January 9, 2014

January 9, 2014

Greetings once again from the big city! After a long car ride, we made it into Buenos Aires about 10:30 last night. We were all very tired and enjoyed having a tour later in the morning to start our our day.

Our first stop this morning was at Raciones Argentinas, a premix plant that specializes in rations for beef and dairy cattle. They operate solely in the cattle business sector and premix 80% beef cattle feed and 20% dairy cattle feed. The business sector took form in 2002 with the actual premix plant beginning operation for producers in 2007. The plant can prepare standard cattle ration formulations, but also can customize formulations based on recommendations from the on farm nutritionists. The plant operates under good management procedures such as strict safety protocols and having a clean facility. To avoid contamination from mad cow and other diseases, the company avoids using products from other cattle sources such as meat or bone meal. Raciones Argentinas has an excellent business strategy that enables them to have long term goals with their customers allowing them to help the customer out with any feed concerns along the way. The plant itself contains a formulation room which is where micro-ingredients are kept. Some commonly used micro-ingredients are Zinc and Rumensin, but only make up about 15% or the entire ration. The average batch size they mix ranges from 30-33 metric tons. Most of the premixes go out as a powder  instead of a pellet mainly because it is more expensive to pelletize rations in Argentina. They also use a fly control product to be used in October through March, when fly populations are high. Another interesting point is that they have no feed in a warehouse or on hand, every batch is made specifically to order by the producer or nutritionist's recommendation. The factory has no trucks on hand so delivery falls solely on the producer. The reasoning behind this is that owning trucks is complicated due to the powerful unions and road regulations. The winter months are the best as far as sales, and they see a slump during the summer months. The company is also required to keep records and feed samples for at least 6 months after they are shipped, as the company is inspected once a year. After our tour, we were all treated to a wonderful brunch.

Our second stop of the day was to the Buenos Aires Board of Trade. The trade floor contains only two pits; one for cereals like corn and wheat and one for legumes such as soybeans and sunflowers. The company made its appearance in 1854 and will celebrate its 160 anniversary this year. The trading floor, like in Chicago, is seeing a loss in face to face trading moving more to electronic. Our guide stated that more than likely it would move to entirely electronic sometime this year. To give you some perspective on the impact of electronic trading, this time last year a seat on the trade floor was worth around $100,000 U.S. dollars and now it is worth around $30,000 U.S. dollars. We calculated the prices per bushel that were at closing time, corn was trading around $4.00 with soybeans trading around $10.00. You may notice the soybeans being a bit low, but this is because of shipping/handling costs. This board of trade operates by watching the Chicago Board of Trade and sets prices somewhat parallel. After our visit, our tour guide took a picture of us to be put on the official website of the Buenos Aires Board of Trade! You can find it at www.bolsadecereales.com.ar and look under newsletter.

Tonight we are going out for one last meal with our gracious host, Alejandro. I think I speak for all of us when I say that he has gone above and beyond for making this trip memorable, comfortable, and educational. We are very exciting to ride the ferry into Uruguay tomorrow to see another aspect of agriculture.

Sincerely,
Tyler Vreugdenhil