News

A descendant of Ukrainian emigrants, Argentine businessman Gustavo Grobocopatel created a successful model of agribusiness. The case of Grupo Los Grobo SA founded by him is studied in the best business schools in the world.

Los Grobo, one of the largest producers of agricultural products in Argentina, loves jeans and plaid shirts. At the meeting with the journalist Landlord, the Latin American multimillionaire came without changing his style. The founder of the group of companies Grupo Los Grobo SA, the leader in the production of wheat and soybean in Argentina, Gustavo is pleased to talk about the unique business model that he developed and for 20 years brought to perfection in his holding. He calls himself a simple farmer and fully complies with this image, despite the fact that the annual income of his farm exceeds $ 1 billion.
On the example of their companies, which form Grupo Los Grobo SA, an Argentine businessman with a rather unusual name for the Slavic ear managed to prove that agriculture is a branch of intellectual and not physical labor. The business model developed by him is studied in universities and business schools, in particular at the Harvard Business School.

What is the essence of this model? Los Grobo, the lion's share of the profits, reinvests in the construction of a network company, the development of personnel and the introduction of innovative technologies. In expanding the land bank and increasing the fleet of equipment, he invests, only making sure that the company is perfectly coping with the existing scale. "First quality - then quantity," - so it sounds Gustavo's basic business rule.

The principle of deep qualitative development, according to the Argentine, should work at the level of an individual. It is important that each person develops his abilities and talents. One of Gustavo's serious hobbies is music. He started singing as a child, and while studying at the University of Buenos Aires, he took voice lessons from the famous singer, pianist and music teacher Lucia Maranka. About 20 years ago Gustavo founded with two musicians the trio Cruz del Sur ("Southern Cross"), performing Argentine folklore. He also performs classical works of Argentinian composers of the 20th century. The last concert took place at the Argentine Embassy in Paris in late April this year.

"In Argentina, Grobocopatel is known for his business and songs," notes Pedro Lacques, his friend and long-time business partner.

The birth of the network

Company Los Grobo 23-year-old Gustavo created in 1984. The family business graduate of the School of Agronomy at the University of Buenos Aires began with his father, who owned 3,500 hectares of land. Then they were joined by Gustavo's sister and wife. The family was not a beginner in agriculture, working in this field for several decades.

At the beginning of the 20th century, Abram Grobocopatel, Gustavo's great-grandfather, came to Argentina from Kamenetz-Podolsky with his wife and five children, fleeing persecution of Jews in the Russian Empire. In the city of Carlos Casares, 300 km south of Buenos Aires, immigrant Jews founded a colony and started farming. Baron Maurice de Hirsch helped them in this, acquiring and giving the land for use. So has received the first 15 hectares and a family of Groeps.

In the first years of his work Gustavo combined business development with the teaching of agronomy at the University of Buenos Aires. In the late 1980s, he went to study in the US for a month, where he got acquainted with innovative soil cultivation technologies. Most of all, he was impressed by the technology of zero tillage, which was perfectly suited for agribusiness in Argentina.

By the beginning of the 1990s, this technology had already been applied on all lands treated by Los Grobo. In 1994, the land bank of the company reached 75,000 hectares. By that time, Gustavo's business was staffed by an army of highly qualified specialists. During hyperinflation in Argentina, agribusiness was an island of stability because of high prices for agricultural products in the world. Many talented people from other industries came to him.

Gustavo stopped buying land and equipment. Fields and tractors Los Grobo rented. "We are directing all the money to develop managerial skills, and we are very effective in terms of returning invested money," says Gustavo. "We do not need too much capital, because we do not buy land."

This allowed the entrepreneur to create a flexible business model that quickly adapts to various risks, from the weather and ending with political instability. "Traditionally, any agroproduction consists of three factors: land, work and finance. Los Grobo offered to enter the market with a leasing model, in which it introduced financial and working capital, "said agronomist Guido Carrillo, who researched the company's business model.

In addition to outsourcing, the second basic principle on which the work of Los Grobo is based is the development of human resources. From his youth Gustavo was fond of various theories of management. He was greatly influenced by the work of the economist Peter Drucker, who introduced the concept of "worker of intellectual labor" into science. The Argentinean came to the conclusion that knowledge and new technologies are what makes agribusiness a success first, and its main asset is people.

So the network of Los Grobo began, in which now employs about 1000 company employees and 5,000 partners. In addition to its own agro-production, the company provides a full range of services for farmers, in particular, technical expertise, counseling, and lending. In order to coordinate the activities of employees, customers, partners and suppliers, Grobosoft software was launched in 1998, and in 2001, Los Grobo was the first agribusiness company in the world to pass to ISO 9001, a management system for international standards used in industry. "We worked hard for two years to adapt the ISO 9001 quality standard," Gustavo admits.

Now all the partners of Los Grobo are trained before accessing the network, and then they are audited for compliance with this standard. In addition, the company invests a lot of money in the development of employees, encourages them to become businessmen themselves and gives them initial financing, actively cooperates with universities. 
In addition to the office in Buenos Aires, in 2003, Los Grobo opened an office in Carlos Casares.

Entering the continent market

Since 2004, Gustavo has launched a new strategy to turn Los Grobo into a global company, launching agribusiness in Uruguay and becoming the second largest soybean producer in this country. In 2005, he entered the market of Paraguay, and in 2007 - Brazil.

In 2010-2012, Los Grobo processed about 250,000 hectares of land, collecting 2.6 million tons of grain annually and becoming one of the largest producers of wheat and soybeans not only in Argentina but also in Latin America.

But a number of negative factors in recent years forced Gustavo to drastically reduce agricultural production. Two strong droughts in 2009 and 2012, as well as an increase in export duties on agricultural products in Argentina made this business much less attractive. Now Los Grobo is processing about 50,000 hectares of land. 
Gustavo also decided to concentrate his business in Argentina, selling the company in Paraguay in 2012, and in 2013 - in Uruguay. His business model did not work in these countries the way he wanted. "In Paraguay, the weather is very volatile," explains Guillermo Rossi, an economic analyst with the non-profit association Bolsa de Comercio de Rosario. "In this country, Los Grobo also had problems with storage and transportation."

Future plans 
Businessman Pedro Lacou has been cooperating with Gustavo for over 20 years. His company Quesos la Suerte de Lacau grows wheat, soybeans, corn and sunflower, has six dairy farms, a cheese factory, is engaged in the production of beef and poultry meat. "In 1995, we with Los Grobo rented a farm for growing grain. Engaged in this about six years - says Pedro. "We also sold corn, soybeans and beef. From year to year we have done a lot together and continue to cooperate now. "

But the ways of development of the two companies are increasingly diverging in different directions. If the company Pedro, as before, is focused on the production of agricultural products, although revenues from this in the past five years, according to his confession, were small, then Los Grobo focused on processing. Gustavo is one of the largest flour producers in Argentina, has factories for the production of pasta and flour products, produces and sells seeds, fertilizers and plant protection products.

"Our business is changing," notes Gustavo. "We reduced the production of agricultural products, but we increased the agrochemical business."

Los Grobo actively continues to invest in science and new technologies, as well as engaged in biotechnology research, creating a company with partners Bioceres, develops accurate agriculture, based with the state satellite company INVAP SE technological platform Frontec. Gustavo hopes that with the help of space technology he will be able to increase yield by 30%. Like the other players in Argentina's agro market, he is optimistic about the future after the new president, Mauricio Macri, came to power in December 2015. The president abolished export duties on wheat, corn, sorghum and barley and reduced them to soybeans from 35 to 30%. "Next year we will definitely increase the production of corn and, possibly, wheat," Gustavo said. "And I think all the agricultural production in Argentina will increase - by 20% per year and by 50% within three years."

The strategy of turning Los Grobo into a global company has not changed. However, experts note that the specifics of its work need to be adapted to each individual country, taking into account local peculiarities. "I think that this type of business model was created at a certain point in the development of our country and it is difficult to accurately copy it somewhere else," says Rossi.

--
Original article published in landlord.ua (7/26/2016)