Profile: Adecoagro SA (AGRO.N)
9 Feb 2016
Adecoagro S.A., incorporated on June 17, 2010, is a holding company. The Company, through its operating subsidiaries, primarily engaged in agricultural and agro-industrial activities. The Company has three operating segments: Farming, Sugar, Ethanol and Energy and Land Transformation. The Company's Farming segment is further consisted of four segments: Crops, Rice, Dairy and All Other. The Company's Sugar, Ethanol and Energy segment consists of cultivating sugarcane, which is processed in owned sugar mills, transformed into ethanol, sugar and electricity and marketed. The Company's Land Transformation segment consists of the identification and acquisition of underdeveloped and undermanaged farmland businesses and realization of value through the strategic disposition of assets (generating profits).
As of December 31, 2014, the Company owned a total of 257,036 hectares, consisted of 20 farms in Argentina, 11 farms in Brazil and one farm in Uruguay. In addition, the Company owns and operates several agro-industrial production facilities, including three rice processing facilities in Argentina, two dairy facilities with approximately 6,551 milking cows in Argentina and 10 grain and rice conditioning and storage plants in Argentina. As of March 31, 2015, the Company owned three sugar and ethanol mills in Brazil with a sugarcane crushing capacity of 10.2 million tons.
The Company conducts its farming operations primarily on its own land and, to a lesser extent, on land leased from third parties. The Company's Crop business produces a range of agricultural commodities, including soybeans, corn, wheat, sunflower and cotton, among others. In Argentina, its farming activities are conducted mainly in the Argentine humid pampas region, where agro-ecological conditions are optimal for low-cost production. During the 2013/2014 harvest year, the Company planted approximately 182,813 hectares of crops, including second harvests, producing 643,354 tons of grains, including soybeans, wheat and corn, sunflower and cotton. The Company also planted an additional 3,141 hectares where it produced over 89,081 tons of forage that it used for cow feed in its dairy operation. During the 2014/15 harvest year, the Company planted approximately 189,272 hectares of crops, including second harvest, and also planted an additional 4,999 hectares of forage.
The Company's Rice business produces irrigated rice in the northeast provinces of Argentina. The Company produced 205,489 tons during the 2013/2014 harvest year, which accounted for 15% of the total Argentine production. The Company owns three rice mills that process its own production, as well as rice purchased from third parties. The Company produces different types of white and brown rice that is both sold in the domestic Argentine retail market and exported. During the 2014/15 harvest year, the Company planted 35,328 hectares of rice.
The Company's Dairy business produced approximately 79.5 million liters of raw milk during 2014, with an average of 6,440 milking cows, delivering an average of 33.8 liters of milk per cow per day. Through the production of raw milk, the Company is able to transform forage and grains into value-added animal protein. The Company's free-stall dairies in Argentina allows it to optimize its use of resources (land, dairy cow feed and capital), increase its productivity and maximize the conversion of forage and grain into raw milk.
The Company's All Other Segments business consists of leasing pasture land to cattle farmers in Argentina and leasing its coffee plantation in the Rio de Janeiro farm, located in Western Bahia, Brazil, to a third party. The Company leases 63,336 hectares of pasture land, which is not suitable for crop production to third party cattle farmers.
Sugar, Ethanol and Energy
The Company cultivates and harvests sugarcane, which is then processed in its own mills to produce sugar, ethanol and energy. As of December 31, 2014, the Company's total sugarcane plantation consisted of 124,412 hectares, planted over both owned and leased land. The Company owns and operates three sugar and ethanol mills, UMA, Angelica and Ivinhema, with a total crushing capacity of 10.2 million tons of sugarcane per year as of March 31, 2015. UMA is a small mill 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 presence in the regional retail market (Acucar Monte Alegre). The Company plants and harvests 99% of the sugarcane milled at UMA, with the remaining 1% acquired from third parties. Angelica and Ivinhema are two modern mills located in the state of Mato Grosso do Sul, Brazil, with sugarcane crushing capacities of 4 and 5 million tons per year, respectively. Angelica and Ivinhema are equipped with high pressure steam boilers and turbo-generators with the capacity to use all the sugarcane bagasse by-product to generate electricity. Approximately 25% of the electricity generated is used to power the mill and the excess electricity is sold to the local power grid, resulting in the mills having full cogeneration capacity.
For the year ended December 31, 2014, the Company crushed 7.2 million tons of sugarcane and produced 413,687 tons of sugar and 299,810 cubic meters of ethanol. As of December 31, 2014, the Company's overall sugarcane plantation consisted of 124,412 hectares of sugarcane in the states of Mato Grosso do Sul and Minas Gerais, Brazil, of which 9,145 hectares of sugarcane were planted on owned land and 115,267 hectares were planted on land leased from third parties under long term agreements.
The Company, through land transformation, optimizes land use and increases the productive potential and value of its farmland. Its land transformation model consists of changing the use of underutilized or undermanaged agricultural land to profitable cash generating agricultural activities, such as turning low cash-yielding cattle pasture land into high cash-yielding croppable land, allowing profitable agricultural activities, such as crop, rice and sugarcane production. The Company is engaged in three different categories of the land transformation process: undeveloped land (savannahs and natural grasslands), undermanaged or underutilized farmland (cultivated pastures and poorly managed agriculture) and ongoing transformation of croppable land. The Company's owned land portfolio consists of 257,036 hectares, distributed throughout its operating regions: 87% in Argentina, 12% in Brazil and 1% in Uruguay.
The Company competes with SLC Agricola S.A., BrasilAgro - Companhia Brasileira de Propriedades Agricolas, Sollus Agricola, Radar Propriedades Agricolas, El Tejar S.A., Cresud SACIF y A, MSU S.A., Los Grobo Agropecuaria, Molinos Rio de la Plata S.A., Dos Hermanos S.H., Sagemuller S.A., Cooperativa Arroceros Villa Elisa Ltda., Cosan Ltd., Grupo Sao Martinho S.A., Acucar Guarani S.A., Louis Dreyfus Commodities Brasil S.A., ETH Bioenergia S.A., Bunge, Grupo Zillo Lorenzetti, Grupo Carlos Lyra S.A. and Grupo Irmaos Biaggi.
13-15 Avenue de la Liberte