The Argentine agricultural landscape is far from the story of a rising power. Although grain exports provide vital foreign currency for the economy, the core business of the agricultural ecosystem — particularly input, technology and services companies — are experiencing a profound structural crisis, combining increasingly tight margins, a decline in financing, over-indebtedness, and changes in the production model.

At the forefront of this collapse is Los Grobo, one of the country’s largest agroindustrial groups, which filed for bankruptcy in February with a debt exceeding US$200 million. The company, which had diversified operations into the storage, production and sale of inputs, recognized accumulated losses of US$36.619 billion and a 12% drop in its revenue measured in dollars. Its subsidiary, Agrofina, which specializes in agrochemicals, also filed for bankruptcy, and its parent company is moving forward with a Preventive Crisis Procedure (PPC) to obtain labor relief.

Surcos, another major supplier, faces an even more complex situation. Along with its filing, it has accumulated more than US$1 billion in debt with nearly 600 creditors and is under criminal investigation for alleged financial fraud, after issuing US$100 million in bonds just weeks before declaring default. The complaint filed by the CNV with the Santa Fe Court warns of possible concealment of key information during the debt issuance, which would have misled investors about the company’s true solvency.

Under market pressure

Financial stress isn’t exclusive to traditional firms. It also affects high-profile technology companies such as Bioceres and its subsidiary Rizobacter, leaders in the development of seeds and bioinputs. In early July, the rating agency FIX downgraded Rizobacter from A+(arg) to A(arg) and placed its debt on negative watch, warning of a highly stressed capital structure.

The company has a debt level of nearly $194 million, with net leverage of 7.1x and an EBITDA margin of just 10.6%, far from the average of 23% it held just a few years ago. This fragility was accentuated after the default of Bioceres SA, a local vehicle spun off from the global holding company Bioceres Crop Solutions (BIOX), which left unpaid a maturity of $5.3 million in promissory notes. Although BIOX is not directly responsible for this default, it impacted the group’s access to credit.

To contain the crisis, the company secured a $17 million loan from Rabobank in February, but faces restrictions on further funding if it fails to stabilize its financial indicators. FIX warned that a recovery will depend on the company increasing its EBITDA above 20% and reducing its debt-to-EBITDA ratio to more sustainable levels.

SMEs, model change and fierce competition

Meanwhile, medium-sized companies in the interior are also beginning to buckle under pressure. One of the most notable cases was Campo de Avanzada, an Entre Ríos-based SME dedicated to agricultural production and grain transportation, which filed for bankruptcy and defaulted on a $7.5 million SME Negotiable Bond. The maturity was ultimately covered by SGR Garantizar, which acted as guarantor, but this highlighted the fragility of the agricultural capital market.

The common thread in all these cases is a drastic shift in the production paradigm. The rise of the “financial model” with barter inputs, leveraged planting and cheap financing is long gone. Today, a defensive and conservative approach prevails, with producers adjusting doses, purchasing fewer inputs, renting fewer hectares and postponing investments. In a context of depressed international prices, tax pressure and high local costs, supplier companies are the first to pay the price.

Added to this is the cumulative impact of three drought seasons and the emergence of pests like the corn leafhopper, which disrupted yields and led to defaults. The landscape of the crisis is clear: fewer employees, more debt, defaults, restructuring, bankruptcy proceedings and adjustments, even in companies that until recently were considered models of innovation or efficiency. The wave of expansion is already underway, and it ignores size or sector. In Argentine agriculture, profitability is shrinking and risk is growing.

Other firms in trouble

In this complex context for the productive sector, other cases within the local industrial structure reflect different stages of deterioration. Vicentin, the agro-export company at the center of the largest economic scandal in the sector in the last decade, is heading toward the definitive transfer of control within the framework of the cram down, which would put an end to one of the most controversial bankruptcy proceedings in Argentine history. The process, which began in late 2019 with a default of $1.5 billion, is about to conclude with the entry of new shareholders after the failure of the original preventive agreement.

Meanwhile, SanCor remains immersed in bankruptcy proceedings, with slow progress and no clear solution on the horizon. The dairy cooperative, once a market leader, survives thanks to contract manufacturing, while accumulating labor disputes and barely managing to sustain part of its production structure.

Finally, Lácteos Verónica, a long-standing SME from Santa Fe, recently filed a Preventive Crisis Procedure with the Ministry of Labor to implement layoffs, citing a sharp drop in consumption and debt accumulation. Although it maintains some activity, it faces union tensions and payment delays in a context of depressed domestic demand.

A structural change

The truth is that the simultaneous collapse of iconic firms, the decline in investment, and operational adjustments are symptoms of a deeper change. The model that for years combined expansion, innovation and access to affordable financing has entered a crisis. Food companies are facing falling domestic consumption, while agricultural companies are adjusting their structures in the face of international prices that are far from historical highs.

The transformation is structural: the sector has left behind the “input boom” and is moving toward a survival model, with less scale, less risk and more uncertainty. All of this has a direct impact on the productive structure of the country’s interior, where agribusiness is a driver of employment, credit and activity. The reconfiguration of Argentine agriculture is already underway, and the costs are beginning to be felt far beyond the countryside.

Originally published on Ámbito