These are some of the words and thoughts which come into one’s mind when thinking of South America. Tourism and parties are one of the biggest money spinners in South America. So one cannot find fault with the Indians for having such a picture of the continent. But off late Indian firms are completely changing the way at which we look at South America.
First lets take a look at some of the facts and statistics:
Shree Renuka Sugars has made it to the club of the top 5 sugar producers in Brazil, the world’s largest sugarcane producer. It first bought sugar and ethanol producer Vale Do Ivai S.A. Acucar E Alcool in November 2009 for $240 million. In February 2010, it consolidated its position at the top by investing another $329 million for a 51-percent stake in Equipav SA Acucar e Alcool which is also a very large sugar producer
The consortium led by state – run Bharat Petroleum Corporation and also private companies like Rajashree and Godavari are scouting for opportunities in the country in the field of sugar production and investments. Bajaj Hindustan also has a subsidiary in Brazil to scout for investment opportunities
Sterling Group with olive production, Olam owned by NRI with peanut production and the Solvent Extractors Association of India (group of 16 companies) with production of oilseeds are leading a revolution in the agricultural sector in this continent
So what’s so special about South America that Indian firms are moving into their agriculture sector when the Indian agriculture sector is itself so challenging and has vast opportunities?
This led me to analyze and find out the reasons for the same –
Cost of Land
– The cost of the land in South America is generally around half of that in Punjab at around $ 12,000 a hectare while fallow land is even cheaper
Synergy between India and South America
– Being at a premium, finding cultivable land in India is a big problem. Therefore growing crops overseas and sending them back to India is a win – win situation for both
– Since the population is low, the problems faced in India for acquisition of land aren’t seen here and it thus becomes a much easier process
Rules of the land
– Since there are no restrictions on foreigners acquiring land, this makes it a great proposition for countries to invest in South America
Research and Development
– Presence of a large number of technologies for agriculture and farming have also made it a really inviting place for companies in this sector
All these factors have opened new avenues for Indian companies in the field of agriculture.
Do you think this will be good for India in the long run? Should companies use this strategy?