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Corn+Soybean Digest

Buy American

“I'm in heaven here,” says Adrian Fay as he drives through the flat, fertile farmland of central Illinois. “It looks just like Argentina.”

Fay bought a little slice of U.S. heaven — 340 acres to be exact — last summer. It's the first step in the globalization of his Argentine farm operation.

“I always thought it would be way too expensive to own farmland in the U.S.,” Fay says. But, it turns out, $5,500/acre, or a little more, will buy you premium land in either country.

“We couldn't grow in Argentina. We were getting squeezed by the government,” Fay says. “We had to figure out a way to take our business to the next level. The idea is not to run away from Argentina, but to globalize the company.”

The search for American soil began in 2006 when Fay and Carlos Mayer, the business development officer for Fay's Argentine operation, crisscrossed the Midwest asking a lot of questions. One of their first stops was at Dale Lattz's office at the University of Illinois.

“I got an e-mail from Adrian saying they wanted to get together with me,” Lattz, a farm management Extension specialist, says. “They wanted to get an understanding of how ag worked here — size of farms, farmer/land-owner relationships, how the ag industry is organized, types of leases, etc. They wanted to understand the culture.”

THE MEETING LEFT an impression. “Adrian and Carlos are more business-oriented than many of the absentee landlords we talk with who have inherited land,” he says. “They did a lot more due diligence and looked at all the angles closely. And, they actually followed through. A lot of times when we talk to people about land ownership, nothing comes of it.”

“We were rookies,” Fay says. “We had no idea what American agriculture was like. We also used the trip to figure out legal issues.”

At the same time, the duo started to work with Dan Patten, Soy Capital Ag Services, Bloomington, IL. “We looked at a lot of properties across the Midwest,” Patten says. “Initially, Adrian and Carlos looked at Indiana, Iowa, Wisconsin and Minnesota. By November they focused on central Illinois.”

Expanding in the U.S. was one choice, but Fay and his management team considered New Zealand, Ukraine, Brazil and other countries, as well. Each country offered unique opportunities, but the Corn Belt sure looked a lot like Argentina to Fay.

Fay and Mayer actively started to look for land to buy in July 2007. “Since this was all new to us, we wanted to work with as few variables as possible,” he says. “Our idea was to buy the best land, hire the best operator and the best management company.”

With a target price range of $5,500-5,900/acre, the Argentines found land to buy. The first parcel Fay bought privately was 180 acres for a purchase price of $5,550/acre. He later bought 160 acres at auction for $5,750/acre. Both farms were purchased by Fay's American farm company, Southern Pilgrims LLC.

Total cost to become an American farmland owner: $5,640/acre.

The crops, machinery and chemicals Fay uses in America will be essentially the same as he buys in Argentina. “You see Pioneer, Dekalb and Monsanto in Argentina, just like here,” he says. While corn dominates the U.S., soybeans are the favored crop in Argentina. Farmers there expect crop yields of 170 bu. and 60 bu./acre, respectively.

There are distinct differences in the farming cultures between the two countries. “In Argentina, the mindset is a farmer is a landowner who may never get on a combine,” he says. “In the U.S. a farmer is an operator who may not own any land at all.”

And, the next time you complain about all the paperwork you fill out at the FSA office, remember that in Argentina Fay doesn't receive any economic support from his government. On the contrary, he pays a 35% tax to the government on every bushel of grain he sells.

Naturally, the seasons are reversed between Fay's North and South American farms. So, as combines pull into his U.S. fields this fall, planters will begin seeding his fields in Argentina.

FAY'S FAMILY-OWNED South American farm business includes 4,800 acres of corn, soybeans and wheat; another 4,800 acres supports a 2,000-head dairy; and 8,000 leased acres for a 2,000-head beef cow herd. It's part of a farm business that has been in his mother's family since his great-great-grandfather bought land in Argentina in 1882.

That original 18,000-acre investment eventually grew to 200,000 acres. But, charitable investments, political expropriations during the 1940s and family succession reduced and divided the land. In the early 21st century, Fay found himself with a profitable business with little opportunity to grow.

“In Argentina, business owners are vilified by the government. There's a stigma,” he says. “My grandfather told me one time that he wished that he had considered buying land in America to diversify some of the risk.”

In an odd twist of fate, Fay has, at least partially, fulfilled his grandfather's musings. He has no intention of selling his Argentine business, but he has used farm profits to expand to the U.S. where he also now resides.

Fay's wife, Maite, has a family ranching heritage that stretches back to the 1800s, too. And, like Fay, she has combined agriculture with academics. At age 16 she helped manage the family ranch and simultaneously finished a bachelor's degree in public relations. So, she understands and encourages Fay's ventures in global agriculture.

Rich Illinois farmland wasn't Fay's first reason for coming to the U.S. His Argentine mother married Michael Fay, an American from Pennsylvania.

Fay's international parentage evolved into a multi-country education. He attended high school in Switzerland, was an undergraduate at M.I.T. and completed his education with graduate studies at Harvard. He remains in the Boston area where he is on staff at M.I.T.'s Laboratory for Metabolic Engineering and Bioinformatics.

Even an Ivy League education can't take the heart of a country boy off the farm, it seems. With regular trips back to Buenos Aires and management input from a board of directors, Fay maintains hands-on control of the Argentine operation.

In 1998, Fay started to press his advisors for ways to grow the business. When Argentina's economy collapsed in 2001, he became convinced he needed to go global to grow.

Fay took possession of his American farms in September 2007, and has since contracted with a local farmer to custom farm both parcels of land. “I want to maintain control so I can experiment. What we learn from one farm may help us become more efficient on the other,” he says. “It's like a global Extension program.”

WITH INPUT FROM Patten and others, Fay has his farm plan set for 2008. “One farm will be all corn, the other, because it's close to Farmer City, will be devoted to corn and soybean seed production,” explains Patten.

“Soil tests from the farm near Gibson City showed it needed a lot of limestone to raise pH. We chiseled the fields after the application and were concerned that might cause some yield loss with soybeans. And, it's hard to argue with $4/bu. corn.

“There are a number of seed companies with plants at Farmer City and we can capture a 50-60¢/bu. premium on soybean seed production,” Patten says. “You get a premium for hybrid seed corn production, plus a savings of nearly $75/acre in seed costs.”

Next year wheat, and even switch-grass, may show up in the rotation. “He's going to be the most involved client I have,” Patten says. “Others don't have the background and desire to learn as much as Adrian. He's as educated a person as you're going to meet. He's open to innovation and any idea you bring that will make the farm more productive and more efficient.”

Fay says he grew up as a citizen of the world. “That helps me put things in perspective,” he says. “I like to think outside the box.”

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