Industry Insights: TAFIREL’s Nicolas Potrie on the Developing Relationship Between the MERCOSUR and ASEAN Regions
20 July 2023 AgriBusiness Global spoke with Dr. Nicolas Potrie, Director of TAFIREL, a Uruguay-based holding of agribusiness companies operating throughout the MERCOSUR area, about his recent visit to several ASEAN countries on a fact-finding mission and effort to learn about how the regions can further develop agrobusiness in their respective regions.
AgriBusiness Global: Hello. You visited some ASEAN countries, Malaysia, Thailand, the Philippines. Tell us about that trip.
Nicolas Potrie: Yes, of course. After the pandemic, we for many years didn’t go to Asia we feel little changes, right? Our company belongs to the MERCOSUR (Southern Common Market) Chamber of Commerce that is the quite different chamber, because usually they’d be national chambers of two countries, but this case it’s two regions. MERCOSUR, that includes Uruguay, Paraguay, Argentina, and Brazil on this side of the world in Latin America, and the 10 countries of ASEAN (Association of Southeast Asian Nations) that are the 5 big Malaysia, Philippines, Thailand, Indonesia, and Singapore, and also Laos, Member Myanmar, Cambodia, and the other small. It’s 10 countries, but the market is 650 million people.
So, the relation between both a common markets here in MERCOSUR, we need to learn a lot about the integration experience that those countries in Southeast Asia have. So, these chambers promote the relations between these two regions. So, we join a delegation of 28 businessman and businesswomen from different industries.
And we were 12 days in this trip that include, in this case only the three countries that we visit, were Thailand, Malaysia, and Philippines. And it was a very good trip, because we could see this growing area of the world, and the possibilities to trade mainly with our countries that we may produce commodities, and food.
And these countries that need this kind of production? So, it was very interesting. And also, we could see the influence of China in those markets. We visited MATRADE Trade Association in Malaysia that has more than 46 offices around the world. (They want to learn) how they can promote their export, and (develop) a bilateral trade relationship. And also, we saw this influence of China in the Chinese, Malaysia, Philippine, Chamber of Commerce.
It was very interesting, very interesting trip for our delegation.
ABG: So, is that a change? The influence of China in in that region.
NP: Yes, nowadays we can see with the tensions of the war Ukraine, Russia, and the situation with China/U.S. tensions that are in this area, we can see the difference.
Because these countries a support China, and some of them are neutral, and some of the are more with U.S. and some of them are with both. So, we can see a that political (climate), after the pandemic, and nowadays are influenced more in in trade, than before. So, is a factor that we need to analyze when we are talking about trade, political and geopolitical relations nowadays.
ABG: Okay, how would you characterize the crop protection market? The crop input market for those for that region.
NP: Our trip was more based in all kinds of industry, not only agrochemical, but in our particular case, we a visit, an association of pesticides, association of a fertilizer and crop protection industries, and we saw that everybody is taking note that they, the upcoming years will be with more challenges for all of our all of us. The players in this industry – we will need to focus in this industry, we need to be more a attentive and more a cautious with the problems of the supply chain, with the problems of the weather conditions – many things that before are not so on the table like nowadays.
ABG: Okay. Did they come up with any solutions to any of these issues? Supply chain certainly has been something that we’ve talked about over the last several years. Are there any agreements or partnerships? Or was this just an exploration trip?
NP: Uruguay, Paraguay, Argentina, and Brazil, the block is dealing some a bilateral negotiation with these countries. One of the main concepts of the block is, we need to negotiate all together. And this was an advantage and also a disadvantage, because the speeds are different, and a symmetry as that we have in the in Uruguay and Paraguay that are small countries compared to Brazil and Argentina means the needs of that speed are different. Because we have small markets, we need to open more fast, and sometimes Argentina and Brazil are close at this industries. So, the bilateral free trade agreement Uruguay, Paraguay and the MERCOSUR in total can do with the same countries together versus separately, are really a very interesting. It’s not for the future. We need to do now, because MERCOSUR is close an agreement with Singapore. And we are dealing with Indonesia and possibilities to do also with Vietnam.
For example, Uruguay is trying to negotiate a free trade agreement with China separately than MERCOSUR, because, with the political change that we come in Argentina this year and last year with the new President of Brazil we need this process of integration. But Uruguay needs to do it right now. So, sometimes, the speeds are different, and these kinds of free trade agreements are really, really necessary for small economies.
ABG: Are you seeing any trends or new changes in those markets that you haven’t seen in the past?
NP: Yes, yes, we saw more technologies coming. We had the chance to visit one of the biggest drone companies in Malaysia, and the agriculture is really a using this kind of technologies. So, some years before we say, “Okay, this technology will come.” Now, it’s already in the in the field. It’s already in the market and the companies that we are in the agricultural business, we need to bring solutions to our customers. So, this will be really very important to ag – all these kinds of precision agriculture that is, right now, using this technology.
ABG: Okay, do these new technologies force any kind of change to formulations? Or does it force you to change anything that you’re doing right now?
NP: Yes. And also, all the regulations that our industry has, (create a) need to adapt these kinds of new technologies. The formulation for example, here we have very big lands of agriculture, not small, like they have in in Southeast Asian countries makes adapting these regulations to the new kinds of application product. So, sometimes we operate at a little different speed. But The regulatory offices need to adapt to these kinds of new technologies? Right?
ABG: Yeah, very good. What else do we need to know? What else can you tell us about this trip that would be interest of to our listeners?
NP: I visited also China, that I would like to tell a little about my insights of this trip. After almost four years of the lockdown and borders that were closed, we saw some changes from the main producer of agrochemicals and these kinds of agriculture products. China and India play a very important role for importers and distributors and formulators.
And after CAC moved from March to May, we saw that companies reconfigured their situations.
Some small brokers have some problems to deal with the new challenges. The government during the pandemic relocate some industries and also closed some factories and some producers of pesticides. We saw some changes in this field, and some reconfiguration in the supply and manufacturers in China.
Some history that we saw there – comparing some years before China and the (economic) growth of China is still very high (despite the) almost four years when nobody could travel. Nobody could go abroad. We thought that the industry would be the same. No. It has changed a lot. Also, we think that nowadays we would be better because players can travel more, see customers?
It was very important. At last year’s (AgriBusiness Global Trade) Summit in Panama, we were all Latin Americans together and say, okay, next year we’ll be. If China opens the border, it would be better to see each other. This year at CAC not too many too foreigners (attended). So, the summit will be in Miami, Florida, I think, would be very good, because we’ll start these face-to-face relations. That is very important for the industry, right?
ABG: Did you change anything in the last few years because of the lack of availability in China and the supply chain issues and those kinds of things. Or have you just kind of waited it out?
NP: No, not too many changes in the industry inside, but the relation between suppliers, it was. a little different. And as we know, this kind of event and inter-exchange of information is very important.
We suffer because the Zoom (virtual) exhibitions were not the same, and sometimes the information became (harder to get). The situation of the factories and the manufacturers were not so clear. And after the price went very high last year, nowadays, we think, we are already at the bottom, and will be a rebound on some prices. And that affects, totally, the agrobusiness and the food production here in Latin America. Even the weather and their political problems all together affect the industry. And we need to focus very much on what is happening around.
ABG: Okay, very good. any other thoughts.
NP: I hope we can meet each other all together in Miami, and next 9 and 10 of August. And I really hope it will be very good to catch up and see what’s what the new challenges for all of us in the industry. So, we think that this is a very good opportunity.
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