Agriculture in Argentina, a technological challenge
The primary sector has a fundamental role in the economy of the country, even if a large part of its immense territory does not have the soil and climatic conditions favourable to cultivation. Innovative technologies, such as those relating to precision agriculture, are gradually finding space, and the demand for agricultural machinery is potentially very high, also for specialized crops and fruit and vegetables
The image that comes to mind when you think of Argentina is that of large cultivated fields or farms with thousands of heads of cattle. This scenario, told by the many Europeans who in the last century went to populate that country and made it great, largely corresponds to today’s reality, but must also include the economic difficulties that the country has experienced on several occasions in recent decades and which have led to several changes of course in the political landscape.
In economic terms, however, agriculture remains central, together with fishing, given that 53% of the almost 3 million square km of land is cultivable and the agro-food chain, as a whole, contributes to about 30% of the GDP of the country. Another 30% is due to industry, which has developed at a faster rate in recent years, and the remaining part is significant in natural resources (quarries, mines and energy).
Despite the large presence of Spaniards and Italians, which leads to a very strong cultural link with Europe, Argentina’s trade exchanges are more intense with other geographical areas. In the first place, Mercosur, the free trade area that the main countries of South America are building, and above all Brazil, a historical partner.
However, the other most significant trading partner is China, despite the geographical and cultural distances.
What has become the world trade giant manages to export to Argentina more than double what it imports. The volumes of China are comparable to those of the USA and of the entire NAFTA area (USA, Canada and Mexico) where, however, Argentina also manages to partially balance with exports.
Considering the top three trading partners, Brazil is the only one with which Argentina’s balance is active, while with China and the USA it imports more than it exports.
The European Union has fourth place, and in recent years there has also been a drop in trade: in December 2018, 9% less exports to Europe and 21.7% less imports. Agricultural processed products were the only ones not to lose ground. Half of the exported products are: flour and pellets derived from soybean oil, biodiesel, beef, shrimp and other crustaceans.
The Netherlands ranks first among the various countries of the Union, followed by Italy, Spain, the United Kingdom, Germany and Poland. However, the top position is simply due to the port of Rotterdam, which is actually just the main entrance of the goods which are then forwarded to other countries. If we knew where they really end up, the ranking would probably change a lot.
As regards imports from the EU, 70% of the volumes are concentrated in five countries which, in order, are Germany, Italy, Spain, France and the United Kingdom. As we can easily imagine, these are technological products, including nuclear reactors and boilers. The pharmaceutical products sector is interesting, with a growing demand in Argentina.
Although Argentine agriculture continues to be characterized by large surfaces and traditional cultivation systems, more technological systems such as precision agriculture, soil radar mapping and the use of drones have been developing for several years. Farms have also started updating commercial channels using various forms of electronic commerce.
Overall, however, the sector is still characterized by a low level of mechanization. At the same time, there is a shortage of rural workers, especially skilled workers. This constitutes a further obstacle to the development and modernization of farms.
The characteristics of the soil, and therefore of the crop choices, vary a great deal because passing from the north to the south of the country one encounters very different climatic conditions that are rarely encountered all together, in the territory of a single nation.
From an agronomic point of view, we can consider three macro areas: temperate zone, subtropical zone, and arid zone, which represents three quarters of the entire Argentine territory.
The large volumes are primarily achieved from grains, followed by oil crops. It is said that the production volume is ten times higher than the internal demand. Going into the specifics, the main crops are, in order: soy, wheat, corn, sunflower, sorghum and rice. And a further increase in the cultivated area is expected for grains.
The greatest weight in exports is given by the oil crops, with sunflower and soy at the top.
Despite having very modest numbers, the horticulture sector captures the interest of businesses and economists. It occupies less than 2% of the cultivated land and almost all of the production (93%) is destined for the internal market; but for several years it has recorded a trend of continuous growth, and stimulates technological innovation in order to be competitive on international markets.
Together with fruit growing, which however is much more developed in terms of volumes, it can be strategic for exports and more interesting for suppliers of technology for agriculture, given that these crops are able to increase quality and profitability thanks to a very specialized mechanization.
In addition, fruit production feeds the processing industry, which has been growing steadily in recent years. Already now, Argentina is the world’s leading lemon producer and the second largest lemon and pear exporter. Furthermore, for some years it has been present on the world market as a producer of blueberries, cherries and grapes, while vines are one of the most common crops in arid areas.
Although Argentine farms are poorly mechanized, if compared with other industrialized countries, there are over 850 companies that build equipment and components for agricultural machines, with a workforce of about 40 thousand people, including direct and indirect employees. They are mainly found in the internal areas of the country, where there are very few manufacturing industries in other sectors.
These, however, are the areas mainly dedicated to crops. That is, the recipients of the solutions that agricultural equipment must offer. Almost all of the agricultural machinery industries, over 95%, are concentrated in three of the 23 provinces: Santa Fe, Córdoba and Buenos Aires. There are no dominant production models and the range of products made by the various companies is extremely diverse, with the exception of the manufacturers of tractors and combine harvesters who adapt to the standards of the multinationals present in Argentina with their own branches.
The top five companies present with their own production sites are John Deere (USA), Case New Holland (Netherlands), Claas (Germany), Agco (USA) and Vassalli Fabril (Argentina).
However, some small companies have gained leading positions in technological research. If today Argentina is also known as a producer of tracked foods, it is due to the solutions developed by some local electronics, robotics and nanotechnology companies.
It is also the second country, after the United States, for precision agriculture. In addition, it exports highly complex agricultural components for highly specialized functions, such as self-driving, variable dosing of seeds and fertilizers, monitoring of wheat yield, analysis of the quality of wheat in the harvesters, connection to the machine via the web etc.
There is no doubt that the imports of agricultural machinery and components are higher than exports, which however show a growing trend. In 2017, the value was around 64 million dollars. But from year to year there are significant fluctuations due to frequent changes of course in the context of financial policies.
Imports, which in 2018 reached a value of around 700 million (-36% compared to 2017), mainly concern combine harvesters and tractors.
But recently there has been an increase in the import of self-propelled sprayers and seed drills, for which Argentina boasts world-recognized records. Also in this case, however, the phenomenon can be explained for financial reasons: an increase in internal costs and a continuous revaluation of exchange rates.
More than half of the imported agricultural equipment comes from China and Brazil. Italy accounts for between 2 and 3% of the total import of agricultural machinery. Over the course of ten years there has been a growth that has raised the 10 million euro in 2008 to 27.5 million in 2018. This is a much higher value than what Italy imported from Argentina, which decreased (after an anomalous peak between 2009 and 2010) from 998 million in 2008 to 241 million in 2018.