Innovation and diversification to develop Córdoba's potential

In management and production, Córdoba has chosen a path for innovation, creating its own Productivity Cabinet, and calling for collaboration and creativity. This cabinet is composed of the provincial ministers of industry, commerce and mining, agriculture and livestock, and science and technology, as well as presidents of three provincial agencies: the Agency for Innovation and Entrepreneurship, the Agency for the Promotion of Exports and the Tourism Agency.

Productivity Cabinet

The province integrates the efforts of its Productivity Cabinet with other external states and entities. In this context it is important to highlight the creation of the Centre Region, which is a productive, institutional organisation composed of Córdoba, Santa Fe and Entre Ríos. These three provinces share a similar production profile and design some policies in conjunction.

The Productivity Cabinet was officially launched in 2016, and the output of the cabinet’s work is already visible, including the establishment of a new business unit for US-based automotive manufac turer Lear Corporation in the city of San Francisco, 206 km east of the capital. While Lear also studied opportunities in the provinces of Santa Fe and San Luis, the company was ultimately convinced by Córdoba’s competitive advantages and will manufacture automotive seating and electrical systems for Fiat Chrysler Automobiles (FCA) Argentina in the province.

“The authorities have acknowledged the benefits of thinking outside bureaucracy in order to more easily attract investment,” Leonardo Destéfano, the manager for external relations and communications at FCA, told OBG. This was echoed by Sergio Sebastián Busso, the minister of agriculture and livestock of Córdoba, who told OBG, “Commercial missions are executed through the Productivity Cabinet, and in effect, it has already built its own regional agenda in order to attract potential investors around the central region of Argentina.”

Horizontal Consensus

The practice of consensus within the legislative chamber has helped to institutionalise agreements within the provincial government of Córdoba. According to Destéfano, this practice allowed FCA suppliers access to public funding offered by the Provincial Bank of Córdoba allowing them to invest in the training of their workers, but only after signing an agreement extending FCA benefits to smaller companies.

It is around long-term decisions that horizontal consensus has been reached. For example, Law No. 10467, also known as the Provincial Agro-forestry Plan, was enacted by the majority of the chamber in 2017, enabling the enforcement of the agro-forestry initiative, through which local producers are mandated to plant at least 2% of their farms over 10 years. However, under the programme, landowners are also given the choice to buy a share of plantations, so-called aggregated forests.

The initiative is meant to promote industrial forest production and to have 68,000 ha planted by 2027, ultimately leading to the regulation of water levels, assisting in soil conservation and capturing carbon dioxide from the atmosphere.

Agro Output

The agricultural production of Có rdoba experienced fluctuations during the 2016/17 growing season. Soybean production decreased by 11.3% and sorghum by around 28%. Conversely, wheat and maize output increased by around 57% and 93%, respectively, with wheat production achieving its best harvest since 2008.

In spite of these changes, some of which are responses to recent droughts, Córdoba, with its 27,084 producers, still ranks among the best-performing regions with regards to primary production. It continues to rank first for maize and second for soybeans, sorghum and wheat.

Peanut production is also noteworthy, as Córdoba has maintained the top spot in Argentina and is the leading global exporter. Although peanuts are not in high demand in the domestic market, Có rdoba’s Board of Trade estimated a 7% production increase when comparing 2016/17 output against 2014/15. According to the Agency for the Promotion of Exports, raw peanut exports in Córdoba grew at an average annual rate of 6.7% in the period of 2014-17, although in 2017 they fell 27% in relation to 2016. More notably, Córdoba’s exports of processed peanut products grew at an average annual rate of 14% in the same period, while in 2017 they increased by 10% compared to 2016.

Alternative Crops

In 2018 many farmers began to consider alternative crops in response to the agricultural export taxes on soybeans, wheat and maize enacted by Congress. One such alternative crop was the chickpea. This pulse was not important on the global market until 2004 when its international price began to rise. Previous to that, there was a general lack of knowledge about the versatility of this bean as a food. Indeed, according to Máximo Costamagna Garzon, manager and partner at Córdoba-based exporter La Maluca, it was not until the 2015/16 and 2016/17 growing seasons that companies such as La Maluca would seriously consider chickpeas as a lucrative opportunity, as experienced producers such as Australia, Canada, India and the US had become unable to offer the quantities the market demanded.

Adding Value

Beyond Córdoba’s privileged position in primary production in Argentina, the region also remains famous for adding value through its robust agro-industrial complex, leaning on its academic history. Nationally known as La Docta (the Learned One), Córdoba is the seat of the oldest public and private universities in the country. The agricultural productivity of the province has been developed in large part through its 13 public and private universities, as well its well-recognised scientific institutions: the Space Centre of the National Commission of Space Activities, the National Institute of Agricultural Technology, the National Institute of Industrial Technology, the Centre of Excellence in Products and Processes Córdoba and the National Council of Scientific and Technical Research. “It is our duty to add value to each of the regional economies,” Carlos Walter Robledo, minister of science and technology, told OBG.

Despite the development of a number of local processing plants such as those in the municipalities of Jesús María and Montecristo, existing industrial plants dedicated to chickpea production are yet not sufficient, according to Gonzalo Agusto, analyst at Córdoba’s Board of Cereals.

In addition, it appears that opportunities for investment will also arise in research, manufacturing processes and irrigation, for which, according to Costamagna Garzon, La Maluca is requesting subsidies to double the company’s irrigated land holdings. “It is important to help investors identify existing clusters to take part in so that they might enjoy the competitive advantages offered by Có rdoba, and be part of the spearheading of new and upcoming clusters,” Francisco Iguerabide, director of sustainable agricultural development in Córdoba, told OBG. In this context, the cluster under development for 15 years around the cities of Oncativo and Brinkmann, or the sheep industry’s need for cold storage infrastructure investment, are sound examples to take into account.

Call for Investment

The use of grains to generate energy – via maize-based bioethanol production – also appears to be a promising area for investment, with the largest bioethanol production plant located in Córdoba. The Promaíz plant produces around 420,000 litres per day, and both the bioethanol and byproduct of animal feed are produced for the domestic market. Food production companies like Prodeman have started producing energy from biomass – specifically, the disposed shells of processed or commercialised peanuts – with 10% of the energy produced being applied towards the industrialisation of peanuts and 90% entering into the Argentine system, all through the framework of the RenovAr2 programme.

Launched in 2016 by the Argentine government, the RenovAR programme marked the beginning of the bidding process to contract wholesale electric market from renewable energy sources. The RenovAR programme has carried out three rounds of bids with the fourth set to be launched in October 2018. The success of the programme is expected to fulfil the goals of renewable energy production as set out by the state, at 20% of national energy consumption by the end of 2025 (see Legal Framework chapter).

Whether companies apply for opportunities promoted by the national government, as Prodeman did through the RenovAr programme, or they reach out directly to local officials, Córdoba appears to be actively seeking and attracting investment.