Sowing the FutureWed, 02/22/2017 - 16:29
Good fortune and nature gave Mexico two of the most competitive advantages any country could ask for: a diverse climate that favors a wide variety of crops and a border with the world’s largest consumer market, the US. Add in the start of NAFTA negotiations and Enrique Portilla had the recipe for a new company. “Back in 1991, when we founded Grupo Agros, there was little interest in the Mexican countryside. Land ownership was a sensitive issue and no one could imagine the commercialization opportunities NAFTA would bring,” says Portilla, Director General of Grupo Agros.
Armed with the competitive advantages the country offers, Grupo Agros began operating with two crops: greenhouse cultivated tomatos in Queretaro and rubber trees in Chiapas. However, it was not long before Portilla realized that the country’s natural advantages themselves were not enough to succeed. “When it comes to growth, we have been very cautious. We have faced a steep learning curve and in the process we favored a long-term equilibrium. We have sought high productivity that enables us to be competitive at an international level.”
Portilla says that most people believe that agribusiness is just growing a crop but there is more than meets the eye. “It goes well beyond just planting and pruning. There are diseases that affect trees and crops, there are several fungi and you have to know how to commercialize adequately.”
An inability to sufficiently conquer these areas is one reason many agricultural companies do not succeed, particularly when trying to export their products. “You have to know your buyer and what are their main concerns. For instance, Walmart is concerned about human rights, so they constantly audit their suppliers, making sure that we do not employ children, that all workers have social benefits and that the work environment complies with safety measures,” he explains.
Commercialization is not the only challenge for companies; exporting agricultural products also represents a hurdle. “In addition to constantly attending fairs to find new clients, you have to learn about logistics, obtain all the needed certifications and comply with FDA and C-TPAT requirements,” says Portilla. FDA regulations touch upon production, packaging, storage and the handling of products, while C-TPAT regulations address security concerns regarding the import of products.
As strict as FDA regulations might appear, Portilla says that SENASICA’s requirements are similar in that both demand high-quality standards.
An important key to success for companies looking for export opportunities is to produce all year round. To avoid the vagaries of climate, Grupo Agros has led the way in the production of greenhouse tomatoes and lettuce. “We were pioneers in greenhouse crop production. We have around 21ha of greenhouses. Although we might not be the largest company, we certainly led the way,” says Portilla.
Growing tomatoes in greenhouses permits Grupo Agros to have a constant supply of crops, which has facilitated the task of exporting to the US. “We export 90 percent of our tomato production, of which almost 40 percent is bought by Walmart,” says Portilla.
Grupo Agros’ business plan focuses on market niches, with lettuce being a good example. “We started growing hydroponic lettuce almost 17 years ago. Lettuce is a competitive market, so we have specialized in the production of products such as arugula, watercress, spinach, kale and basil.”
To determine which products to specialize in, the company analyzed not only what products were fit for export, but also which could meet with domestic demand. Portilla says rubber trees are a case in point. “In the case of latex, there is no local production; it is all imported from Malaysia. Grupo Agros has almost 3,000ha of rubber trees and we have already acquired processors and centrifuges. We add value to the rubber we obtain from the trees and generate latex. It is a niche where there is no local competition,” says Portilla.