Home At Last

One last "team photo" after we landed on Gustavo's
grass runway near San Andreas de Giles.
Naturally, we had to include our pilots, Carlos and Leandro,
who not only flew us safely across South America,
but kept us entertained and opened many doors for us.
P.S. Pay no attention to the dog in the background.
He's NOT doing what it may appear he's doing...

As far as we know, everyone made it home safely on Friday, January 23. Our plane left Buenos Aires as scheduled and once we hit Miami, we all went our separate ways to our respective states—better educated about the dynamics of Brazilian and Argentine grain production, biofuels, deforestation, government policy and socioeconomic issues. We'll be developing a summary of the mission, but more importantly, a series of action items related to the visit that will help our corn-producing states address some serious challenges related to land use change, exports, food and fuel, and international cooperation and competition.

Stay tuned for future updates to this blog as we fill in the blanks. Thanks for reading. Hope you enjoyed it. Adios!

Rosario Board of Trade

TUESDAY, JANUARY 20—Catching up on an activity from last week:

Grain testing is just one of the services
provided by the Rosario Board of Trade.

On Tuesday, January 20, we were hosted by the Bolsa de Comercio de Rosario (The Rosario Board of Trade), which is responsible for agricultural/food testing as well as for managing commodities trading for much of Argentina.

First we toured the comprehensive testing laboratories. This is where all grain samples are tested as well as food products, biodiesel, soils, etc. After the tour, we were welcomed briefly by the Mayor of Rosario, after which we sat down for a series of presentations.

During the presentations, we learned a number of things:

- The Rosaro BOT trades 80% of the nation’s soybean production, 40% of the corn production, 30% of the wheat production and 20% of sunflowers.

The Mayor of Rosario (second from left) took time
from his schedule to welcome us
to his city and to the Board of Trade.

- Argentina will have a 5 percent biofuels mandate in place by 2010—including both biodiesel and ethanol in gasoline. They are also focused on becoming a major exporter of biofuels.

- Traditionally a corn exporter, Argentina is focusing on adding value to corn before it is exported (bioethanol and other products). Current corn customers include Spain, Portugal, Peru, Cile, Morocco, Malaysia and Egypt.

- Argentina is also the number one exporter and number three producer of soybean oil.

- Argentina currently has soybean crushing capacity of 160,000 tons per day.

- Argentina currently plants about 30 million hectares of land. There are another 13 million available with Class I to Class II soils—and another 15 million when adding Class IV soils.

- If you laid Argentina over North America, it would stretch from the middle of Canada down to the middle of Mexico. In other words, it covers a lot of latitude.

Juan Gear, executive director of MAIZAR, makes
a presentation during our visit to the Board of Trade.

A New Corn Group in Argentina Juan Gear is the executive director of a new (five years old) corn and sorghum growers association called MAIZAR. His group’s goal is to dramatically increase corn acres in Argentina from the current 4 million hectares to 10 million by 2017—with production increasing from 25 million metric tons to 80 million in that period. Considering that Argentina is already the world’s second largest corn exporter (the U.S. is first), it’s clear they are focused on becoming an even more important supplier, in spite of punitive export taxes levied by their federal government (currently 20% on corn exports).

A Closed Loop Dairy We also heard from Alejandro Moriena with Adecoagro, a startup company that is looking to build an integrated facility that includes milk production/dairy, grain production, electric generation and ethanol production. This “closed loop” concept has been explored in the U.S. as well, mostly as a means to increase the net energy balance of ethanol production. This company, however, sees milk production as the primary objective—and ethanol is simply a by-product of the process.

Don Elsbernd of Iowa and Dave Loos of Illinois also had the opportunity to repeat their presentations on the U.S. biodiesel and ethanol industries they had given in Brasilia.

Our takeaways from the four-hour meeting with the BOT:

- Argentina’s federal government is considerably less supportive of agriculture than Brazil’s.

Members of our group, along with representatives
of the Board of Trade, listen intently
to a presentation on Argentine agriculture.

- While ag producers in the U.S. may empathize or sympathize with the crushing tax structure on commodity exports in Argentina, they could become an even more formidable international competitor of those taxes are reduced or disappear altogether.

- The biofuels mandate provides an interesting take on the commodity export tax structure. Adding value to soybeans by converting them to biodiesel helps reduce/avoid the export taxes. Could this be part of the federal government’s plan to force producers to add value to commodities in-country, thus increasing jobs and income?

- There may be an opportunity to partner with Argentina in telling the story about world food and energy production.

Smack in the Middle of the Drought

Gustavo Miroglio leads the team
through a drought-ravaged cornfield.

WEDNESDAY, JANUARY 21—A short flight—and a landing on another grass runway (this one felt as if it were a washboard) as we visit San Andreas de Giles and the integrated farming operation of Gustavo Miroglio. His grandfather started farming in 1915, and now Gustavo’s two sons are helping with the operation

Gustavo began in agriculture in 1969, raising poultry with his father and two brothers. In 1990, he began grain farming—soybeans, corn and wheat. He raises 2.5 million broilers each year and the chickens eat 100% of his corn crop. But after seeing the effect of this 100-year drought, his chickens may be going hungry this year if they have to rely on his corn. There has been no rain—not a drop—in this area since November 28. They had a hard frost on November 15.

Gustavo is a realist, however. “My job is to do the right things at the right time. I cannot worry about the weather because I cannot control it.” But Gustavo, who manages the multi-enterprise operation, definitely controls what he can control. Ask him any number—and he has it in his head. He knows his breakevens (10 tons per hectare on corn, for example…and this year his corn will yield 6 to 7. Not good.) He knows his soil pH, his organic matter, his nutrient levels, etc. etc. In other words, he’s pretty much like any of the successful farmers on our bus! On a side note, the soil numbers are very similar to those in many areas of the Corn Belt.

There has been no rain in this area since the
end of November, reducing Gustavo's
yields by 40% or more.

Gustavo has a poultry operation, a feed mill and his cropping operations. He also plants his own test plots using hybrids from companies we’ve all heard of as well as a few local varieties. He prefers to do his own test plots so he can see how they perform under his specific management practices. While he shares his results with the seed suppliers, he also “controls what he can control” in the test plot environment.
He recently created a new office downtown in this well-kept community of 23,000. The office is in a building that used to be his grandmother’s home. In fact, in the backyard is a rose bush with a real family history—it is the rose bush his grandfather brought to his grandmother’s home when he proposed to her decades ago.

Paul Taylor (IL) gets a closer
look at Gustavo's cornfield.

From Gustavo we heard the same frustration with “Cristina” and the taxes and policies of the national government. Farmers pay high taxes on inputs and on the commodities they grow. But in spite of the drought, land appears to be holding its value at this time—about $3500 per acre.

Gustavo was gracious with his time and honest with his answers. Members of our team pretty much felt as if Gustavo Miroglio was a smart farmer and that the challenges and opportunities facing growers are very similar in Argentina and the United States.

Gustavo listens intently as one of the
corn growers on our team asks a question.