SWEET SMELL OF SUCCESS

Colombia 2014 | AGRICULTURE | INTERVIEW

TBY talks to Gonzalo Antonio Ortiz Aristizabal, General Manager of Ingenio Providencia, on maximizing regional potential and the advantages of revenue diversification.

Gonzalo Antonio Ortiz Aristizabal
BIOGRAPHY
Gonzalo Antonio Ortiz Aristizabal was born Medellín and studied Accountancy at the Universidad de Antioquia, followed by Advanced Management at Icesi. He has held various positions with the Organización Ardila Lülle since 1979, ranging from analyst to senior management roles. He is a member of a number of organizations, including the National Business Association of Colombia (ANDI), the Association of Sugar Cane Cultivators, the National Federation of Biocombustibles, and Sucroal.

How can Cali and the Cauca Valley rank among the leading industrial and economic areas of Latin America?

Improved road infrastructure and the expansion of the Pacific Alliance are two crucial elements for the continued development of the region. Cali needs to complete, among other infrastructural requirements, the highway to Buenaventura, as well as build the connecting railway between these two cities to become a more competitive city. Today, in some cases it costs more to transport a ton of any product from Cali to Buenaventura than to transport that product from Buenaventura to its final destination. Additionally, I think we need to make the region's ports much more competitive. In this context, the Buenaventura Port, which handles the greatest volume of import/export goods in Colombia, needs to become more efficient. The government needs to tackle the current level of underdevelopment that affects the Pacific coast. Essentially, Colombia has to realize that to fully take advantage of its position on the Pacific coast; it must boost development in the region.

How has Ingenio Providencia developed its operations over the years?

The company was founded in 1926 and Modesto Cabal Calindo was the main developer behind it. He also set up two additional sugar refineries, one now defunct. Ingenio Providencia has had one idea in mind; growth. We have always applied this concept to all areas in which we saw business opportunities, diversifying revenue sources. This has elevated us to among the leading companies in the sugar industry. Furthermore, we have always been a pioneering company; for example, we were pioneers in the production of ethanol and electric energy co-generation. Today, we sell 50% of the energy we produce, which is surplus and hence of greater benefit to the national grid. We are also the sole producer of organic sugar in Colombia. Today, around 42% of our income stems from diversification, while just few years ago our entire revenue stream came from the production and commercialization of sugar.

How did the company perform in 2013 and what are your expectations for the sector in 2014?

Climatic conditions affect the entire agricultural sector, and the sugar industry is no stranger to this. Production last year was badly affected by the weather conditions of the past two years' winters, namely due to heavy rains. For example, we lost almost 3,000 hectares of sugar cane crops to floods, which dented production. For this reason, we saw a marked decrease in both production and income during 1Q2013. Our expectations for 2014 include grinding 3 million tons of sugar cane, which would mark an important rise from the 2.847 million tons of the previous year.

What efforts are being made to discover new varieties of crop within the sugar industry?

Lacking additional land for regional growth, we need to boost production productivity within the current area, in other words, to produce more sugar cane per hectare. This is only achievable by cultivating new varieties of sugar cane, such as those being researched at the Sugar Cane Research Center. Cultivating specific agricultural crops in accordance with the area and soil in question is another way, as well as applying Farmer Precision Technology to achieve higher production levels per hectare.

How has the company diversified its business activity over the years and what is your growth strategy?

One of our chief successes as a company has indeed been the diversification of business activity and the establishment of our new electric energy co-generation plant. The plant had an initial investment of around $55 million and a production capacity of around 40MW/hour. It has enabled us to meet our energy needs and sell surplus production (around 50%) to the national grid, generating extra revenue for the company in the process. We also established a new ethanol production plant with a capacity of 300,000 liters/day. Our key objective is to offer our clients the highest quality products in compliance with environmental protection requirements. This has enabled us to successfully meet the needs of even the most demanding clients with the most competitive prices in the market.