implications for Argentina

Buenos Aires, August 27th. The Arysta LifeScience acquisition by Indian UPL could enhance its position in the Argentine chemical and biologics market. According to the UPL’s 2017/18 Annual Report, Argentina represents 2% of the global turnover or about 56 million dollars. Brazil, the largest market in Latin America, represented ten folds the local market, that is to say, 20% or sales for 513 million dollars.

During the first decade of the Century, the Indian company acquired two small chemical companies in Argentina: Reposo in 2005 and Icona in 2007. This operation provided to UPL three chemical plants in the country. But eleven years after the last acquisition, only the original Reposo plant in Abbot city (Buenos Aires Province) is operating.

“They had a strong position in insecticides, but in the last years they expanded to other products, offering farmers a wide portfolio options of herbicides and fungicides”, a reliable source of in the chemical business opines.

The local branch is heading by agronomist Felipe MacLoughlin, a former Sales Manager at Monsanto, who jointed UPL in 2010. “They are known in the market by its aggressive sales team, especially when they need cash”, the source says.

Its large quantity of product registres at the Senasa, the acronym of Food and Agriculture Quality Inspection Service, is another stronghold of UPL in the country.

“The deal its a perfect combination not only at a portfolio level but with the bio-solutions orientation of Arysta”, the source adds. Officials in both companies declined to share comments about the deal. Meanwhile, Arysta’s Argentina branch manager, Rodrigo Ramirez, had said in a recent interview for this website, that the company runs a strategy of “light assets”, that combines very good with the physical assets of UPL. Meanwhile, Arysta has a modern and aggressive strategy to connect with the farmers via technology advisors, as RAVIT, a local big-data run by Esteban Tronfi.

On the other hand, the UPL’s Abbott plant is formulating chemicals for other companies, a profitable business that reduces the risk of the company.

A non-optimistic vision

Another reliable source from the chemical market remarked on the crisis that is facing this industry in Argentina. “The local market has imploded; there is not profitability and most of the companies show losses in their balance sheets”, commented. “Annual interest rates of more than 40% surpasses the industry margin when the farmer is looking for a year financing. But companies continue to focus on sales volume, no matter how profitable is the operation”, says.

“Arysta had a good position with graminicides, mostly with clethodim, which commercializes via Bayer under the Select brand. Corn acreage expansion helped the penetration of the herbicide, but other companies entered in the play and push down the prices of the product”, explained.

“With regard to UPL, there were rumors last year about the close of the Abbott plant, due to the lack of profitability. But it’s too much expensive, due to the tax component, to import the chemicals. You must take account that if you import for a hundred dollars, you must pay another 60 dollars as import taxes”, concludes the source.

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