Interview series 3: Argentina - strategic market for multinationals – interview with KWS Argentina

Date:07-28-2020

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 KWS part, we will put the other interviews online successively.

Can you give us a brief introduction of your business in Argentina?

Gonzalo Bravo Commercial Head of KWS Argentina SA

Gonzalo Bravo: KWS Argentina was founded in 1998 in Balcarce, in the southeast of Buenos Aires province. Since then it has become a very efficient and competitive seed company, focused on the breeding, development, production, processing and sales of corn hybrids for Argentina and Uruguay markets. Today, KWS Argentina has two production plants (Balcarce and Manuel Ocampo), with the most advanced technology in seed production, two research stations (Chivilcoy and Jesus María) with breeding programs for different regions and environments in Argentina, and a winter nursery in Viedma.

What has been the overall situation of Argentina's agri-input industry in recent years?

Gonzalo Bravo: The seed industry in Argentina has developed in recent years at the pace of the agricultural sector that has shown a sharp increase in technology adoption. Argentine legislation was one of the pioneers in the regulation of seed activity, with law 20247 of 1973, and from 1996 with the regulation of biotechnological events. However, for several years now, the modernization of the law has been under continuous discussion to adapt it to technological changes and the preservation of intellectual property rights of genetic improvement developments. 

Public and private sectors work together in this regard. Seed companies (through ASA, the Argentine Seed Association), together with producer institutions, technicians, and politicians are working on the adaptation of the seed law to the new challenges, new breeding technologies and intellectual property, so industry and farmers are looking forward to that.

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?

Gonzalo Bravo: Argentina is unique as an agricultural country: extraordinary soils, favorable climate, highly professional and technically efficient farmers. Agricultural production is enough to feed 400 million persons, and the total population is 44 million. The productive environment is peaceful and calm. 

During the past two years, KWS has invested more than 12 million Euros in our seed processing plant located in Manuel Ocampo, and our second breeding program. 

Despite financial and economic instability, the political and legal frame is stable, and the agricultural business environment is friendly. It has been 21 years since KWS Argentina was founded. During all that time the company has grown continuously, and we expect to do so in the future.

KWS Argentina has been making great effort to introduce new seed products and solutions to the market and performed very well. In addition, KWS invested heavily in Argentina in recent years. Why are you optimistic about the Argentine market? What are the company's development plans in Argentina? What will be your key focuses in the next years?

Gonzalo Bravo: Our long-term vision is positive about agriculture in Argentina. The corn crop is important in the country, covering more than six million hectares, and we believe that the area will grow significantly in the future. For example, beef and milk production is expected to expand in the future. Corn has key importance in feeding and food supply.

KWS Argentina has established a breeding program in Chivilcoy in 2005 and recently the second breeding program was founded in Jesús María, Córdoba province, to breed for the northern subtropical areas. We have 2 modern seed processing facilities that allow us to provide the top quality seed that our clients are expecting. KWS commercial team is very close to the farmer, providing technical advice, and promoting long term personal relationships, built under the basic values of confidence, respect and focused in the prosperity of both the farmer and the company.

What are the significant changes concerning agricultural activities in Argentina recently? What specific development strategies will the company formulate in response to these changes?

Gonzalo Bravo: Agriculture in Argentina - in all South America - is on continuous evolution. Sustainable agriculture is a huge challenge in a wide range of climatic, economical, and technological conditions. Direct planting, precision agriculture, soil fertility, pest and disease management, is in permanent interaction with modern plant breeding; KWS is on the front line investing 18.5% of its sales in research and development of corn hybrids, producing seed with state-of-the-art technology, and being very close to farmers with the same values that have characterized it since 1856 as a family business that promotes an independent, entrepreneurial and collaborative spirit.

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?

Gonzalo Bravo: For KWS, health is the top priority. We comply with the official measures in Argentina and have set up measures to protect our employees accordingly. 

Under these given framework conditions, we work intensively on maintaining all aspects of our work, which - as with all seed companies - is also bound to fixed time corridors. 

The timely delivery of high-performance seeds is not only important for farmers. The food supply of people depends on it. As a plant breeding company, we are at the beginning of agricultural production with our seeds. 

In general, the pandemic has influenced almost all activities and I believe that we will learn a lot from it.

This article was initially published in AgroPages '2020 Latin America Focus' magazine. Download it to read more articles.