Argentina plans to nationalize distressed grains exporter and biofuels producer Vicentin and shift it into the hands of state-controlled oil company YPF.
Vicentin pioneered Argentina's biodiesel exports in 2007 and was the country's largest processed soy exporter until the firm defaulted on its debt late last year.
"We want the company to continue operating, the workers to keep their jobs and small farmers to still sell what they produce," President Alberto Fernandez said upon announcing the move yesterday.
Under the controversial takeover plan, Vicentin will be managed by YPF Agro, the agricultural division of YPF, itself the subject of a 2012 nationalization from Spain's Repsol under the presidency of Cristina Fernandez, who is currently the vice president, unrelated to President Fernandez.
The government immediately placed Vicentin under trusteeship and will send a bill to congress to nationalize the firm, Fernandez said.
YPF's board of directors will meet today to discuss how it will manage Vicentin's assets.
Vicentin has total crushing capacity of 7.7mn t/yr, in addition to a 69,000 m3/yr ethanol plant and a 182,500 t/yr biodiesel plant. According to a details released by the government late yesterday, the company had annual revenue of around $4.2bn until 2019.
Vicentin has offices in Uruguay, Brazil and Paraguay. The company is partnered with Swiss trading house Glencore in Renova, Argentina's top biodiesel producer.
Renova, which has two biodiesel plants in Santa Fe with total installed capacity of 525,600 t/yr, had been a 50:50 joint venture between the companies until Vicentin sold a 16.67pc stake to Glencore in December.
The government did not consult with Glencore before announcing the move, Fernandez said.
Vicentin also holds a 33.33pc stake in 511,000 t/yr biodiesel producer Patagonia Bioenergia.
First oil, now grains
Agricultural exports are the main source of Argentina's hard currency earnings. So for the government, which defaulted on sovereign debt last month for the ninth time in its history, the takeover could provide a way to control a market that has historically had a tense relationship with the government.
Late yesterday, Vicentin expressed "uncertainty and worry" over the nationalization which it said it learned about in the media. "We are carrying out the necessary consultations to understand the characteristics and depth of the measures that were announced."
United for Change, Argentina's main opposition coalition, called the move "illegal and unconstitutional," warning that it is "a first step in the road to nationalizing the agricultural market."
Luis Petri, a Mendoza congressman, accused the government of "turning toward Venezuela." Former agriculture minister Luis Etchevehere called it "very bad news."
Argentina's powerful agricultural chamber SRA said "History has shown us that state interventions in the grain trade in particular and the agricultural markets in general have always created severe distortions that ended up creating more serious problems than those they intended to solve."
Vicentin is also involved in textiles, wines, grape juice, honey and cattle.
