Farm Expertise: Export of farm know-how shows one size doesn’t fit all
August 9th, 2010
Whatever the spin put on PGG Wrightson’s sale of its 11.5% stake of 28.1m shares in NZ Farming Systems Uruguay to Singaporean agribusiness and food company Olam International for just over $15m, industry leaders fret once again a Kiwi company has mucked up trying to transfer NZ farming practices overseas. NZFSU and Wrightson were unlucky with a prolonged drought, and in hindsight were possibly _under-capitalised, but Olam says there were fundamental strategic mistakes made as well as bad management. It expanded too quickly and bought land in the wrong places.
Massey University lecturer and researcher in International Agribusiness, Dr Elena Garneveska, says if NZ organisations don’t adjust their business practices to where they’re exporting, they may have a bit of a problem. Garneveska, originally from Bulgaria, points out the culture in NZ and Latin America is very different, and the Uruguayans have more of a Mediterranean attitude to their country. “In Latin America, often people just want to talk, discuss, and are quite relaxed in the way they do business. Their approach is completely different.”
Whether NZFSU and/or PGG Wrightson did enough homework before setting up in Uruguay is now almost irrelevant – the most important aspect will be to learn the lessons from the venture. Olam says it spent a great deal of time looking for dairy farming opportunities in Uruguay and elsewhere. The food consortium business concluded NZFSU’s expectations were wrong, and NZ’s grass growing advantages can’t be entirely replicated in Uruguay. Olam says much more supplementary feeding is required there to achieve required production levels, and the cost of such supplements hasn’t been very realistic.
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