indexed to Argentina 2016 cost*) Note: *Exc. land costs. PR=Paraná, MT=Mato Grosso, ND=North Dakota, MB=Manitoba; IO=Iowa; Source: USDA; CONAB; Bolsas de cereales S. Fé & B. Blanca; Expert interviews
IMPROVEMENTS WILL DRIVE GROWTH Harvested area (Mha) Yield* (Ton/ha) 11.0 5.8 3.8 4.4 3.1 Note: *2015 benchmark yields consider: for soybean MT (BRA) and IL (USA); for corn, IL (USA); for wheat IL (USA) & overall EU-28 yield. Source: Min. Agroindustria; USDA; CONAB; Bain analysis
GLOBAL MARKET IS READY FOR ARGENTINA Global exports growth 15-25 (Additional Mton) Legend: Argentina s fullpotential Rest of world Global exports 25 (Mton) Arg. Exports ( 25 vs. 15) Growing closer to full-potential only in these 5 main categories would mean +US$30B in value of production Source: USDA; Bain analysis
PRODUCTION CAN INCREASE BY ~US$ 30B Impact on Value of production (US$B) Source: Bain analysis; USDA (US); CONAB (Brazil); B. de cereales de S. Fé; B. de cereales de Bahía Blanca; Revista márgenes agropecuarios
KEY ENABLERS TO ACHIEVE FULL POTENTIAL Infrastructure Credit access Economy formaliza-tion Enablers Value chain economics Access to markets Regulation
The Government s Agenda Presented by Ricardo Buryaile, Minister of Agroindustry
ARGENTINA COULD FEED 600M BY 2020 Argentine food production (millions of people fed*) Legend 10 million people Note: *Measured in caloric equivalent output. Source: SsAyB
OPPORTUNITY AHEAD TO BE CAPTURED OPPORTUNITY TO PROVIDE FOR WORLD MIDDLE CLASS Middle class global population (B people) +50% IN A RESPONSIBLE MANNER Safeguard health and environment - Reduced footprint - Water sustainability - Food security Increase use of renewable energy Avoid climate change effects; reduce greenhouse gas emissions Source: SsAyB based on Kharas - OCDE (2010)
HIGH ADOPTION OF TECHNOLOGY Farmers age and education level Growth in production vs. area +440% +115% Area under no-tillage farming High penetration of diverse technologies +90% GMO Pesticides Inoculants No-Till Fertilizers Silo bag Precision agriculture Source: Universidad Austral, AAPRESID, INTA, Ministry of Agroindustry
ARGENTINA IS PREPARED TO SHINE 1 2 3 4
1 NEW POLICIES SUPPORT GROWTH Position State as a platform for private growth Guarantee fair remuneration for both asset and labor capital Ensure productive-economic, environmental and social sustainability Use good agricultural practices in every part of the productive chain Create a reliable framework for agroindustrial business Elaborate a common vision involving both private and public sectors
1 ARGENTINA CHANGED IN JUST 9 MONTHS BEFORE Foreign Exchange clamp NOW Floating exchange rate Constraints on dividends repatriation Normalized situation Restrictions on exports Free trade Export taxes on agricultural goods Country and segment isolated from the world Export taxes reduced or abolished Pro-active role opening international markets Price control Non diversified energetic matrix Declining cattle breeding activity Free trade Increasing biodiesel, bioethanol, biogas, biomass Increasing female cattle stock
2 AGRIBUSINESS IS DIVERSE IN ARGENTINA
3 FOCUS IS FURTHER THAN AGRICULTURE Niche products Athlete food, functional food, products with territorial identity Specialized products Freeze-dried, Baby food, Ultra-frozen products, Ready to eat food Advanced agroindustrial products Fat reduced / non-trans fat food, Organic food, Low sodium, Gluten free, Religious Basic agroindustry Meat cuts, Dairy products, Vegetal oils, Farinaceous products, Food industry ingredients Primary products Grains, Vegetables and legumes, Fruits, Honey
4 WE KNOW THE CHALLENGES AHEAD... Infrastructure Financing Food Safety & Quality Legislation & Taxes Technology International Markets
WHY ARGENTINA?
WHY AGRIBUSINESS IN ARGENTINA?
The Private Sector s Perspective
PRIVATE SECTOR S PERSPECTIVE (TUESDAY) ALEJANDRO ELSZTAIN CRESUD AMANCIO ONETO MOLINOS GONZALO TANOIRA SAN MIGUEL ANTONIO ARACRE SYNGENTA
PRIVATE SECTOR S PERSPECTIVE (WEDNESDAY) MARIANO BOSCH ADECOAGRO CHRISTOPHE DUMONT BAYER GUSTAVO GROBOCOPATEL LOS GROBO
Q&A Session Minister of Agroindustry & Private Sector Speakers
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