November 1, 2011
AndrÃ© Maggi Group holds back expansion amid costs
Blairo Maggi, one of the world's biggest soy producers who owns AndrÃ© Maggi Group, found Brazilian land too costly to justify soy planting expansion, according to the Brazilian media on Monday (Oct 31)
Although foreign groups such as Argentina's El Tejar have surpassed Maggi and his family's Amaggi soy empire as the world's largest soy producer, Maggi, a Brazilian Senator from the country's Mato Grosso state, has not ruled out future growth if conditions improve.
"We are always ready to expand but it is difficult at the moment because the price of land is very high," Maggi said. "Now is not the time to expand."
Brazil is in the middle of planting a record area with soy, a crop that will be harvested early next year. Area is expected to expand about 3% to about 25 million hectares, the second largest soy acreage after the US.
The Amaggi group plans to plant 207,000 hectares (512,000 acres), the same area as last year, Maggi said. That is an area about half the size of the US state of Rhode Island.
Maggi also said the best opportunities to buy new soy acreage are in places such as Africa, Colombia and Argentina. Amaggi plans to begin planting 7,000 hectares in Argentina with soy in the coming months.
Even with government policies that have hurt Argentine agricultural producers in recent years, Maggi said shipping soy from Argentina is easier than from the Mato Grosso, Brazil's central grain belt, to the port of Santos.
Maggi said he does not plan to follow Brazilian agricultural giants SLC Agricola or Vanguarda Agro and sell stock of his company to the public.
"They are interesting structures and we had considered this possibility in the past. But we have a big volume of production, a trading company and very good terms for raising capital, which is what you are looking to gain when you hold an public offering," he said.
He added that he had not discarded the possibly of raising private equity to buy, develop and manage agricultural land in Brazil outside the Amaggi holdings.