Interview series 2: Argentina - strategic market for multinationals – interview with BASF Argentina
Jul. 27, 2020
- Interview series 4: Argentina - strategic market for multinationals – interview with Rotam Argentina
- Interview series 3: Argentina - strategic market for multinationals – interview with KWS Argentina
- Interview series 1: Argentina - strategic market for multinationals – interview with FMC Química Argentina
The Argentinian agro-food sector has grown and innovated remarkably in the last three decades, driven by technological change and, over much of the period, by high international agricultural prices. Agriculture is the country’s main exporting sector and an exception in terms of performance.
Argentina has been suffering from an economic crisis in recent years. Nevertheless, we have noticed something unexpected during the tracking of the dynamics of the agri-inputs industry in Argentina. In recent years, multinationals have always maintained their attention and investment intensity in the Argentine market. What made these companies focus on this market even under an unstable economic environment is a question we are very curious about. To this end, we contacted some leading companies in the agri-inputs industry to discuss together and received positive responses from FMC, BASF, KWS and Rotam.
Here below is BASF part, we will put the other interviews online successively.
Can you give us a brief introduction of your business in Argentina?
Senior Manager of R&D, BASF Argentina
Hernán Ghiglione: BASF is a chemical company that creates and develops solutions for more than 30 industries including agriculture, automotive, construction, transportation, energy, hygiene, health and nutrition. Our purpose is to create chemistry for a sustainable future. We have more than 60 years of history in the country, a time in which we cross all kinds of contexts.
Argentina is a strategic country because it is one of the most important agricultural countries in the world and is always among the main ones in terms of company turnover. Furthermore, we have participated in innovation projects since their inception and actively contributed to decision-making around the world.
What has been the overall situation of Argentina's agri-input industry in recent years?
Hernán Ghiglione: In recent years, the agricultural sector has grown in percentage terms, and although there is single-digit growth, we are talking about a very relevant market in size. In relation to the number of hectares, there has been no significant growth, although there have been changes in the proportions between the main crops. Agricultural producers have adopted a higher level of technology every year and invest more and more in innovation for their field, thinking not only about producing more but with more profitability, quality and sustainability.
We cannot fail to mention the most recent, specifically in reference to COVID-19, which has established new official regulations and work protocols that changed and will change our way of working and acting. Although agricultural activity was less affected as it was an essential activity for our lives, certain manufacturing of supplies and machinery, among others, was halted, returning to the activity in some cases partially, only in mid or late April. Others are still waiting to reopen.
In regulatory terms, the great change is taking place in specific municipal or provincial regulations regarding the application of plant protection products. These regulations limit peri-urban applications, which in many cases affect some producers as they are located in areas close to cities. It is a subject that should concern us at the national level and, in that sense, it is very important to generate and use scientific information in support of these decisions.
Despite the economic downturn in Argentina, overseas companies have still been seeing some investment activities in Argentina recently. What do you think are the main reasons that Argentina can attract investments from overseas companies? What are the favorable policies that Argentina offers in attracting these overseas investments?
Hernán Ghiglione: BASF continues with its investment commitments in the country. Globally, the company invested more than €800 million in research and development in 2019. Every year, approximately 10% of BASF's net sale is reinvested in R&D, which, in turn, directly impacts investments in the country.
As we have already said, Argentina is a strategic country in agricultural terms, so BASF will continue betting on farmers, who play a fundamental role in food production. Argentine producers are naturally innovative, incorporate new technologies and solutions very quickly when they visualize value and invest approximately US$15 billion each year in the country. A clear example is that of the direct sowing system or genetically modified crops that reached very high adoption rates in a few years. For this reason, at BASF, we continue with our commitment to provide new solutions and innovative technologies for the sector.
We learned that your company has been making great efforts to introduce new crop protection products and solution to the market. Why are you optimistic about the Argentine market? What are the company's development plans in Argentina?
Hernán Ghiglione: In the last five years, BASF has launched 25 products and we have many others that we plan to launch going forward. This shows that the organization invests heavily in innovation and is optimistic in terms of the level of adoption by farmers. Our objective is to identify what solutions the agricultural producer needs to help him. So in the future, we plan to continue offering innovative solutions that help producers solve the challenges that agriculture poses in each of its stages.
Among the next launches is Revysol®, a new fungicide that meets the demands of many crops such as soybeans, corn, wheat, vegetables and fruit. As for herbicides, we have launched Zidua®, which has shown a high level of adoption due to its excellent effectiveness in handling difficult weeds. Also, we have new residual herbicides in pre-launch stages such as Luximo® and Tirexor® that will arrive in the country in the coming years. On the other hand, we have also invested heavily in insecticides globally to strengthen our current portfolio. For two years, we have completed our portfolio with seeds from various crops where soy is today the most relevant crop for Argentina.
In the future, the main focus is to continue strengthening our portfolio in terms of solutions for crop protection, seeds and digital tools.
What are the significant changes concerning agricultural activities in Argentina recently? What specific development strategies will the company formulate in response to these changes?
Hernán Ghiglione: For some years, agriculture at a global level has been undergoing a strong technological change that was accelerated in some cases in recent months as a consequence of the COVID-19 pandemic. These changes are reflected in the level of adoption of new digital tools to achieve greater effectiveness in internal processes and to achieve a different contact with the producer from the digital world. Although there was already a trend of adoption of digital tools by producers and technical advisors, this adoption is accelerated with the main objective of being more efficient, optimizing time and being more accurate in terms of diagnosis.
The use of predictive tools that use Artificial Intelligence, such as our digital xarvio™ solution, has been increased to predict adverse situations that crops will experience soon, allowing better diagnosis, correct treatment, and better logistics by producers.
These changes are taking place throughout the agricultural world and, of course, also in Argentina. From BASF, we also see an internal technological change when using technologies that allow us to improve research and development processes, through the use of digital tools that help us optimize resources.
Keeping the producer in mind, last year we launched xarvio™ Digital Farming, which has two functionalities, xarvio™ Scouting which, using Artificial Intelligence, helps recognize weeds, diseases and insects just by taking a photo, and allows us to be more accurate in diagnoses. And, on the other hand, xarvio™ Field Manager helps to monitor crops remotely, and using predictive tools helps producers and technicians to make decisions about crop management.
In light of the COVID-19 pandemic, what are the challenges the agri-inputs industry is currently facing? Can you predict what the industry situation would be in 2020 or the future?
Hernán Ghiglione: In Argentina, at the start of the pandemic, agricultural producers were able to largely end their campaign activities. Right now they are finishing harvesting, with a not so great impact in terms of production, but the restrictions were observed regarding the logistics of the internal movement of grains.
Quarantine has had its greatest impact on interpersonal contact, which is a very strong characteristic in agriculture. The main complexity is to reconvert the personal and very usual contact that was had with producers and consultants, towards a digital model to implement on a day-to-day basis.
For now, it is difficult to project the total duration of the quarantine. In any case, agriculture continues and will continue to invest as it has always done, despite the different crises that have arisen. It is a key sector for the country, which generates food and other inputs of extreme need (such as ethanol, among others), in addition to much-needed foreign exchange in the current macroeconomic context. For this reason, BASF will continue betting on agriculture, regardless of the duration of the pandemic.
As for the impact on the next campaign, for now, it is difficult to venture a guess. However, I would expect the new scenario to be a little different once the pandemic ends. I think the way of working will be different and we will be more adapted to greater use of digital tools that make our work and time more efficient. Even so, I do not think that personal contact is lost, which is a very important value in agriculture, although everything digital will probably take on greater relevance. We are learning that we can be efficient and we can do agriculture despite the limitations to meet or to go to the field.
We will surely find a different balance, which will otherwise combine personal and digital contacts, and which will bring benefits for both professional and personal activities.
This article was initially published in AgroPages '2020 Latin America Focus' magazine. Download it to read more articles.
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