The sharp increase in land rental costs in recent years in Argentina has meant that despite the rise in grain and oilseed prices, the company’s margins have been squeezed, forcing a strategic rethink of its business model. Owning rather than leasing agricultural land has been a way to gain control of productivity and profit margins, say people who know the company well.
El Tejar isn’t the only company to pack its bags and skip town. According to the FT, other important Argentine agribusinesses are shifting some of their operations into Brazil, “including Los Grobo, Cresud and MSU”, which “have expanded beyond borders in recent years, taking advantage of the plentiful land supply.”We’ve written before about the depressing cycle of Argentine economic failure. Sadly, it doesn’t appear the country will break this cycle anytime soon.[Argentinian flag courtesy of Shutterstock]