The drive towards Latin America for NZ Agriseeds has been motivated primarily by similarities in climatic and environmental conditions between New Zealand and key South American markets. The company has been selling pasture seed into Latin America for around 15 years, with approximately 50 per cent of exports now focused on the region.
"Chile is a market that has a lot of similarities to NZ in terms of their focus on pastoral agriculture," says Michael Hales, Marketing Director at NZ Agriseeds. "A lot of Chilean farmers take their steer on dairy farm management and dairy farming practices from New Zealand; either experiences from working over here or from some early NZ guys that went over there, recognised the potential in Chilean agriculture, and adopted and adapted a NZ farming system in the Chilean environment."
The similar latitude of some South American countries creates a comparable temperate climate, allowing NZ-bred pasture varieties to adapt well to the South American environment. For example, Orsono, the main dairy region in Chile, is at about the same latitude as Palmerston North.
Andean countries, specifically Colombia, also present opportunities due to their high altitude farming regions. "The reason our varieties work in the Andean South American region is because when you get up to 1800-2000m above sea level, the areas that are tropical at sea level, become temperate at altitude."
Hales is confident attending trade missions in the region has assisted significantly in building Agriseeds' presence.
Since the company's initial foray into Colombia during the PM's Trade Mission, NZ Agriseeds has had five groups from Colombia visit their research farm in Christchurch, notably including the Colombian Vice Minister of Foreign Affairs.
"Being part of that bigger group provided a lot more profile, it created a presence that you can't get when you're in a place by yourself.
"The opportunity to meet and engage with a lot of other people there has been really useful. It elevates that level of engagement a lot more than you'd get if it was just one company talking to one company."
The company recently signed up their first distributor Colombia, arising directly out of contacts made on the mission, and Hale believes the market offers a significant amount of potential. In the past, Agriseeds has supplied a small amount of seed into Argentina and Uruguay, however it no longer operates in those markets.
"We have focused our involvement in Latin America in higher value markets, where the value of the genetics we've bred is greater."
Seed supplied into Chile, for example, is priced at about two to two and a half times the prices that the Argentinian market would absorb.
Importance of a long-term outlook
With Latin America containing the world's largest commercially farmed cattle populations, Tru-Test, whose core business is technology for the global cattle industry, recognised early on a need for a presence in the region. Today the company operates in 13 Latin American countries, which accounts for 22 per cent of its export business.
Barrier says the greatest challenge of working in the region is the volatility of each market. For example, 10 years ago, Venezuela was one of Tru-Test's largest Latin markets; today exports there have declined to a trickle as government policies and forex shortages have made it all but impossible for Venezuelan importers to operate.
"Tru-Test takes a fairly nuanced long-term approach to our business - we don't cut and run when things get tough. Venezuela has a large cattle population, farmers love our products there, it's a matter of staying in the market until political change frees up the economy again. By the same token we have seen other markets such as Colombia, Chile and Nicaragua exceed all our expectations in recent years."
Tru-Test has multiple direct distribution relationships in countries ranging from Paraguay to Costa Rica, alongside distribution subsidiary companies in Brazil, Argentina and Mexico.
"We differ from many other NZ-based Agritech companies in our approach to Latin America in that we are not Chile-centric," Barrier says. "Other NZ agribusinesses tend to focus more heavily on Chile. I think that's because it has a similar climate and is an easy place to do business, but the reality is Chile is a mining and forestry country with a relatively small farming sector." Though Tru-Test has established a good share of the Chilean market over many years, with 81 per cent of Chilean electric fence imports last year manufactured by the company, they see other markets as having greater growth potential. Barrier cites Brazil as an obvious place to look for growth, with the 7th largest economy in the world, around 45 per cent of South America's GDP and nearly 200 million head of cattle.
"We are hugely optimistic on the Brazilian market in the short-term, and also about Argentina in the much longer-term. Both these markets have enormous cattle populations with large farm-sizes, and technology savvy farmers who are increasingly looking to our type of technology inputs. Brazil alone has the potential to add 70-100 million head of cattle, by using existing pastures more efficiently - but they need global tools such as our electric fence technologies to achieve that.
"We are proud to make tools to assist with the challenge of global food production - it's no secret that Latin America is one of the few areas in the world where food production can still expand significantly and we are excited by the future demand for our products that this will generate."
A story to tell your customers
Matt Macfie of Gallagher.
"Our aim is to make sure every farmer around the world has a better day on their farm because of the products we produce," says Matt Macfie of
"Making it easier to farm, more profitable, simpler, easier, redefining what's possible for them, is what it's all about."
Gallagher has been involved with Latin American markets for over 30 years, spanning the vast majority of countries in the region. Their Chilean subsidiary business now turns over more than US$1 million a year and employs around seven staff. It distributes not only Gallagher products, but also those of other Kiwi-based businesses, including Giltrap Farm Machinery, Numedic and the NZ Drumpump Company.
"We've built our own little Kiwi ag business and base over there, and it's proved to be a very successful model for us," Macfie says. On top of the Osorno-based subsidiary, Gallagher has distributors of its products in nearly every country in the greater Latin American region, making it a crucial market for the NZ company.
Macfie is confident the market's potential will continue to grow for Gallagher. "There seems to have been an acceleration in the last three to five years of Latin American companies wanting to adopt NZ technologies and integrate them, and modify them a little bit to suit each market individually," Macfie says. "Coming from within South America, the governments in particular are seeing the opportunity to utilise what we call the "Kiwi way of farming" to increase the profitability of their land."
The challenge is in persuading new markets that higher-value Kiwi products will deliver returns sufficient to justify a switch away from cheaper local producers. "The market as a whole in South America now is starting to realise the value of buying good quality products. That's a culture change, and getting that message through to Latin America is a slow and steady process."
Progress is being made. Macfie believes recent trade missions through Chile and Colombia showed huge potential for Kiwi-based technology companies to get involved in those two countries in particular. "Some of the meetings we had in Colombia were immediately fruitful and opened so many doors for us. We came out of there so motivated, and so excited about the opportunity. Those are now starting to come to reality. We already had a distributor base in Panama and Colombia, and we're helping them make the most of these opportunities now."
Building relationships with distributors who are passionate about Gallagher's market proposition is crucial to success. Macfie says the company is now approached by distributors in Latin America seeking to sell a premium brand to differentiate themselves in the market. Their Uruguayan distributor for example, is growing 20-35 per cent a year, selling a product base of 70 per cent Gallagher goods. "We can be a lot more expensive, up to five times more expensive than locally produced products. It's about educating our distributors on how to educate the farmers, so there's a story with our products, and a service and quality expectation."
In November this year, a Gallagher distributors conference will take place for the first time in Montevideo, bringing together distributors from around the region. This marks a commitment Gallagher forecasts can only grow into the future.
Rolling with the changes
Gerry Williams first visited Latin America in 1976, as a tourist backpacking around the region. Inspired by the opportunities, and drawing on his farming heritage, Pacific Basin Exports came to life two years later. Its heritage is focused entirely on Latin America, carving a niche in the market, exporting a wide range of technical products and equipment designed for use in pasture- based grazing systems.
"Things have certainly changed over time," says Williams. "When we first entered the region, Argentina was a great market." Some 35 years later, Pacific Basin has little involvement in that country, after political turmoil in the 80s, and in face of current currency controls. Williams cites one incident in which he was escorted from one airport terminal to another by an armed guard, at the height of tensions between Argentina and Britain.
The company currently has its strongest presence in Chile, while continuing to grow its involvement in countries including Ecuador, Colombia and Peru. Distributors in the region are helped by support staff in Chile.
Perseverance and a willingness to work on the ground in Latin American countries have been key contributors to Pacific Basin's success. The company now has distribution arrangements with Latin American companies throughout the region, which came as the result of many years spent establishing relationships through visits to countries of interest. Williams advises companies looking to enter Latin America to, "Put in the footwork."
"You can't do it from New Zealand," Willams said. "You need to actually get out there into the market and build the relationships."
Pacific Basin continues to grow its relationships with Latin American customers and distributors by inviting delegations to visit New Zealand to see their technology being used commercially on farms, such as for the recent Fieldays.
Williams says that Pacific Basin has "constant plans for new growth and development," but no plans to move outside Latin America. Although Williams doesn't consider Latin America to be a huge region, it is sufficiently large to support their growth plans. "We have expertise in that market. There isn't any sense in going into Africa or Asia or any other market when we have an established business in Latin America."
The competition is also low in Latin America relative to other markets, as they have been able to capitalise on their early move into the region to establish distribution arrangements and strong customer relationships.
Williams stresses the importance of involving young people in business development plans, in order to establish sustainable ties in the region. In line with this philosophy, Pacific Basin has been looking into initiatives such as bringing young Latin American farmers to New Zealand to train on NZ farms to provide education around best practice farming and use of agricultural technologies.
One of the biggest challenges for the company is changing the mindsets of farmers in the region, many of whom are accustomed to North American farming practices. However, Williams says Latin American climates and soil conditions are actually more suited to the products which their company provides, with similarities to NZ environmental conditions.
Changing these mindsets over time can be a slow process, but is a necessary path to success in the region. "The father might be stuck in his traditional way of farming and growing grass, but the son is willing to try something different."