VZCZCXYZ0009
RR RUEHWEB

DE RUEHBU #0553/01 1191708
ZNR UUUUU ZZH
R 281708Z APR 08
FM AMEMBASSY BUENOS AIRES
TO RUEHC/SECSTATE WASHDC 0892
INFO RUEHRC/DEPT OF AGRICULTURE WASHINGTON DC
RUCNMER/MERCOSUR COLLECTIVE

UNCLAS BUENOS AIRES 000553 
 
SIPDIS 
 
STATE FOR ECON WHA/BSC 
USDA FOR FAS/OA/OSTA/OCRA/ONA/OGA/OTP/OCBD/OAO/OFSO 
 
SIPDIS 
SENSITIVE 
 
E.O. 12958:  N/A 
TAGS: EAGR AR ECON EINV
SUBJECT: ARGENTINA: JOHN DEERE CONCERNED ON IMPACT OF AGRICULTURAL 
STRIKE 
 
Reftel: Buenos Aires 540 and previous 
 
¶1. (SBU) SUMMARY:  John Deere Company executives met Ambassador on 
April 1, the day before Argentina's agricultural sector strike was 
suspended for 30 days.  While business has been good, executives 
indicated concern over future business due to the uncertain policy 
environment and expected decreased profitability of the agricultural 
sector.  Of immediate concern was whether buyers would 
follow-through on orders of over 400 units of farm machinery made at 
ExpoAgro (Argentina's largest farm technology show).  Although 
follow-up with John Deere Argentina executives indicates that 90 
percent of those sales will occur, the company expects new sales to 
be very difficult.  They expect a return of the strike on May 2, as 
negotiations between the Government and the agricultural sector are 
deteriorating (reftel).  END SUMMARY. 
 
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JOHN DEERE COMPANY 
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¶2. (SBU) Ambassador met with Argentine and U.S. executives of John 
Deere Company on April 1, the day before Argentina's agricultural 
sector strike was suspended for 30 days.  The meeting was requested 
by John Deere to review their Argentina and South America business, 
and to discuss larger bilateral concerns, including political, 
economic, agricultural, and trade issues.  Most of the discussion 
revolved around the business environment in the wake of the 
Government's increase in agricultural export taxes on March 11, and 
the subsequent farm strike (Refs).  John Deere participants 
included: Charlie Stamp, Vice President, Deere & Company; Aldo 
Torriglia, President, Industrias John Deere Argentina; Miguel Angel 
Di Stefano, President, John Deere Credit Argentina; Aaron Wetzel, 
Vice President, John Deere Latin America; Gilberto Zago, Director, 
Institutional Relations, John Deere Latin America; John Rauber, 
Director, International Affairs, Deere & Company; and Nalu Ribeiro 
Biasus, General Counsel, John Deere Brasil. 
 
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BUSINESS WAS VERY GOOD... UNTIL MARCH 11 
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¶3.  (SBU) John Deere executives indicated that their business had 
been growing steadily and strongly in Argentina over the past 
several years.  Less than two weeks prior to the Government's export 
tax policy change, the company signed sales contracts for over 400 
units of farm machinery at ExpoAgro (Argentina's largest farm 
technology show).  The executives were concerned about possible 
cancellations of those sales by customers due to the uncertain 
agricultural policy environment and expected loss of profitability 
by the agricultural sector. 
 
¶4.  (SBU) John Deere executives said that deliveries of new 
equipment had been suspended during the strike -- both out of 
respect for the farmers' position, and for fear that equipment could 
be damaged by picketing producers angered at any appearance of 
non-support.  The strike also created logistical problems with 
deliveries of raw materials to their diesel engine production plant 
in Rosario. 
 
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JOHN DEERE - A LONG HISTORY IN ARGENTINA 
---------------------------------------- 
 
¶5. (U) John Deere products were first introduced in Argentina in 
¶1894.  Industrias John Deere Argentina S.A., a subsidiary of Deere & 
Company, of Iowa, has been manufacturing locally since 1958.  The 
plant is located in the Province of Santa Fe, near the city of 
Rosario.  It specializes in the production of high power diesel 
engines for distribution in Argentina and for agricultural machinery 
produced in Brazil.  In the past ten years, over 60 million dollars 
have been invested in new production machinery. 
 
¶6. (U) John Deere employs 400 at its factory and relies on a network 
of 350 Argentine suppliers of production materials and services. 
The distribution network includes 56 strategically located dealers 
with more than 400 employees. 
 
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COMMENT 
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¶7. (SBU) Subsequent contacts with John Deere Argentina indicate that 
logistical problems encountered at the plant quickly normalized 
after the rural agricultural producers' strike was suspended on 
April 2.  In addition, John Deere Argentina's President, Aldo 
Torriglia, indicated that more than 90% of the previously mentioned 
400 sales will in fact go through.  He said that April sales have 
 
been good, but the company expects new sales to be difficult after 
May 2, when the current 30-day suspension of the farm strike ends 
and the agricultural strike is expected to resume. 
 
WAYNE