Network companies: a new phenomenon in South American farming

Abstract

Purpose

South America is an important agricultural producer. Farming is characterized by the availability of vast areas of land, a reasonable climate and low cost. These conditions have led South America to be an important supplier of agricultural goods on the world market. Traditionally farmers owned some hundreds of acres and invested their money in all kinds of assets, i.e. land, buildings and equipment. A new phenomenon has emerged in this area i.e. farming companies. These companies have capital but do not own assets. They rent what they need, i.e. land, work force, machinery, transportation, storage and manage from 15,000 ha to 330,000 ha. The purpose of this paper is to determine the perspective of network companies.

Design/methodology/approach

Representatives of 11 network companies in Uruguay and Argentina were interviewed, which provided the opinions of 81 interviewees.

Findings

The most important conclusion of this research is that, though sometimes these companies are called in a pejorative way pools de siembra, network companies might bring prosperity to the members of their supply chain and to a larger extent to the rural population of South America. The possibilities to reduce risk with regards to bad weather, to optimize the combination of soil and crop, and to realize economies of scale are the main factors for this success.

Originality/value

The size and number of network companies is steadily growing and this study contributes to a large debate taking place in Argentina and Uruguay, in order to assess the real impacts of these companies on the economy, environment and population.

Citation

Clasadonte, L., de Vries, E., Trienekens, J., Arbeletche, P. and Tourrand, J. (2013), "Network companies: a new phenomenon in South American farming", British Food Journal, Vol. 115 No. 6, pp. 850-863. https://doi.org/10.1108/BFJ-Dec-2009-0257