Sunday, Dec 17, 2017
Agriculture | South America | Argentina

Argi-business in Argentina

ADBlick bets on Argentina’s agro potential


7 months ago

José Demicheli, Director of ADBlick Agro
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José Demicheli

Director of ADBlick Agro

With only 44 million inhabitants, Argentina produces enough food to sell to and feed 400 million people worldwide. The agricultural sector was what made Argentina an economic powerhouse at the turn of the 20th century. Today, it is among the most prominent sectors of the economy, and one which the government hopes will be an engine for economic growth as Argentina further integrates its economy with the world.

While much of this sector is in the hands of wealthy landowners, entrepreneurs are finding new ways to exploit the economic potential and innovate. José Demicheli saw this potential a decade ago when he founded ADBlick Agro. His project came not from a family history in agriculture or through connections, strictly a business venture. Today, ADBlick is made up of one thousand Argentine investors who become stakeholders in the company’s agribusiness investments. With the new structural changes to the sector stemming from the reduction of export tariffs, the sector is poised to take off.

On a global level, the middle class is growing and increasing its demand for processed foods.  What opportunities do you see for Argentina in this regard?

I am in this line of work because in 2006 I decided to leave my corporate job to embark on my own project.  I had three criteria in choosing a sector to go into business. 1) That the sector would not depend on domestic consumption. 2) That it would be a sector in which Argentina has competitive advantages. 3) That it would be a growth sector.

With these three criteria I decided on agro.  I do not come from such a background and I do not have family in the business; this was an enterprise I created from scratch based on these three pillars. In the beginning, many were waiting to see if and when I would fail.

It has been ten years in the business, capitalizing on the growth of the world’s population and the changing food tastes.

Argentina’s greatest opportunity is also its greatest risk.  We cannot set our national economic policy solely based on commodity commerce.  Companies such as Citibank, Harrods, Mercedes-Benz, and Nestlé decided to open up shop decades ago, many of them establishing their first international branches in Argentina; a testament to the global importance of our economy at the time.  Today however, we cannot have our economy depend exclusively on foreign trade.

The decade of high commodity prices was a wasted decade for Argentina because the cash was used to finance populist policies.  If Argentina had been more disciplined, it would have a significant surplus of cash and more resilient to external shocks.

Some investors are still weary to invest in Argentina because of the vicious and unstable cycle of our economy which has occurred over many years. They are still waiting to see if there is a true undergoing cultural change.  This change does not depend on one particular party and takes more than two years to generate or prove.

I believed in Argentina’s imminent change in course in November 2014 when I decided as a businessman to invest.  I hired a general manager for one of the company divisions and we moved to a new office double the size of the former, and we launched a new cattle division of the company at a time when competitors were retreating. The election year of 2015 was a year to either wait and do nothing or bet everything on the future.  Fortunately for me, our investment has been positive. This year, ADBlick has had experienced unprecedented success.

 

The private sector needs better infrastructure in order to reduce logistical costs so that the economy can be competitive. How do you work with the public sector for these changes?

As a businessman, I never had a dialogue with the government. I began my first enterprise at age 18, at a time when businesses grew due to their deals cut with the government. I always believed that in order to develop myself and my projects, I would do it beyond government contracts. The state must establish a stable mechanism for doing business and do exercise sensible regulation.

With regards to infrastructure, there is much that remains to accomplish, and Argentina must develop a more long-term vision. However, the Macri administration is establishing clear rules of the game and working for macroeconomic stability so that the private companies can take advantage of opportunities.

 

ADBlick already has 1,000 investors in Argentina. What is the next step for the organization?

This year our objective is to launch an investment fund with foreign investors.  This is the next step for our organization as we build on a ten-year track record and seize the opportunities in Argentina’s new economic arena.  Through the difficult years for agribusiness between 2012 and 2015 we were able to surmount many obstacles.  Now that the conditions from the government have improved, we are poised to take advantage of this new environment.

 

What is the key identity of ADBlick?

We define ourselves by both professionalism and open heartedness.  We have solid values which our investors have come to know.  We involve investors in our strategy orientation; this way they understand the challenges and the path to overcome them.

However, nearly 95% of investors don’t look at the books; they trust us to manage their money because we have a proven ability to achieve profitability.  This is what has set us apart, and which has encouraged several private firms to hire us as consultants for our expertise in agribusiness.  Such a demand for our skills prompted us to open the ADBlick Business Consulting division.

 

Interview by Nicolas Carver, follow him on Twitter at @WorldTempo


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