The agricultural landscape of Argentina does not align with the narrative of an ascending economic power. While grain exports are essential for generating foreign currency for the economy, the fundamental operations within the agricultural ecosystem — especially those related to input, technology, and services — are facing a significant structural crisis. This crisis is characterized by narrowing profit margins, reduced access to financing, excessive debt levels, and shifts in the production model.
Leading this downturn is Los Grobo, a prominent agroindustrial conglomerate in the nation, which declared bankruptcy in February, carrying a debt that surpasses US$200 million. The firm, having expanded its activities into the storage, production, and sale of inputs, reported accumulated losses amounting to US$36.619 billion and experienced a 12% decline in revenue when measured in dollar terms. Agrofina, a subsidiary specializing in agrochemicals, has filed for bankruptcy. In response, its parent company is advancing with a Preventive Crisis Procedure (PPC) to secure labor relief. Surcos, a significant supplier, encounters a notably intricate scenario. In conjunction with its filing, the entity has amassed over US$1 billion in liabilities, engaging with nearly 600 creditors, and is currently subject to a criminal inquiry regarding purported financial misconduct, following the issuance of US$100 million in bonds merely weeks prior to its declaration of default. The complaint lodged by the CNV with the Santa Fe Court highlights potential obfuscation of critical information during the debt issuance process, which may have resulted in investors being misinformed regarding the actual solvency of the company.
Financial stress is not confined to conventional enterprises. High-profile technology companies, including Bioceres and its subsidiary Rizobacter, are also impacted, as they are leaders in the development of seeds and bioinputs. In early July, the rating agency FIX downgraded Rizobacter from A+ to A and placed its debt on negative watch, indicating concerns regarding a highly stressed capital structure. The company currently exhibits a debt level approaching $194 million, accompanied by a net leverage ratio of 7.1x and an EBITDA margin of merely 10.6%. This figure stands in stark contrast to the average margin of 23% it maintained only a few years prior. This fragility was heightened following the default of Bioceres SA, a domestic entity derived from the global holding company Bioceres Crop Solutions (BIOX), which failed to settle a maturity of $5.3 million in promissory notes. While BIOX is not directly accountable for this default, it has nevertheless influenced the group’s ability to secure credit. In an effort to mitigate the ongoing crisis, the company obtained a $17 million loan from Rabobank in February. However, it now confronts limitations on additional funding should it not succeed in stabilizing its financial metrics. FIX cautioned that a recovery hinges on the company enhancing its EBITDA beyond 20% and lowering its debt-to-EBITDA ratio to more sustainable levels.
Small and medium-sized enterprises (SMEs) are currently navigating a landscape characterized by significant model changes and intense competition. Meanwhile, medium-sized companies in the interior are also starting to experience significant strain. One of the most notable cases was Campo de Avanzada, an Entre Ríos-based SME dedicated to agricultural production and grain transportation, which filed for bankruptcy and defaulted on a $7.5 million SME Negotiable Bond. The maturity was ultimately covered by SGR Garantizar, which acted as guarantor; however, this situation underscored the vulnerability of the agricultural capital market. A notable characteristic across these instances is a significant transformation in the production framework. The era characterized by the “financial model” utilizing barter inputs, leveraged planting, and inexpensive financing has faded into history. Currently, a cautious and risk-averse strategy dominates, as producers modify their input levels, acquire fewer resources, lease reduced land areas, and defer capital expenditures. In an environment characterized by subdued international prices, elevated tax burdens, and significant local expenses, it is the supplier companies that bear the initial consequences.
The cumulative impact of three drought seasons, coupled with the emergence of pests such as the corn leafhopper, has significantly disrupted yields and resulted in defaults. The current economic landscape reveals a stark reality: a reduction in workforce, an increase in debt levels, a rise in defaults, ongoing restructuring efforts, bankruptcy filings, and necessary adjustments, even among firms that were previously viewed as paragons of innovation or operational efficiency. The current phase of expansion is in motion, transcending both size and sector distinctions. In Argentine agriculture, the decline in profitability is becoming evident while the associated risks are on the rise. In this intricate landscape for the productive sector, various instances within the local industrial framework illustrate distinct phases of decline. Vicentin, the agro-export company embroiled in the most significant economic scandal in the sector over the past decade, is moving towards the conclusive transfer of control as part of the cram down process. This development would conclude one of the most contentious bankruptcy proceedings in Argentine history. The process initiated in late 2019, marked by a default of $1.5 billion, is nearing its conclusion with the introduction of new shareholders following the unsuccessful implementation of the original preventive agreement.
Meanwhile, SanCor is currently engaged in bankruptcy proceedings, characterized by sluggish progress and an absence of a definitive resolution in sight. The dairy cooperative, previously a dominant player in the market, continues to operate through contract manufacturing, all the while grappling with ongoing labor disputes and struggling to maintain a portion of its production framework. Finally, Lácteos Verónica, a long-standing SME from Santa Fe, has recently initiated a Preventive Crisis Procedure with the Ministry of Labor to execute layoffs, attributing this decision to a significant decline in consumption and the accumulation of debt. Despite sustaining a degree of operational activity, the entity encounters labor disputes and delays in remuneration amidst a backdrop of subdued domestic demand.
The simultaneous collapse of iconic firms, the decline in investment, and operational adjustments are indicative of a more profound transformation occurring within the economic landscape. The framework that has historically integrated expansion, innovation, and access to affordable financing is now facing a crisis. Food companies are encountering a decline in domestic consumption, whereas agricultural firms are restructuring in response to international prices that deviate significantly from historical peaks. The transformation is structural: the sector has left behind the “input boom” and is transitioning to a survival model, characterized by reduced scale, diminished risk, and increased uncertainty. The implications of these factors are significant for the productive structure within the country, particularly as agribusiness serves as a crucial engine for employment, credit, and overall economic activity. The transformation of Argentine agriculture is currently in progress, and the associated costs are starting to manifest well beyond rural areas.