PGGW see opportunities in South America
14th May 09, 2:19pm
PGGW boss Tim Miles has aspirations for the company's South American seeds and rural businesses to provide much of the group's growth in the next decade reports Business Day. He has just returned from a farms trip through Uruguay where PGGW has businesses and manages dairy land owned and being developed by New Zealand Farming Systems Uruguay. Uruguayan farms were often mega- scale. Two farms he had seen from one viewing point were of 5600 to 6000 hectares, and dotted with milking sheds. While the heart of PGGW's business remained in New Zealand, there were good opportunities in Australia for seeds, and in South America for seeds, rural supplies, real estate and livestock. The company already employed about 400 people for its operations in Uruguay, Chile and Argentina. In South America, the company grew the same amount of seed as it grew in New Zealand and Australia combined. "If you were to ask me where the real growth will be in terms of the next 10 years, I would say it would be in Latin America. You've got a huge amount of land that is relatively undeveloped," Mr Miles said. "The opportunity to help all that development is just colossal . . . you have very good soil but often the grass is just naked, nothing's ever been done with it." In the New Zealand rural economy, operators remained circumspect about any major commitments such as capital spending, he said. PGGW's trading in March, April and May had been consistent with that careful attitude. "We've got parts of our business that have been performing very well and other parts that have seen a bit more pressure because clients are a bit more cautious," Mr Miles said. There were also a lot of good things happening in the rural sector, including sheep prices being much stronger in the past year than in the year before, reduced fuel and fertiliser prices, and dairy payouts staying relatively high "in historic terms". In many parts of New Zealand, farmers and rural people had had a good season, Mr Miles said. But despite a correction, rural land prices remained expensive compared with other countries.