Gustavo Grobocopatel: “Argentina is a fabulous place to invest in farming”
Gustavo Grobocopatel used to be known as “Argentinean King of the Soybean”. The business of this farmer born at Carlos Casares, a little town in the heart of the Las Pampas, had a fast and incredible growing period during the middle of the ’90s and during the first decade of the 21st century.
“Los Grobo”, the name that popularized the company, developed a business model based in renting the land, running the crops, supply inputs to farmers, and storage and commercialize the grain (own and from third-parties). In his golden years, he expanded his agribusiness model to Brazil, bought wheat milling in both countries, and invested in the poultry business.
Now, most of those milestones are things of the past. Currently, Grobocopatel only own 25% of Grupo Los Grobo stocks, while major shareholders are investment funds, like Victoria Capital Partners. The farm operation remains circumscribed to Argentina; with some warehouses sold as they did with three wheat milling and pasta factories. Gross input rounds $700 million, but the company continues facing large debts which will need restructuring.
During the interview with www.eFarmNewsAr.com, Mr. Grobocopatel shows a clear and pragmatical logic: “Argentina grains output will reach 160 million tons, shortly. This grow implies a large opportunity for us because we are focused on supplying services to the farmers”, he affirmed during the interview.
-What is Los Grobo, currently?
-It’s a company that provides farmers with risk management. Formerly, when we rented the farms, we took all the risk. Now we are sharing the risk with farmers through a percent scheme, where we provide agronomic management, inputs, labors by own or via contractors, and marketing. In some way, we want to reduce farmers’ risk exposure.
-It has been always said that Argentinean is the global most competitive farmer. Do you share this assumption?
-We lost some part of this competitiveness. We (the farmers) are living from innovations and developments from 20 years ago. We are not generating the innovations for the next ten or twenty years.
We were distracted in domestic fights and we forgot to preserve our farming advantages. We need to return to an innovation schedule.
-What is this disruptive technology?
-I’m talking about robotics, artificial intelligence, biotechnology, microorganisms, precision agriculture, etc. I’m talking about a robot that seeds and a robot that learns on its own seeding activity. I was in California, Israel, the MIT, and I could say that are investors paying attention to those innovations.
Photo: Mr. Grobocopatel and www.eFarmNewsAr.com editor-in-chief Javier Preciado Patiño, during the interview
-Do you think foreign investors finally will arrive at Argentinean farming?
-Local farming is admired all over the world. But it needs those macroeconomics indicators that will stabilize it. The inflation, the fiscal and trade deficits or currency turbulences, concerns the investors. But we need local and foreign investment in the farming sector.
-Where investments will arrive?
-In the processing of raw materials, like dairy, poultry or beef industries. For example, if Argentina achieves a Free Trade Agreement with the European Union, it will be the Europeans who will invest in our animal protein industries. Also, China could be a large investor. In fact, they bought Nidera via Cofco and they expanded local operation until they are the largest grain exporter. Furthermore, I’m seeing changes in the dairy industry map as Arcor enters in the La Serenisima operation and Adecoagro will run the SanCor operation.
-Is the land in Argentina an attractive asset to investment?
-Really, I’m not a guy who likes to buy land. I don’t like to immobilize capital. I prefer the flow of the money. But, answering your question, the price of the land is in a relationship with the cash flow it generates. Also, the land is a refuge for capital. Many people have this point of view.
-But, what about land prices in Argentina?
-At the beginning of the century, prices rose dramatically. Lands in Argentina had the same value that in the United States. But after the 2008 crisis, prices began to slow down, and currently, Brazil lands are more expensive than ours. Anyway, there is an absurd law in Argentina that limit to foreigns acquire more than 1,000 hectares. I hope representatives modify this law soon.
-Do you think that beef chain is a good place to invest?
-Of course. Argentina does a difference in this area. We have good weather condition -in fact, no snow in the Pampas- high qualified human resources and a trademark well recognized at a global scale. Beef meat will be a specialty in the future and Argentina is in a privileged position.
-Los Grobo controls chemical Agrofina. What do you think about the Argentinean input market?
-Here there is a large market, maybe 2.8 billion dollars and the market is expanding. From Agrofina we supply generic chemicals but no commodities, something like “specialties generics”. But a key asset we have is the access to the farmer, the capillarity of our network that permits us to provide services to them. We have an effective strategy for marketing our products.
-Finally, which is your message to the global agribusiness network?
-There are not many places in the world that are attractive for investment in farming. Argentina is one of them and we (Los Grobo Group) have an efficient platform to generate profitability for our shareholders. We plan double the company size in the next four years, doubling gross incomes, the grain commercialized. We consider ourselves as an ecosystem around the farmer and that is our strength.
Source: e – Farmer News