With the opening of the Argentine economy to the world, its agribusiness sector is among the government’s prime targets for investment and growth, and has the greatest potential to inject foreign capital to the economy. While home to only 44 million inhabitants, Argentina already produces foodstuffs for 400 million people worldwide. The current government seeks to increase that figure to 600 million. Key to bringing out this change will be innovation in the agribusiness sector through more advanced techniques and greater collaboration among agribusiness professionals. The non-governmental organization dedicated to implementing just that is AACREA. Its president, Francisco Iguerabide, discusses how to make the sector grow in the context of Argentina’s global economic reckoning.
Since Argentina returned to the international capital markets upon reaching a deal with holdout creditors, the country has been keen to promote key sectors such as agribusiness to attract investment to stimulate economic growth.
Argentina is undergoing a key cultural change, and President Macri’s reforms would not have been possible without this change. Our society understands that change has been necessary in Argentina and this was reflected in the democratic choice in the 2015 general elections.
The cultural change has to do with choosing a more transparent government that respects the principle of separation of powers, as well as the state’s role in the economy, finding key roles for both the public and private sectors.
The agribusiness sector has great potential for growth as the global middle class is growing and global demand is increasing. How can Argentina increase its production?
There are several challenges regarding strategic implementation. For example, at one point it was economically feasible to export beef, yet due to government policy, domestic consumption was prioritized at exports’ expense. The new vision to increase Argentina’s wellness is to look outward, not inward, to advance our economy.
Argentina makes up less than one percent of the world’s population and gross domestic product, meaning that the markets and resources are found elsewhere, and we will certainly have an easier time at our own development by commercializing on the demand of the remaining 99% of the global population. This is the new vision adopted by the Argentine agribusiness sector, and this is why it is crucial to continue the path set out by the Macri administration to globalize the sector. We must generate confidence among Argentines to begin providing foodstuffs to the 600 million people throughout the world which our nation is capable of feeding.
There is also great potential for public-private partnerships in agribusiness. It’s not enough to provide value-added goods to global markets, because there are export taxes which make business acumens unfeasible.
What will Argentina’s new Public Private Partnership Law mean for the agribusiness sector?
It will open new markets together. If the private sector takes up the challenge on its own of trying to sell its products, it will come up empty handed. If the public sector goes it alone, it will open doors that no one will walk through. The two must work hand-in-hand to grow the economy in context with our opening to the world.
This is being done in Argentina, with the Ministries of Foreign Affairs and Agribusiness working together to develop commercial relations with various countries such as China. We all know that the Chinese middle class is growing quickly. For value added goods, China is a key commercial relationship.
Our remaining challenge is to convince Argentines that the future for our sector depends on looking outwards not inwards. We can develop our key agricultural commodities for global consumption.
What remains to be done for Argentina’s global agro integration?
I point out the level of education of the Argentine agro-entrepreneur. The percentage of Argentine agribusiness decision-makers with a university degree is nearly double that of the United States. This makes our sector innovative and advanced.
As new technologies are developed, Argentina will be the first to implement them due to the high level of human talent in our agribusiness sector. When one sees old tractors in the Argentine fields, it is because there is no credit or high interest rates impeding development.
It is more difficult to innovate in agribusiness than in software, due to land ownership.
Correct, it is more difficult. Large enterprises have advanced and innovated production, yet is also important to have agribusiness SMEs.
Today, it is clear what are the world’s demands, but in ten years, who knows? There are trends, but we know the global economy can be unpredictable.
What will be AACREA’s role in Argentina’s agribusiness opening?
At AACREA we do three things: inspire, train people, and empower ideas. While we appear to be an organization, we are an empowerment tool for people. Our people make decisions on a daily basis which achieve results. If one centers on the formation of individuals, it is easier to achieve better results. We work to incorporate and develop smart techniques in Argentine agribusiness.
AACREA is made up of 200 agribusiness players who come together at events to discuss ideas. We in turn present these ideas to the necessary actors to make change. We do two prime events per year. The seven thousand attendees come neither for the speakers nor the program, but because these events inspire future dynamism through discourse.
What is your perspective on Argentina’s future relationship with the United States in agribusiness?
We don’t necessary need to compete with the United States; we can collaborate instead. We have the land, the production, and the technology to ally ourselves with the U.S. as a bloc, instead of independently negotiating. We must increase our bilateral commercial relationship with the U.S. Despite the U.S.’s possible neo-isolationist economic policies, it is in Argentina’s best interest to do business with the U.S. Although bilateral trade may be limited, however ajar the door may be, there is still great potential for our economy.
Interview by Nicolas Carver, follow him on Twitter at @WorldTempo