Agricultural Giants Los Grobo and Agrofina Enter Creditors’ Contest Amid Economic Turmoil
In a significant blow to Argentina’s agricultural sector, Los Grobo, along with its controlled entities Agrofina and Surcos, have filed for a creditors’ contest. This move comes amidst a challenging economic landscape marked by a 30% decline in activity, reduced margins, and broader management issues. while the immediate impact on these supply companies is severe, experts suggest that the broader agricultural market may not face a mass disruption.
The dairy giant Sancor has also entered a similar contest, grappling with years of financial strain exacerbated by price controls, withholdings, and disputes with the dairy guild Atilra.
the Perfect Storm: Economic and Market Challenges
Table of Contents
- the Perfect Storm: Economic and Market Challenges
- Financial Mismatch and Operational Paralysis
- Ownership and Defaults
- Key Points at a Glance
- Looking Ahead
- Sancor’s Struggles: A tale of Union Battles, Political Interference, and Missed opportunities
- Key Developments in the Argentine dairy Sector
- SanCor’s Struggle for Survival Amidst a Shifting Dairy Landscape
Luis Mogni, a management consultant and partner at Summer, highlighted that both Surcos and Agrofina, driven by Los Grobo, were initially “selling a lot.” However, the macroeconomic environment shifted dramatically. A 2% monthly devaluation, fluctuating exchange rate forecasts, and declining supply prices created a perfect storm.
The agrochemical market, as an example, plummeted from $43 billion to $2.9 billion last year. This decline was not solely due to drought but also because companies were left holding products purchased at higher prices in a deflated market.
Financial Mismatch and Operational Paralysis
Companies like Los Grobo and Agrofina operate on a 120-day purchasing cycle but sell over a 300-day period, spanning product shipment, formulation, and marketing. This mismatch was compounded by suppliers in China and india offering shorter payment terms compared to Argentina’s extended deadlines.
“With longer credits, raised rates at certain times, a subsequent fall in financing, and a demand that changed in 2024, the market is now 30% smaller than in 2023,” Mogni explained.
Ownership and Defaults
Victoria capital Partners (VCP), led by Carlos García, now owns 90% of los Grobo, while Gustavo grobocopatel and his sister Matilde retain the remaining 10%. On December 27, Los Grobo announced to the CNV its inability to pay a $100,000 promissory note, a modest sum that hinted at deeper financial troubles.
Similarly, Surcos, owned by the Calvo family, defaulted on a $500,000 promissory note in December. An embargo by a financial creditor left the company without access to bank accounts or credit lines, effectively paralyzing its operations.
Key Points at a Glance
| Company | Key Issue | Financial Impact |
|——————–|——————————————————————————|——————————————|
| Los Grobo | Filed for creditors’ contest, defaulted on $100,000 promissory note | 90% owned by VCP, 10% by Grobocopatel |
| Agrofina | Affected by market deflation and financial mismatches | Part of Los Grobo’s controlled entities |
| Surcos | Defaulted on $500,000 promissory note, faced embargo | Owned by the Calvo family |
| Sancor | Entered creditors’ contest due to long-term financial strain | Impacted by price controls and disputes |
Looking Ahead
While the immediate fallout for Los Grobo, Agrofina, and Surcos is severe, the broader agricultural market may remain resilient. Though,the situation underscores the fragility of Argentina’s agro-industrial sector in the face of economic volatility and mismanagement.For more insights into the evolving agricultural landscape,explore how these developments could reshape the industry in the coming months.
Sancor’s Struggles: A tale of Union Battles, Political Interference, and Missed opportunities
Sancor, once a dominant player in argentina’s dairy sector, has faced a tumultuous journey marked by union disputes, political interventions, and strategic missteps. From its peak in the 1980s to its current struggles, the company’s story is a cautionary tale of how internal and external factors can derail even the most established enterprises.
The Rise and Fall of Sancor
In the 1980s, Sancor was a powerhouse in Argentina’s dairy industry, alongside giants like Mastellone and Nestlé. At its height, the firm processed 7 million liters of milk daily, accounting for a third of the nation’s production. though, as Alejandro Sammartino, Director of Unfortunate, recalls, “It is indeed tough to summarize the mistakes made by the cooperative. Everything related to care prices affected it a lot, there were too many mistakes. There are internal and external causes, and also responsible.”
Political Interference and Union Challenges
In 2005, Sancor attempted to sell a minority stake to Adecoagro, a company backed by George Soros. However, the deal was derailed when Néstor Kirchner and Hugo Chávez intervened. instead, sancor accepted a loan from Venezuela, a decision that would later haunt the company.The union also played a significant role in Sancor’s decline. as the company outsourced replacement services in supermarkets, the union absorbed the personnel, leading to a surge in operating costs.Over time, Sancor became overloaded with employees, and its expenses skyrocketed. “those who know the company argue that they have not sold it in a timely manner,” a move that could have mitigated the crisis.
Price Controls and Failed Restructuring
The Kirchner governments’ price control policies further exacerbated Sancor’s woes. While there was always the possibility of restructuring, these policies, coupled with the failed business dealings with Venezuela in the sale of milk powder, made it unachievable. Sammartino notes, “There were two long decades in which this outcome began to be seen.”
From a peak of 5,000 employees, Sancor’s workforce has dwindled to around 800. The company’s inability to adapt to changing market dynamics, combined with external pressures, has left it a shadow of its former self.
Lessons from Sancor’s Decline
Sancor’s story underscores the importance of timely decision-making and the dangers of political interference in business. The company’s failure to sell at the right moment, coupled with the union’s role and Argentina’s macroeconomic challenges, created a perfect storm that led to its downfall.
| Key Factors in sancor’s Decline |
|————————————-|
| Union disputes and increased labor costs |
| Political interference by Kirchner and Chávez |
| Failed sale to Adecoagro |
| Price control policies under Kirchnerism |
| Over-reliance on business with Venezuela |
As Argentina’s dairy sector continues to evolve, Sancor’s struggles serve as a stark reminder of the complexities businesses face in navigating political, economic, and operational challenges.
For more insights into Argentina’s agricultural and dairy sectors, explore Rosario Stock Exchange and Adecoagro’s investments.SanCor’s Struggle for Survival Amidst a Shifting Dairy Landscape
The Argentine dairy giant SanCor, once a cornerstone of the national economy, finds itself in a precarious position. The company,which played a pivotal role in the development of the dairy sector and price formation,has been grappling with a series of challenges that have left it as the last standing major player in an industry undergoing significant restructuring.According to industry experts, SanCor’s struggles are not isolated. The entire dairy sector has been affected by policies implemented during the Kirchner governance,especially under the leadership of Guillermo Moreno,former Secretary of Commerce. Moreno’s policies included severe retentions and quotas on dairy products, which stifled growth and innovation. Sammartino, a key figure in the sector, summarized the situation succinctly: “The aids were always late. The business model was changing, and the Kirchner government did not allow him to restructure.”
As 2017, the dairy sector has seen a wave of consolidation and restructuring. Mastellone came under the control of Arcor, Williner was acquired by Savencia, Parmalat closed its doors, Molfino transitioned to Saputo, and milkaut was also absorbed by Savencia. Amidst this upheaval, sancor has managed to remain operational, but its survival is far from guaranteed.
The company’s ability to navigate these turbulent waters will depend on its capacity to adapt to a rapidly changing business environment. Sammartino emphasized that SanCor was not just a victim of external policies but also a key contributor to the progress of dairy producers. Its role in price formation and sector development has been instrumental,making its potential collapse a significant blow to the industry.
Key Developments in the Argentine dairy Sector
| Company | Status | Acquired By/Outcome |
|——————–|——————————–|————————-|
| Mastellone | Restructured | Arcor |
| Williner | Acquired | Savencia |
| Parmalat | Closed | N/A |
| Molfino | Transitioned | Saputo |
| Milkaut | Acquired | Savencia |
| SanCor | Remaining Operational | N/A |
As the only major player still standing, SanCor faces immense pressure to restructure and innovate. The company’s ability to overcome these challenges will not only determine its future but also the stability of the broader dairy sector.
For more insights into the evolving landscape of the dairy industry, explore the latest updates on the campo sector.
The road ahead for SanCor is fraught with uncertainty, but its legacy as a pillar of the national economy underscores the importance of its survival. Will it rise to the occasion, or will it become another casualty of a shifting industry? Only time will tell.
SanCor’s Struggle for Survival Amidst a Shifting Dairy Landscape
The Argentine dairy giant SanCor, once a cornerstone of the national economy, finds itself in a precarious position. The company, which played a pivotal role in the development of the dairy sector and price formation, has been grappling with a series of challenges that have left it as the last standing major player in an industry undergoing significant restructuring. According to industry experts, SanCor’s struggles are not isolated. The entire dairy sector has been affected by policies implemented during the kirchner governance, especially under the leadership of guillermo Moreno, former Secretary of Commerce. Moreno’s policies included severe retentions and quotas on dairy products, which stifled growth and innovation.Sammartino, a key figure in the sector, summarized the situation succinctly: “The aids were always late. The business model was changing, and the Kirchner government did not allow him to restructure.”
Key Developments in the Argentine Dairy Sector
| Company | Status | Acquired By/Outcome |
|---|---|---|
| Mastellone | Restructured | Arcor |
| williner | Acquired | Savencia |
| Parmalat | Closed | N/A |
| Molfino | Transitioned | Saputo |
| Milkaut | Acquired | Savencia |
| SanCor | Remaining operational | N/A |
As the only major player still standing, SanCor faces immense pressure to restructure and innovate. The company’s ability to overcome these challenges will not only determine its future but also the stability of the broader dairy sector.
Lessons from SanCor’s Decline
SanCor’s story underscores the importance of timely decision-making and the dangers of political interference in business. The company’s failure to sell at the right moment,coupled with the union’s role and Argentina’s macroeconomic challenges,created a perfect storm that led to its downfall.
| Key factors in SanCor’s Decline |
|---|
| Union disputes and increased labor costs |
| Political interference by Kirchner and Chávez |
| Failed sale to Adecoagro |
| Price control policies under Kirchnerism |
| Over-reliance on business with Venezuela |
For more insights into Argentina’s agricultural and dairy sectors, explore Rosario Stock Exchange and Adecoagro’s investments.
Conclusion
The road ahead for SanCor is fraught with uncertainty, but its legacy as a pillar of the national economy underscores the importance of its survival. Will it rise to the occasion, or will it become another casualty of a shifting industry? Only time will tell.
