CRESUD: Harvesting success.

Author:Ramirez, David
Position::INTERVIEW
 
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With a business model that combines agricultural production with the buying and selling of land, Cresud is probably the most dynamic agricultural corporation to be found in Latin America in recent years. CEO Alejandro Elsztain talks about that success.

The story of Cresud is simply fascinating. Created in 1936, the Argentine company has passed several milestones, like when it decided to be listed at the NASDAQ in 1997, becoming the first company of its kind to do so in Latin America. The decision diversified its capital base even more, given that it had already broadened it with a listing on the Buenos Aires Stock Exchange back in 1960.

In 2017, for the first time, Cresud entered the LT 500, Latin Trade's ranking of the 500 companies with the highest revenues in Latin America. It jumped from the 530th to 95th position, after its year-over-year sales soared more than eight times in 2016, surpassing $4.4 billion. In 2017 the company's sales growth was more moderate, at 2%, thus surpassing the 4.5 billion barrier, reaching the 101st position in the LT500 ranking this year.

Although this might appear to be an economic "miracle" to some, Alejandro Elsztain, its CEO, sees it in a more prudent and modest way, characterizing it as "the result of a good strategy," he tells Latin Trade.

But what is the strategy? "We understood that we must not confine ourselves to the production part of the agriculture business," he says. "We needed a more attractive agro model for our shareholders and investors, and that was when we decided to start buying land, bringing it into production and selling it."

There is no doubt that it is the component of buying and selling land that generates the higher earnings: Cresud acquires land with little or no productivity, applies technology, improves it, and sells it when it enters the maximum productivity phase, thus obtaining the highest possible capital gain.

In the year 2000 it owned 1,062 million acres, all in Argentina, but by 2017 its holdings had grown to 1,890 million acres in Argentina, Brazil, Paraguay and Bolivia. Cresud did this by diversifying its portfolio, crossing borders and rotating fields that had become mature, thus improving its original purchase value.

INCREASING PRODUCTIVITY, THE KEY

The process of acquiring land is probably easier today than it was in the beginning, because the company has gained enough prestige that it barely has to look for deals; the sellers are looking for Cresud. "We receive many...

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