The Argentine farmer’s cooperative that originates 6 MMT of grain by season

Buenos Aires, August 8th. When large grain traders are urged to load a cargo in a Parana River port, and they don’t have the cereal, they take the phone and call to the Grain Desk of Agricultores Federados Argentinos (AFA), a farmers organization based in the heart of the Pampas, who are able to supply the grain immediately.

Cooperative AFA is a large farmers network with 26 strategic placed Primary Centres, that totalizes 3 million metric tons of grain storage capacity and that move, each season between 5 and 6 MMT of grains. “Between 50 or 60% of that grain is soybean”, AFA’s Chairman, Mr. Jorge Petetta comments, talking with “Part of the grain is transforming in our facilities into feed, oil or flour, catching the added value of the transformation process, but the rest is sold to exporters or export by ourselves”, Mr. Petetta explains. “With 3 MMT of grain storage capacity, we can supply 300 trucks of grain (9,000 tons) immediately to our customers”, added.

But AFA’s leadership is facing the increasing competition for the grain by the exporters, which are doing direct business with large farmers, i.e. without a middleman. “Thus we must increase our scale and be more aggressive, in commercial terms, to maintain our competitiveness and characteristic stronghold in the grain market”, the executive opines. For example, AFA is running a re-engineering of its logistics structure, by the consolidation of the administration of nearby Primary Centres. “If we have 70% of the people occupied in administrative tasks and 30% to commercial tasks, we want to revert this figures”, Petteta clarifies.

According to the official statistics, provided by the Ministry of AgIndustry, during 2017 AFA export the followings amounts of grain and byproducts:

1.- 25,700 tons of wheat

2.- 584,464 tons of corn

3.- 545,093 tons of soybean

4.- 321,535 tons of soymeal

5.- 76,793 tons of soyoil

AFA accounted 2,4% of the total grain exports, 1,0% of byproducts exports and 1,3% of vegetable oils exports.

“To export by ourselves or to sell the grain to exporters is a decision that depends on how much benefit we create to our affiliates”, Mr. Petetta explains in dialogue with “All we want is to gross the income to our farmers”. Currently, AFA has 17,000 active affiliates, but the number is increasing. “In every monthly commission, we have between 45 or 60 new farmers who enter to the organization. In the past years an average between 200 and 300 new affiliates, the net balance between registration and cancellation, enter to AFA”, comments.

An own port: the dream
An own port on the Paraná River would be a strategic asset for this farmer’s cooperative. This would allow competing in better conditions with big grain exporters, also to provide them port services.  For many years to the present, the successive AFA’s administrations have managed this petition with National Government Authorities. There is a location in Punta Alvear, near the Cargill’s port, that the Nation could transfer to farmers. But President Macri’s Administration is thinking to privatize it via a bidding, not through a direct transfer. AFA’s leadership estimates that the investment to acquire the land and mount a port with storage facilities and a crushing plant would round 200 million dollars. “Today is impossible to finance an investment like this, due to the high interest rates at the local market and the uncertainty about economics perspectives; only through an international bank assistance it would be possible”, AFA’s chairman confess.

Epigraph: Jorge Petetta (right), chairman of AFA, during a conference at Rosario City (Santa Fe Province)

Contact Jeronimo Granda, AFA’s spokeperson at [email protected]

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