Marcos Guigou, one of the GFN members from Uruguay, was interviewed several weeks ago and we thought it might be interesting for others to learn about some of the opportunities and challenges faced by agricultural producers in the South American nation.
The article/interview has been translated from Spanish to English via the publication El Pais Rurales (Uruguay) so may contain some minor errors.
May 22, 2019
The Director of Agribusiness of Plata (ADP) said: “We must think of an agriculture integrated to the value chains: that the grains produce more beef, more pork, more poultry and more milk. It will allow us to be better grain producers than we are today. ”
By Martín Olaverry and Guillermo Crampet
To be a producer of commodities “you must be a world champion of low costs per ton, because it is a cost business,” says the Director of Agribusiness of the Silver (ADP). Marcos Guigou believes that in Uruguay “there is a problem” and that, at times, “the country does not help us” and, for others, “we put restrictions that do not allow us to address the productivity potential we have.”
Understand that the year 2018/19 has been “very good since production”, both for winter and summer crops. In soy it estimates that the average country could be positioned at 2,800 to 3,000 kilos per hectare. And it highlights that in the last three years the farmers have achieved two soybean crops with record production.
Therefore, he sees “positive signs of the system, its people and the ability to overcome the challenges,” he said and stressed that the last harvest “was the worst of my thirty years of history doing agriculture.” What “is a sign of resilience” that “forces you to keep doing things better and better because the future is challenging. Now we must think that we must be exceptionally good in costs. ”
[Question] – At current prices and expected yields in soy, where do you think the breakeven point is?
[Answer] – There are as many accounts as producers. It is difficult to get numbers in a business where there are people who double crop and others play only with soy. With $ 300 per ton you don’t make much homeland. It is not for a party, but who also manages other products finds a year of more chances. The basket must be assembled with different productions, perhaps a producer saves the soybeans because the price does not serve him but he manages to sell wheat, barley or rapeseed well.
[Q] – How do you see the future of the agricultural area of the country, is it necessary to start thinking about an agriculture more integrated with other value chains?
[A] – The theme is the alternatives and for soy there are not too many. Probably soy is individually the main crop of the country, but today we can build strong agricultural production systems that do not have soy as the only one that moves the needle. And you have to start thinking about a more integrated agriculture in the value chains: that the grains produce more beef, pork, poultry and more milk. To the extent that there are strong changes in the availability of proteins in relevant areas, as is happening with China for example, producing more animal protein would be something very interesting. Although perhaps culture is lacking.
[Q] – In what sense?
[A] – I see that agricultural production that is close to an integration in the meat production chain is really interesting. Uruguay is the most inefficient in kilograms of meat per kilo of food compared to all other chains that are much more efficient and that, in general, we do not explore with export capacity. Those technologies are there, industries too and the consumption of these products are developed. Uruguay does not have much Know-how although it can be acquired.
[Q] – How do you evaluate ADP’s experience in integrating meat production with agriculture?
[A] – I evaluate it as very good and I am convinced that it is a very good tool to make a different business. It has been a solution to produce more value in each production area with efficient agriculture and avoiding falling into high costs. There is also a validation of the markets, since the generated product is demanded. What is a reality is that we produce meat based on grain with efficiency of six to nine kilos of grain for one kilo of animal. We are with the most inefficient animal for that, if it were done in pigs, birds or fish, the conversion efficiency would be much better. The issue that Uruguay has no tradition in these matters, we also don’t have open markets for those products, nor the sanitary regulations to close those businesses, or perhaps we have not yet encouraged ourselves to think that we can be large exporters in these species. What would also allow us to be many better grain producers than we are today.
[Q] – The quota 481 has been a business that dynamized the production of meat in an intensive way, how do you see the fattening farmyard thinking about the future and the possibility that the quota be restricted?
[A] – In the future I see it well, there is enormous potential as long as it is efficient in each of the links in the chain. I am not a meat specialist but I try to learn the keys to our development, and I consider that Quota 481 is a capped business that is going to be restricted and for a time it will be important, although the future passes through other markets. It is difficult to say what will happen, it seems to me that the system that integrates pasture production, grain supplementation and farmyard production generates a product of high demand, of good quality and that is positive for the whole system that integrates it . The objective has to be to generate more kilos per animal and the potential for that is very good.
[Q] – Do you see it possible to maintain the confinement business without having the quota that guarantees a sale price of the product?
[A] – I have no doubt that will continue to happen. I think it is necessary for the producer to have a clear future sale price. But I don’t see why you can’t have other options. To the extent that a volume, a supply and a premium quality is guaranteed, you will have the demand and those chains will be given. I do not see that the pen business is over because the Quota is adjusted.
[Q] – Is it possible to enclose other categories such as rearing or preparing animals for export on foot?
[A] – Can be. Everything is given by a theme of costs and markets. Rearing with grain or faster rearing is better for the carcass you are going to have. The issue is to continue to shorten the periods until the animal is finished and ready for slaughter. The faster the growth of the animals and the closer to the ceiling of the genetic potential they are, the quality produced in the end is better. Putting grain at some other time would be something interesting, you would have to deepen the studies to see how you can chain. You can invent a lot.
[Q] – Where else do you see it possible?
[A] – There is another chain where you can put grain and it is in the milk. There you can also improve productivity with the rodeo and milk quality. Because ultimately producing grain is transforming the sun’s energy into chemical energy, and that can be applied in many ideas. That is why we must not stop being efficient in capturing the sun and water to turn them into a good production. If the product is not present, the alternative paths begin to be smaller. It is clear that the world needs food and energy, therefore it is essential to apply science, since that gives value, gives work and many opportunities. It is a road where there is a lot of positive.
[Q] – How important are commercial alliances with other companies to ADP?
[A] – Our DNA is in using the information so that the business improves its efficiency all the time. We are very delicate in searching, saving and using the data. In these years with the pens we have learned a lot and we develop alliances to continue improving efficiency in the internal business. The pen requires a lot of preparation and integration with other companies gives predictability to the system. There are very important variables such as genetics, that lots are even, that animals know how to eat, the health that is done at source. These are aspects that have a great impact on the performance of the pen. In genetics we saw that with Fridge Model we have achieved good efficiencies. It also happens to us, from the evenness of the lots and that they know how to eat, with Carne Crea. They are agreements that work very well. Another alliance is with Valdez & Cía., which has long been our main livestock supplier. Our needs are very clear, the operation simplifies us a lot. It provides us with very good quality and a lot of volume. It has been a very good experience.
[Q] – What do you expect from the new government for the development of an adequate productive framework?
[A] – In Uruguay we tend to look at what we lack and not what we have. But as things that should not be lost is economic stability, something very necessary. Lately we have lost simplicity in the economy in relation to 10 years ago, tools that worked well as the investment promotion law that got complicated everywhere. It is a country that is full of regulations, everything that is going to be done is regulated and we should see if they really add value. Surely many do not add it. I do not like the State to get into everything there is and drive us crazy in all kinds of decisions. You must look for a logical way and eliminate everything that does not add value.
[Q] – What is your opinion of the land use and management plan?
[A] – I do not like. It is a model that asks you to say what you are going to do from here to five years, when the markets do not let you know what will happen in the next three months. How will I plan what I do five years onwards if nobody assures you anything. That is not and will not be. Sometimes a decision is made to change item two months before it is sown. It would be necessary to think about more rational things, the soil must be controlled and taken care of, but it is something basic that must be done. Technicians, for example, spend hours to enter the Plan page to load the data, and they have to be in the field because that is where the business is played. Not that that will change the number, although every thing that is added is like a spider web.
[Q] – What else do you consider necessary to be installed in the next government?
[A] – More projects that excite. When the national team plays we all swell for the sky and generate a positive wave that has allowed us to achieve a lot of achievements. That should generate our leaders, in big business we should think of leaders that move you and encourage you to get up to continue and do more. You have to look at the things that can be done together. Uruguay is a beautiful country, with few people, good weather, beautiful beaches and plenty of food. What is most needed are projects that fit everyone behind a better country.