Register Agribusiness Writer
11/21/2003
Becker Underwood Inc., an Ames agribusiness company, has opened an office in Buenos Aires, Argentina, joining a growing list of U.S. companies that are expanding their operations in South America to keep pace with the explosive growth in agricultural production that is occurring on that continent.
Becker Underwood makes products for use by agricultural, greenhouse, landscape, garden and turf businesses. The products include colorants and coatings for the crop seed industry.
The company already has a production plant in Brazil as part of a joint venture. Adding an office in Argentina will give the company a presence in another key market in Latin America, said company President Peter Innes.
"South America is a very important market to us, not least because there's such an expansion in soybeans there," he said.
Like Becker Underwood, other agribusinesses are beefing up business in Latin America as countries in that region increase their crop acreage and production of such commodities as soybeans, corn and pork. Brazil and Argentina are becoming powerful agricultural players, particularly in the soybean industry.
"Agricultural production is shifting to a number of developing countries around the world, especially Brazil and Argentina, and with that is going to go growth," said Sano Shimoda, president of BioScience Securities Inc., an agricultural biotechnology investment banking business based in Orinda, Calif.
The United States traditionally has been the world's No. 1 soybean producer, but South American farmers are expected to produce more soybeans than U.S. farmers in 2004. Brazil and Argentina alone are projected to harvest one-and-a-half times as many soybeans as the United States, according to the U.S. Department of Agriculture.
"It's obviously important for those that provide farm inputs," said Dermot Hayes, an Iowa State University professor of finance and economics.
Suppliers of crop seed, farm chemicals and equipment are expanding their operations in Latin America.
Des Moines-based Pioneer Hi-Bred International Inc., for instance, has had operations in that region for about 25 years, but Pioneer's business there has been growing at double-digit rates in recent years, said Paul Schickler, a Pioneer vice president who leads the company's sales operations in markets outside North America.
Pioneer has 450 full-time employees in South America, in addition to seasonal and part-time workers. The company runs research stations, as well as sales and distribution operations, in Argentina, Brazil and Chile. Pioneer also has offices in Venezuela.
"We have good and growing businesses in each of those countries," Schickler said. "I think we can continue that same pace of growth over the next five to 10 years."
U.S. grain processors, as well as livestock producers and processors, also are building business in Latin America. For instance, Archer-Daniels-Midland Co. and Cargill Inc., two of the world's largest grain companies, are adding employees and building facilities in South America.
Earlier this week, Cargill announced a new South American venture that will make high-performance synthetic esters and formulated lubricants for automotive and industrial uses. The venture is building a manufacturing plant next to an existing Cargill oilseed processing plant in Mairinque, Brazil.
But with a long history of unstable economic and political conditions there, Latin America can be a dicey place to do business, experts said. These days, Argentina is especially troubled, and some companies have scaled back operations there until the unrest subsides.
Testing: Quality control employee Kira Clark uses distilled water to dilute Turf Mark, a spray pattern indicator made by Ames agribusiness company Becker Underwood. The company has opened an office in Argentina.
