One of the largest seed producers in the world, Vilmorin Corporation, which operates under the French cooperative Limagrain, recently formed a joint venture with Argentine seed manufacturer Don Mario. The goal of the partnership is to develop wheat throughout South America, with the main focus being production in Argentina.
"We expect to become one of the most important wheat seed providers worldwide and a high-end supplier in South America," Ignacio Parodi, wheat manager for Don Mario, told World Grain. The venture is banking on hopes that Vilmorin’s high-technology wheat production methods will help Argentina go back to producing an area of over 6 million hectares, despite an overall decline in wheat production over the last 10 years. With this objective in mind, the venture was created for the long term.
The idea for the venture originated with Limagrain, as it was searching for wheat development strategies outside of Europe and the U.S., which are two of the world’s biggest wheat producers. The project will focus mainly on research of new grain varieties in order to obtain larger yields, and utilization of new advances in biotechnology.
"Vilmorin and Don Mario will bring their germoplasm and industry knowledge to the table," Parodi said.
Don Mario said it has a good reputation as well as expertise in the local market as seed seller. Meanwhile, Vilmorin will supply the advanced technology to make the project work. The project will be based in Argentina, although these companies plan to extend the venture to other markets such as Uruguay, Paraguay, Bolivia and Brazil.
In the initial stages of investigation, the company will concentrate on the efficiency of nitrogen use as a transgenic event. A large part of the venture will also have to do with diminishing the stress on wheat that comes from drought, extreme temperatures, plagues and insects, which are common threats to production in the South American region.
Vilmorin is the fourth largest seed company in the world, with sales of over €1 billion a year. The company is controlled by Limagrain, a firm with subsidiaries in 35 countries that invests about €112 million for technology improvement programs. This is why the transgenic wheat technology that Vilmorin has been developing over the last couple years would play an important role in the venture with Don Mario. The French company believes that in a short amount of time the market will be ready to accept transgenic wheat, finding acceptance in developed markets such as the United States and Australia, and later in South America. About 80% of the company’s sales in 2008, which amounted €1.2 billion, were for wheat, corn and rapeseed.
Wheat production has been declining in Argentina over the last 10 years. The 2009-10 wheat campaign ended in January 2010 with an output of 7.4 million tonnes, a 15% decline in production compared to the previous campaign, according to the Buenos Aires Cereal Stock Exchange. Also, the cultivated area for wheat in 2009-10 (2.7 million hectares) was the lowest in a century, according to an official report from the National Institute of Agropecuary Technology (INTA). According to the Agriculture, Cattle and Fishing Ministry, there are 29,936 wheat producers in Argentina.
However, both companies in the joint venture consider this decline to be transitory. "Don Mario is looking to be at the forefront of technology, not only in terms of having the best genetics, but also in terms of putting the best product on the market," said Parodi. "We are confident that wheat production will increase again, be it in the mid or long term. This is why we see this joint venture as a long-term investment," said Parodi. "This is no minor detail; many companies hesitate in making a strong commitment to Argentina since the country is renowned for its constant changes in the legal business framework."
The decline in wheat production is also a trend in other South American countries. Chile, for example, has seen production drop by 36%, over 634,000 tonnes, in the last nine harvests, according to the Agrarian Studies and Policies Office (ODEPA), of the Chilean Agriculture Ministery. Chile’s 2008-09 harvest finished with a total output of 1.1 million tonnes. The same public office estimated in October 2009 that the 2009-10 harvest will also see a decrease in the cultivated area for wheat of approximately 9.3%, dropping to 254,000 hectares.
However, other South American countries show more promising numbers. Brazil, which is one of the main destinations for Argentine wheat, has increased its production. According to the Brazilian Agriculture, Cattle and Supply Ministry, Brazil’s wheat production rose from 4.1 million tonnes in 2007-08 to 5.8 million tonnes in 2008-09. The cultivated area went from 1.8 million hectares to 2.3 million hectares in the same period.
Paraguay has seen wheat production more than triple since 1991, reaching over 799,000 tonnes in 2008, according to the last available data from the local Agriculture and Cattle Ministry. The cultivated area for wheat in Paraguay more than doubled in that period, having added over 277,000 hectares and reaching 381,000 hectares in 2008.
In Uruguay, there has been an upward trend for wheat since the 1999-2000 harvest, according to the Uruguayan Ministry of Cattle, Agriculture and Fishing. In 2008-09, wheat production in Uruguay reached 1.3 million tonnes, which is more than three times the 384,000 tonnes the country produced in 1999-2000. The wheat cultivated area also increased by 296,000 hectares during that period, reaching 476,000 tonnes in the 2008-09 harvest.
DON MARIO’S CONTRIBUTION
Don Mario is the leading soybean seed producer in Argentina. "This firm began working progressively with different crops," Paroidi said. "First, it developed soy seeds, and later, it entered the corn business and then wheat production. The first step in this last crop was with an Onix variety product that the company put in the Argentine market in 2003."
Wheat production is a classic complement for soy, because the rotation period of these two grains is usually convenient in Argentina.
"Don Mario is looking to be at the forefront of technology, not only in terms of having the best genetics, but also in terms of putting the best product on the market."
For instance, Parodi noted that at the most recent Expoagro exhibition, the main trade show of the rural sector in Argentina, Don Mario introduced five new products for soy that promise a rise in yields of up to 10%. However, the company also used this event to show farmers a preview of a new wheat technology for the short cycle, which will soon be on the market. Parodi affirmed that "this joint venture signifies an important interchange between technology and knowledge that will result in the improvement of wheat genetics."
Although Argentina remains the top producer of wheat in South America and the joint venture will initially be focused in this country, the venture will put a great deal of emphasis on increasing production in other countries throughout the continent.
As for Don Mario’s goals for the joint venture, it is looking to increase its presence in the South American wheat industry. The company has just started commercializing its products in neighboring Bolvia through an agreement with the multinational company Dow Agrosciences for joint research, development and commercialization of soy varieties. Dow will be in charge of commercializing the products and new materials developed by Don Mario.
Also, in January, the Argentine company acquired 24% of the stock of its Brazilian branch, Drasmax, and became sole proprietor. Through this branch, Don Mario is the leading soy seed seller in the southern region of Brazil. But the purchase is contained in a larger process of regionalization that also involves a strategic association with the Erro company in Uruguay and a recent disembarking of the company in Paraguay, thus giving Don Mario a broad base from which to work.
Cristina Kroll is a freelance writer based in Buenos Aires, Argentina. She can be reached at