Business
- Business
- Farming Business
- Sugar, Ethanol and Energy Business
- Land Transformation Business
- Agribusiness Model
Business
Adecoagro is engaged in three main businesses:
Farming Business:
Adecoagro is one of the largest owners of productive farmland in South America. As of September 30, 2010, Adecoagro owned 274,663 hectares (excluding sugarcane farms) of farmland in Argentina, Brazil and Uruguay, of which 121,723 hectares are croppable, 18,909 hectares are being evaluated for transformation, 79,645 hectares are suitable for raising beef cattle and are mostly leased to a third party beef processor, and 54,387 hectares are legal land reserves pursuant to local regulations or other land reserves. As of September 30, 2010, Adecoagro held leases or had entered into agriculture partnerships for an additional 37,687 croppable hectares. Adecoagro owns the facilities and has the resources to store and condition 100% of its crop and rice production. Adecoagro does not depend on third parties to condition its production for sale.
Adecoagro´s farming business is subdivided into five business areas:
Crop business: Adecoagro produces a wide range of agricultural commodities including soybeans, corn, wheat, sunflower and cotton, among others. In Argentina, our farming activities are conducted mainly in the Argentine humid pampas region, where agro-ecological conditions are optimal for low-cost production.
Since 2004, Adecoagro has expanded their operations throughout the center-west region of Uruguay and the western part of the state of Bahia, Brazil, as well as in the northern region of Argentina.
Rice business: Adecoagro owns a fully-integrated rice operation in Argentina. The Company produces irrigated rice in the northeast provinces of Argentina, where the availability of water, sunlight, and fertile soil results in one of the most ideal regions in the world for producing rice at low cost. Adecoagro is one of the largest producers of rough (unprocessed) rice in Argentina, producing 91,000 tons during the 2009/2010 harvest year, which accounted for 8% of the total Argentine production according to Conmasur. Adecoagro owns three rice mills that process its own production as well as rice purchased from third parties.
Coffee business: Adecoagro´s integrated coffee operation is located in the western part of the state of Bahia, Brazil, where conditions are well-suited for producing “Specialty Coffee” due to the availability of water for irrigation, the absence of frosts, and the flat topography that allows for a fully mechanized harvest.
Dairy business: Adecoagro is one of the leading dairy producer in South America in terms of its utilization of cutting-edge technology, productivity per cow and grain conversion efficiencies, producing over 47.5 million liters of raw milk during 2009, with an average of 4,594 milking cows, delivering an average of 28.3 liters per cow per day. Our “free-stall” dairy in Argentina is the first of its kind in South America and allows us to optimize our use of resources (land, dairy cow feed and capital), increase our productivity and maximize the conversion of forage and grain into raw milk.
Cattle business: Adecoagro´s cattle business primarily consists of leasing (i) approximately 74,000 hectares of grazing land located in the Argentine provinces of Corrientes, Formosa, Santa Fe and Santiago del Estero, for an annual price equal to the equivalent in Argentine Pesos of 30 kilograms of meat per hectare, calculated in accordance with the Steer Index of the Liniers Market (INML), for a period of 10 years, renewable by the parties and (ii) two feed lots located in the Argentine provinces of Corrientes and Santa Fe, for an annual price of $25,000 each.
Additionally, Adecoagro currently owns approximately 1,625 head of cattle and two cattle feedlots with a capacity to hold 6,500 head, which they use for fattening activities.
Sugar, Ethanol and Energy Business:
Adecoagro is a growing and efficient producer of sugar and ethanol in Brazil. The Company cultivates and harvest sugarcane which is then processed in its own mills to produce sugar, ethanol and electric energy.
Adecoagro currently owns and operates two sugar and ethanol mills, UMA and Angélica, with a total crushing capacity of 5.2 million tons of sugarcane per year.
UMA is a small but efficient mill with over 75 years of history which is located in the state of Minas Gerais, Brazil, with a sugarcane crushing capacity of 1.2 million tons per year, full cogeneration capacity and an associated sugar brand with strong presence in the regional retail market (Açúcar Monte Alegre).
Angélica is a new, advanced mill, which Adecoagro built in the state of Mato Grosso do Sul, Brazil, and which has a current sugarcane crushing capacity of 4 million tons per year, highly mechanized harvest and two high pressure boilers and three turbo-generators with the capacity to use all the sugarcane bagasse by-product to generate electricity that is used to power the mill, with excess electricity being sold to the grid, resulting in the mill having full cogeneration capacity.
Land Transformation Business:
Adecoagro is one of the leading companies in South America involved in the acquisition and transformation of land. We acquire farmlands we believe are underdeveloped or underutilized and, by implementing cutting-edge production technology and agricultural best practices, transform the land to be suitable for more productive uses, enhance yields and increase the value of the land.
Adecoagro current owned land portfolio consists of 287,884 hectares, distributed throughout our operating regions as follows: 84% in Argentina, 13% in Brazil, and 3% in Uruguay.
Adecoagro promotes sustainable land use through its land transformation activities, which seek to promote environmentally responsible agricultural production and a balance between production and ecosystem preservation.
The following map shows the location of our farms, main industrial facilities and corporate offices.
Agribusiness Model
Adecoagro is developing an agribusiness model that allows them to engage in large-scale farming activities in an efficient and sustainable manner. Our agribusiness model consists of developing a specialized workforce and defining standard protocols to track crop development and control production variables, thereby enhancing efficient decision making and facilitating continuous improvement. This approach allows them to grow in scale and execute its expansion plan and efficiently manage various production units spread across different regions by effectively replicating our productive model.
Process standardization also helps them assure compliance with local law and regulations and reduce social and environmental risks.
Adecoagro continues to develop and implement crop protocols. The purpose of these protocols is to coordinate and consolidate the knowledge on crop management for each area in order to standardize the implementation of these protocols. The protocols contain all the technical information for managing crops. This information is constantly reviewed by agricultural teams and Adecoagro´s advisors, making it possible to preserve the technical knowledge of the company and at the same time improve agricultural production and make decisions pursuant to the company’s guidelines. Based on the results of the application of these protocols, the Company conducts an annual review of the techniques used and their results.
When processes and protocols are defined they can be audited and certified by qualified third parties.
Adecoagro is currently in the process of certifying its crop production in Argentina under ISO 9001. We are also working to implement ISO 14001 and OHSAS 18001 in some operating units.
In order to achieve efficient scales of production, Adecoagro has redesigned its field sizes by removing useless cattle infrastructure such as fencing. Larger fields reduce the overlapping of farmworks, enhancing operating efficiency, reducing the use of inputs and achieving agronomic timing (planting or harvesting on time). The goal is to reduce operative time and to improve efficiency in the use of inputs. Large-scale production also requires the implementation of advanced technology such as GPS (Global Positioning System), GIS (Geographic Information System) and modern machinery as well.