Adecoagro expects to grow in the dairy business

(Photo: the Adecoagro’s free-stall dairy farm in Santa Fe province)

Buenos Aires, November 12th. While its ticket (AGRO) is plunging in the NYSE and shareholders and investors are expecting the results of the 3rd Quarter next November 16th, CEO of Adecoagro Mariano Bosch is saying that the company hopes to grow in its dairy farming operation.

Adecoagro is one of the largest farming companies in Argentina and the Mercosur (adding Brazil and Uruguay operation) that had net sales for US$933 million in 2017, a US$125 million operating profit and US$12 million profit after financing and taxation, according with its financial annual report.

This first half year, net sales are downing from US$394 in 2017 to 371 million and profit from US$10 million to US$22 million losses, due to huge financial costs. According to this trend, its ticket passed to US9.00 a year ago to current US$7.30.

But in a recent interview given to, the CEO of Adecoagro, Mariano Bosch, said that they are optimistic about its growth in the dairy business. In the first half of 2018, sales of Dairy business unit reached US$15 million or the 4% of total sales, US$1.1 million as milk powder and the remaining volume as crude (fresh) milk.

The company is a pioneer in the free-stall barn dairy in Argentina, with a total of 7,000 cows, producing more than 95 million liters per year.

At the beginning of the year, it was learned that Adecoagro was going to purchase San-Cor, the largest dairy industry cooperative in the country. But after months of analysis, they withdrew with the initial proposal and announced, in September, that the company only was interested into acquiring two milk processing plants from SanCor, one of them in Chivilcoy city (Buenos Aires province) and the other in Morteros city (Cordoba province); the first focused on supplying fresh milk to the domestic market, and the second one to process milk from export and cheese production.

“In the next four years, we will own 14,000 dairy cows and four milking yards. Currently, we are producing 300,000 liters of milk per day and we will duplicate this production in the next two years”, Mr. Bosch said in the interview with The purchase of the two plants and two trademarks (Las 3 Niñas and Angelita) would imply a US$45 million operation.

But Adecoagro will must continue to deal with a sector plunged in a depth crisis. Milk production in Argentina is stagnated and many dairy farmers are leaving the activity and selling its milking yards and cows. On the other hand, the domestic demand is affected by the economic recession (milk equivalent consumption is dropping 10% this year) and exports are conditioned by the high logistic costs and tax framework (export taxes).



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