PGG Wrightson targets South America

Last updated 05:00 05/12/2013

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Despite being a Chinese-controlled company, listed firm PGG Wrightson is not shying away from a growth plan that targets South America much more than China.

The agricultural services and supplies company which retains its traditional New Zealand base has been working for years to improve its exports, particularly in the pastoral and cropping seeds sector.

Chief executive Mark Dewdney says South American revenues are "almost $100 million", up from $2m less than 15 years ago, with the bulk of those sales in Uruguay based around pasture seed.

Over the next three to five years revenues would grow from new markets identified in Brazil, Argentina and Paraguay.

"I think [South America] will grow more quickly than any other part of our business," he said.

PGW reported total revenues of $1.13 billion in the June 2013 year.

Uruguay had 12 million hectares of natural grassland, for PGW to grow its position as "No 1" seed supplier for that country. The seed could increase annual beef volumes by five or six times.

PGW was starting to build relationships in Brazil, where there was "huge land masses," in the southern part of the country, he said.

PGW's new Chinese chairman Alan Lai, appointed to the lead board role in October, was very supportive of the South American focus, Dewdney said.

Lai first took on a PGW directorship in December 2009, after Agria Corp, the Chinese entrepreneurial firm he leads, built an initial stake in PGW, which at the time was struggling with large debts. Agria now has a 50.22 per cent holding in PGW.

China was also an opportunity for PGW, though annual revenues including wool exports were less than $10 million.

"There are opportunities to export live cattle into China, that's important for us. We work with Fonterra, who have a large farming business in China. So we help them to procure cattle in New Zealand," Dewdney said.

"In time we may well start to export cattle into China on our own account." In the past three years PGW had exported cattle into Vietnam and other parts of Asia.

PGW was still working with partners in China on its seeds business, testing cultivars for pasture and crops so they were successful in different conditions.

"So I don't expect that we will have a large transactional seed business in China in the foreseeable future."

Dewdney knows his subject when he is talking about China and Asia. He spent 2001 to 2006 living in the region, including a role in Tokyo as managing director for Fonterra's Asian ingredients business.

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- BusinessDay

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