ECONOMIC
PERFORMANCE AND
VALUE CHAIN

4.1

ECONOMIC PERFORMANCE

Material topics: Economic performance, Indirect Economic impacts

Our economic and productive development is part of a growing commitment to sustainability. Therefore, as a strategy, we adopted intelligent investment to optimize efforts and resources, generate jobs and contribute to sustainable development, in pursuit of the best social, environmental and economic results.

Our reality, our context, our experience and the lessons learned from these two decades of operation are variables that generate an excellent opportunity to significantly increase the production of fertilizers or Granulated Urea, a project that is currently under study to determine the technical and economic feasibility.

As for the general context of our industry, during 2021, estimates regarding the domestic fertilizer market yielded a total of 5.3 million tons, slightly higher than the previous year.

As it can be seen in the following graphs, nitrogen fertilizers represent 58% of the total fertilizers used in Argentina in the 2021 campaign. These increased their share by 2 percentage points with respect to the previous year, compared to a slight decrease in the share of fossil fuels. The most widely used nitrogen fertilizer continues to be Granulated Urea by a wide margin, increasing its share to 71% in the category, followed by UAN which represented 20% of the total.

The following graph shows the evolution of urea domestic sales Profertil. In 2021, it concluded with total sales in the local market of 905,412 tons of Urea from its own production.

* Evolution of Profertil Urea sales in tons in the Argentine market. Own production.

Fiscal year 2021 showed a net income of $13,466 million

*In million pesos.

In 2021, we continue to strive to continue the positive results. The effort and efficiently of each area and person at Profertil were fundamental to achieve most of the goals and projects proposed at the beginning of the year.

Below, we present the main magnitudes of economic performance through the table of Direct Economic Value Generated and Distributed (DEVG+D), proposed by the GRI Standards. The information is presented in millions of pesos and comes from the Accounting Statements of Profertil SA as of December 31, 2021, exposed under the International Financial Reporting Standards (IFRS) in Argentine pesos and audited, externally, by Deloitte & Co. S.R.L

Negotiable bonds
In 2021, we made our first placement of Class 1 Negotiable Obligations (NO) in the local market. The issuance amounted to USD 25 million, although the strong interest it generated drove demand to USD 41 million. They were placed through the dollar Link instrument, at a rate of 2.49%, with a maturity of 24 months. This amount will be used for projects aimed at increasing fertilizer production, providing the company with working capital and strengthening the sustainability of its production complex.

4.2

A STRONG LOCAL VALUE CHAIN

Material Issues: Practices with Distributors and Agricultural Producers, Practices with Suppliers, Gas Emissions: release of substances into the atmosphere.

Committed to upholding the highest ethical and legal standards of conduct in all our activities, we developed the Code of Ethical Conduct for Third Parties and the Integrity Policies for Third Parties, which contain the values and principles that allow us to maintain transparent business relationships, while expressing the Company’s expectations regarding the ethical conduct of third parties, within the framework of their contractual relationship with Profertil. These policies are applicable to our contractors, subcontractors, suppliers, associated persons, commercial intermediaries, non-commercial representatives, consultants, business partners or anyone providing services for or on behalf of the Company.

4.2.1

CUSTOMERS AND DISTRIBUTORS

The relationship with our customers and distributors allows us to detect opportunities for improvement through different mechanisms, such as commercial agreements, annual satisfaction surveys, special meetings, public information and a complaint handling system. The characteristics of our customers are shown in the following table:

We train our staff in communication tools, for a better attention and a better link with our clients. In addition, we carry out an annual review of our performance, through satisfaction surveys. The results for 2021, in the retail segment, were:

In addition to satisfaction surveys, we use market research at the level of agricultural producers and technical advisors, which allows us to know the changes in the behavior of our customers, in order to analyze the trends of the market where we operate. We also have different communication channels to facilitate dialog and conflict resolution:

• Telephone hot line 0-800-666-7763 (PROF).
• Commercial Administration Analyst.
• Commercial Management web portal for retail customers and wholesalers, with online information on the status of their commercial agreements.
• Formal complaint management channels with audits of the Integrated Management System, always seeking to provide an effective response to any event. When we receive a complaint, we enter it into the Complaint Management System and assign a person responsible for its primary treatment. This follows up and involves each person responsible for responding to the issue through concrete actions, setting the corresponding deadline for the response to the customer. In this way, we ensure that complaints are resolved in a timely and comprehensive manner.
In 2021 there were 26 complaints, involving a total of 486 tons over a total of 1,321,527 tons commercialized.
• Scheduled visits to customers.
• Twitter: @profertilAgro
• Facebook: ProfertilAgro
• YouTube: Canal Profertil Agroindustria
• Instagram: ProfertilAgro
• Website: www.profertil.com.ar. Its objective is to add value to the agribusiness, through technical support on sustainable crop nutrition technologies, available in the Virtual Library, together with brochures, technical notes and technical bulletins, among others. In addition, in the AgTech section we provide specialized information on products and diagnostic tools, such as Triguero and Maicero. We also provide technical information to the distributor, technical advisors and agricultural producers.

In 2021, we continued to work on the Integrated Communication Plan, which aligns the areas of Human Resources, Institutional Relations and Communication and Commercial Marketing, with messages aimed at the organization’s brand positioning objectives. This new plan involves the interaction of 5 communication axes, aligned with 6 Sustainable Development Goals (SDGs), defined as a priority by the Company’s Steering Committee. These are:

Given the priorities of the organization in 6 of the Sustainable Development Goals, from the Marketing area, we delved into SDG 8, Target 8.8, which addresses the issue of protecting labor rights, promoting a safe and secure work environment for staff, focusing on the rural area. The objectives of this program are:

• To learn about the risk factors that occur in rural areas.
• To raise awareness of this issue, which is invisible to many.
• To collaborate in the improvement of quality protocols, to carry out BPA and PM that take into account the 4 key requirements for sustainable crop nutrition (dose, source, timing and form).

To promoting this type of programs collaborates in the visibility of this problem, providing a greater welfare of all the agro-industrial sector personnel.

Since its inception, and with an environmental and sustainable approach, we have been promoting the use of Best Management Practices (BMP) for nutrition, known as the 4 Requirements or 4R (dose, source, form and correct timing of application). In this sense, we work together with research institutions and producers’ associations to generate knowledge and transfer the best approaches on Sustainable Crop Nutrition Strategies. Among them, we highlight the collaborative work with INTA, Fertilizar, Maizar, Argentrigo, CIAFA, AAPRESID, AACREA, Bolsa de Cereales de Bs As., AIANBA, Universidad del Sur (Department of Agronoy)), FAUBA (Department of Agronomy of the UBA) and the Asociación Argentina de Ciencias del Suelo (AACS).

In 2021, we participated in different own and third party events in virtual form. We can mention;

• Congreso Maizar 2021. Workshop “eNeTOTAL Plus in Maize Environment efficiency and care”.
• Congress A Todo Trigo 2021 Workshop “Mayor EUN y Cuidado del medioambiente en Trigo”. (More EUN and environmental care in wheat).
• Congress AAPRESID 2021. Workshop “Los fertilizantes Nitrogenados como aliados para el Balance de C”.(Nitrogen fertilizers as allies for C balance).
• Participation in the AAPRESID Agenda talk.
• Participation in the Argentine Carbon Neutral Program (PACN) of the Argentine Grain Exchange in the wheat and corn roundtables.

Through our testing network, we evaluate new products and provide the necessary tools for proper soil management and health care. Likewise, along the years, we developed different activities and programs, aimed at transferring knowledge and to strengthen our relationship with agronomy technical advisors and end customers (agricultural producers).

In 2021 we began with a new challenge: the generation of local data for measuring greenhouse gases (GHG) in situ, with field tests and measurements with cameras that capture nitrous oxides and ammonia. The objective is to evaluate the emissions from different nitrogen sources and in different doses, on the intensity of ammonia and nitrous oxide (NH3 and N2O) emissions in the corn crop in the core zone of Argentina. Obtaining these data will allow us to have local emission factors for nitrogen fertilizers in real field situations and, thus, generate more realistic greenhouse gas inventories for our country.

4.2.2

CULTIVATING STRONG RELATIONSHIPS

CLIMATE CHANGE For this reason, Profertil, the leading company in the production of granulated urea in Argentina, permanently carries out different actions to disseminate the importance of these issues.

Ratifying our commitment with the agricultural activity in Argentina and continuing with the plan of relationship with the agricultural sector, we developed different training sessions in virtual format. Through these meetings with specialists, we disseminate Best Management Practices (BMPs) for crop nutrition as a fundamental basis for sustainable agriculture. This must have an integral approach; it must be sustainable, responsible, environmentally and socially friendly, always taking care of soil health.

VIDEO CONFERENCE CYCLE

During 2021, 2 new training programs were carried out. One of them called Building Together the 2030 Agenda, oriented to the sustainability of agri-food production, which included 6 videoconferences:

• “Building Together the Green Agenda Argentina”. Agr. Eng.
F. Vilella and F. Bert
• “Soil health: key to increasingly efficient systems”. Dr. G. Peralta
• “Nutrition a la carte: wheat and barley”. Dr.N.Reussi Calvo and Dr. F.García
• “Evolutionary changes and innovation in agriculture”. Dr. E. Viglizzo
• “Agriculture and nutrient management”. Dr. N. Reussi Calvo and Dr. F. García
• “Criteria and tools for nutrition management in corn”. Frequent questions, Agr. Eng. G. Ferraris

The second program is focused on risk prevention and people’s health care; it is called Prevention of Risks and Diseases in the Rural Environment and its objective is to raise the visibility of this problem. It consisted of a series of six meetings led by Agr. Eng. A.C. Amador and Lic. M. G. Bertazolli, and it had the special collaboration and participation of the Department of Agronomy of Buenos Aires (FAUBA):

• “Building competitiveness from working conditions and environment in agriculture”.
• “Regulations and protocols of good practices that support safe work”.
• “Ergonomics as an ally of healthy and safe work”.
• “Risks in the handling and storage of fertilizer products”.
• “Risk prevention in environmental management”.
• “Efficient communication for the organization and development of risk-free work in the field.”

4.2.3

VENDORS

Focused on the economic, social and environmental development of the suppliers in the communities where we operate. Therefore, we privilege the hiring of Bahia Blanca or national suppliers over foreign ones, as long as the quality and price conditions so allow.

We have a supplier evaluation procedure that may directly affect the quality of our marketed products and services. This is done at the time of incorporation of new suppliers, as well as in certain cases, according to the analysis of the level of criticality. After a comprehensive evaluation of the supplier, all the multidisciplinary information is consolidated and a ratio is calculated, which will determine whether the supplier is critical or non-critical, and the way in which it will be evaluated and its periodicity will depend on this.

In this assessment, several attributes are analyzed, which allow to score the service from the profiles of the requesting area, as well as from purchasing, quality, safety, environment and energy. Some of the attributes evaluated, according to the level of criticality, are the following:

• Possible health and safety risks, derived from the type of input or service to be acquired, such as handling, storage and use
• Infrastructure and facilities
• Documentation, training and adherence to international certification standards

Critical supplier performance evaluations begin in February and conclude at the end of May. The evaluation period corresponds to the service or material “past due” year.
*The evaluation identifies 3 items of significant importance: Compliance with the standard, Impact on the site, the facility or the Company’s image and Compliance with the MSDS (Material Safety Data Sheet).
** Causes not applicable performance evaluation: by critical supplier with biannual condition, By user’s decision, By lack of service in the period and By evaluation of material supplier (does not contemplate environment).

With respect to our contractors, there are safety and environmental requirements, which are set out in the contract bases, within the Normal Purchasing Management procedure Additionally, we are in charge of developing, together with the Universidad Tecnológica Nacional (Facultad Regional Bahía Blanca), a training system (for suppliers and contractors) in environmental issues. Through it, the university provides accreditation of the knowledge acquired, which is supported by the development of reference material elaborated by our professionals.

As signatories of the United Nations Global Compact, we incorporate its principles into our contracting conditions to verify and promote that our suppliers are aligned with the protection of human rights, the eradication of child and forced labor, the elimination of discrimination and the promotion of freedom of association, as well as protection of the environment and the prevention of corruption.

Also, we regularly evaluate and measure the business relationship with them through different mechanisms:

• Annual internal customer survey: to integrate all areas involved, in order to evaluate and improve the management of internal processes.
• External audits to partners and entities contracted by the Board of Directors: exhaustive evaluations are carried out, from which improvement actions arise.
• Internal audits of the Integrated Management System: to verify that the services provided comply with certain regulations.
• External audits of the Integrated Management System: these are carried out by quality agencies, which evaluate compliance with the Integrated Management System.