Los Grobo in the Media
By Pablo Ortega. Published in El Cronista
Ten in the morning. Gustavo Grobocopatel meets with OPENING at a café in Palermo, very close to his home. Although at the end of 2016 it sold 76 percent of the company to the private equity fund Victoria Capital, Grobocopatel continues to be chairman of the board and the visible face of Los Grobo, where his family maintains 24 percent of the capital. It also retains the good predisposition always to talk about the business and, in particular, the prospects of local agriculture. "The outlook we have today is of a record harvest, with record yields above budget. This has to do with technology and climate, among other factors. We have overflowed silos, trucks that do not reach; This brings new expectations for the next campaign, "he says, about the current moment. "The most critical thing is that we are living on technologies that were generated in the last 10, 15 years and it is time to start thinking about new technologies here in the next 20 years, where agriculture will be totally different," he says.
What will that agriculture be like?
It will be robotized, with precision agriculture, biological products, better transport. All these investments must be made to remain leaders and not technology takers. In direct sowing there is a lot of technology, silo bags that allow us to have record harvests without needing to have the investment that we would have to make. If there had not been a stock market, the logistics would collapse and a more important investment in capital goods would be required.
Going forward, what technologies will revolutionize the sector?
In the future we will see the convergence of several technologies, Internet of Things, sensors, robotization, seed ready to use, which is the sophisticated seed of biotechnology accompanied by microorganisms, chemical molecules, a lot of things that will come and go to tend to lower production costs and improve productivity and quality.
Is something of that being applied in Argentina?
They are doing some things, but timid, they are advances that are not yet structured. They require some changes in rules of the game, like the law of seeds. In some developments, we need to activate local purchasing to allow small companies to develop. In other cases the problem is financial, we need a capital market that is not developed.
After the decline of the great planting pooles, how is the agricultural business organized today?
They lost importance to planting poles with foreign capital, which are almost gone and were replaced by local contractors, medium or small pooles that are more competitive when there are such restrictions. This process shows that the fear of concentration was not given as it was believed. The business today is structured by smaller pooles and local contractors. In any case, the percentage of leased land is still high, because it is a mega structural tendency of the business, it is a reordering of work, where the most efficient or the one with the most knowledge is the one that manages the management. If the management of agriculture is done by someone who does not know it is very dangerous, because the numbers are very thin and the difference between winning and losing money are small details.
Beyond the core zone, is the sector profitable with the tax pressure it has?
The furthest from the ports are complicated. The profitability this year is going to be good because the yields are good, but usually that is very much in the limit, and after the last retentions. The problem is that there is no savings that can be reinvested in the processing of raw materials. If we had more savings in the interior that money is not saved, it is reinvested in infrastructure, in silos, vans. We need to stimulate the processing of these raw materials in the places of origin, that is a pending account we have to add value. If that were stimulated by the producer, instead of investing in bricks, he would invest more in the chain. That situation remains, it has not changed.
Does stimulating this investment depend only on a reduction in withholdings?
From 2012 to this part we went through a rather dark period. One can not measure what we lost from 2009 to 2015, because we do not realize what would have happened if they had liberated the productive force. Probably today we would not have 140 million tons, we would have 200 million tons with more industrialization and infrastructure. When one measures that, the deterioration is greater. The field could have created much more quality employment. Now there is a reactivation in terms of quantities of volumes and we have to go from that to more diverse products, processed and some other things of the agriculture of the future, post-granary, linked to the fact that agricultural production is not used only to produce grains but for produce energy, bioplastics, cement and other industrial products that come from the plants.
He recently mentioned the potential of pulses. Is it an opportunity for Argentina?
Yes, it is a niche destined for greatness because the world market will grow between US $ 10,000 and 15,000 million and Argentina could be the provider of 50 percent of that. It would be to export US $ 5000 million of a product that does not replace the others but complements it, because the vegetables are double crop per year. The legumes do not take out surface to the soybean, it is possible to do the two things: the legume first and soybean later in the same year.
Is the local industry still very young in that segment?
Yes, we are boys and we have to grow a lot. There are people who are already seeing it but things are not automatic, it requires organization, investment in technology, we must align the private sector with the public behind this goal that is to be world leaders in pulses.
Beyond the border
Is the 150 million tons of grain production a roof?
No, it's going to break. Obviously it could go faster without retentions, which alter the product input ratio because the product is cheaper and the input more expensive in relation, then one tends to use fewer inputs. If what is harvested is worth more, the producer uses more technology, better seed quality. That point has an impact on productivity that could translate into 10, 20 million tons more just by an increase in inputs with zero or minimum retentions of 3 or 5 percent. If we add to that the increase in the area of products such as pulses and others, and the productive advance with precision agriculture, all this without growing on the surface, it is easy to have between 20 and 40 million tons more, it could be close of the 200 million. That could be a roof because, however much we use other technology such as irrigation, we would have to process at least half, which is the great challenge today. You have to make more meat, more dairy. In this post-granary agriculture, a ton of soybeans is worth US $ 300 but a by-product of soybeans can be worth US $ 3000 or 30,000 a ton. Then the net value of the product could grow very much without increasing the amount of tons. It can be transformed into bioplastics, into sugars.
Will that be seen in the next 10 years?
It is quite fast if the productive forces are released, there is savings and capacity to invest. The technologies are already developed and the world demand is growing, so it can be done. There is another point that interests me a long time ago: it is the idea based on the experience of Finland, which had forests and developed a very sophisticated electronic industry to cut wood. From that Nokia was born, that is, it is the daughter of wood. In Argentina there is something similar. The president of Toyota always says that they made the pick-up factory here because there was soy and agriculture, that is, the most competitive automotive industry that exports to the world is the daughter of soy. This means that we have been analyzing agriculture, agroindustry and value chains, but now there are multiple value chains associated creating ecosystems. The highly competitive agricultural ecosystem generates a highly competitive automotive industry, which in turn employs more and more people in the technologies of the new generations: artificial intelligence, 3D printers, IoT. One sees that in agriculture Argentina can be linked more and more with gastronomic tourism in the production of regional foods, there can be a development of Argentine food as in Peru. There are many chains that begin to link with these sectors. If there is more money in the interior, there is more gastronomy, more cultural tourism; that is the way that agribusinesses have to energize the rest of the ecosystems. Obviously it is not the only thing and other chains have to be developed, but the traction is not only of the productive level of grains but of the whole ecosystem.
What horizon do you see for the price of soybeans and other grains?
We have to learn to see prices as a broad and volatile range. As demand increases, production must be increased, which is increasingly difficult to sustain because it is necessary to go to marginal areas with higher production costs. Prices tend to production costs; with the current (international) price between US $ 320/340 we are close to that, closer to the floor than the ceiling. It would not be strange that in the face of production failure in some country prices rise again, not to US $ 600 but to US $ 450. That of 600 was achieved because there was a failure in the harvest and a demand for corn for biofuels, three or four things that lined up. Normally, the price fluctuates between US $ 320/330 and US $ 420/430. There may be some exceptional increase and that range tends to rise because each time the cost of production is higher. With that range and without retentions, there would be a surplus that should be invested in the development of agricultural ecosystems, in postgranary agriculture, in industrialization to be the world's supermarket. In this scenario, the most remote areas change everything. The previous government made the 2020 strategic food plan and said that the Argentine GDP could grow an additional 3 percent with the implementation of these things that we are talking about. It is very relevant. You have to be aware of that and do what corresponds.
How do you analyze the current macroeconomic context?
We are in the short term in an election year, with a hinge choice. Society will have to decide if it wants to change or not, but whoever comes will have to make a series of important transformations to redirect Argentina. If not, deterioration will continue to deepen. The issue is who relies society to make these changes, that in the short term. In the long term, we will have to make a great sacrifice, a kind of post-war economy, and it is very important to have a vision of where we are going and how we are going to see the light at the end of the road.
Do you mean the structural reforms that are being talked about?
Yes, a tax reform, of the State, labor, education. It is what should be done in a post-war economy, and renegotiate issues related to debt. Make a broad national consensus of price and wage growth. It is a broad reflection and a deep commitment.
(Published in the 305 edition of the OPENING magazine, May 2019)
Automatic translation from spanish.