Los Grobo in the Media
The picture is dominated by flat family houses, children are cycling on the street. But the village located 240 kilometers east of the provincial capital Córdoba is all the richer in resources. This is where the gold of Argentina is growing, as on about two-thirds of the agricultural land in the country: soy. Around 18 million hectares are now planted in Gosoja in Argentina. This makes the state - after Brazil and the US - the world's third largest producer of soybeans. While 54 million tonnes were harvested in 2010, the number increased to more than 60 million tonnes in 2015. But since then, the value has fluctuated between 53 and 58 million per year, of which the majority, together with the by-products, goes into export. In 2016, soybean meal, soybeans and soybean oil accounted for 31.3% of Argentine exports, at $ 17.34 billion. With soybean meal - this is obtained by crushing the soybean - Argentina is even export world champion. Especially pigs, chickens and cows in the European Union and China are fed with the protein-containing by-product in the fattening industry. For years, China has been the largest buyer of Argentine soybean.
Martín Roggero looks at his land, grabs a soybean - and breaks it open. "Agribusiness is not lucrative. The profit margins do not cover the associated risks. In the past five years, there have been four major floods in Freyre. In addition, here half of the acreage is leased, the cost is far too high, "says the farmer, who is in his 40s. The crux: The rent must be paid in any case, even if more than half of the harvest is destroyed. This rule applies to both smallholders and large agricultural companies. Roggero is a "newcomer" in the soya business. Although he built so far together with his brother and sister on 100 hectares of soybeans, corn and wheat, the majority of the reason was intended with 300 hectares but as pasture for dairy cows. Thus, the family earned their money for more than 75 years. She produced 80,000 liters of milk last day per day, at a price of $ 0.28 per liter, no bad business. This is now being restructured step by step - which was not an easy decision, Roggero says. "Due to the floods, the trucks could not drive to the fields and transport the milk. For the past three months, we have been concentrating on soybeans, "says the agronomist, who also works as a consultant at Coop Agricola Ganadera and Consumo Freyre Limitada. The cooperative is made up of 150 small and medium-sized producers from the region. The farmers sell their grain-derived earnings directly to the cooperation, which in turn delivers them to the financially stronger Asociación de Cooperativas Argentinas (ACA). In the ports of the country, for example in the third largest Argentine city of Rosario, ships with 3,000 tons of soybeans are loaded and shipped, mainly to China.
The soybean business is by far not as time-consuming and costly as a cattle breed. Meaning: sowing is done once a year, twice a year the plants are sprayed with pesticides. Harvest is from March to May. The agricultural machinery leases Roggero from local entrepreneurs. "On average, 2.8 tonnes per hectare are harvested in this region every year. For a ton you get 300 US $. That's a good price, two years ago it was $ 150, "says Roggero. But almost half of it, 1.3 tons per hectare, goes into the lease. The lease price is calculated here based on the soybean harvest.
So Roggero does not seem to be (yet) satisfied. More than 20 years ago, local farmers saw things differently: At that time, the soybean in Argentina really became a blockbuster and the farmers made good money on it. The US genetic engineering group Monsanto entered the scene and Argentina was swamped within a very short time with genetically modified "Roundup Ready" seeds. The company was strongly supported by the then neo-liberal government led by Carlos Menem (reigned 1989-1999). This not only because the group renounced "replication fees" (farmers only pay for the first purchase of Roundup soy); Rather, also beckoned rich government revenue. The International Service for the Acquisition of Agri-biotech Applications (ISAAA) calculated that Argentina generated $ 65 billion between 1996 and 2010 due to the Roundup bean. The bean is resistant to the herbicide glyphosate (broad spectrum herbicide, note), while the plants and insects around it die. The cultivation became thus cheaper, more efficient, faster. Over time, however, the grasses became resistant to the herbicides, more had to be sprayed and production costs increased. "Today, 100 percent of genetically modified soy is harvested in Argentina," says Roggero. This led in some places to a violent outcry. Doctors and residents in Ituzaingó in the Buenos Aires region reported increased numbers of cancers and malformations caused by the chemical mix. Corporations like Monsanto are resisting these allegations. A little later, we are sitting in the house of Roggero at a wooden table in a small kitchen with a couch and a large fridge. He shows a YouTube video with huge amounts of water in Freyre. He does not seem embittered, he grins, as we tell him from the interview with the Argentine "soy king" Gustavo Grobocopatel: "You speak to the largest soy producer in the country - and now you sit at my house?"
Roggero's reaction shows that Grobocopatel has shaped Argentinean agriculture more than 25 years ago like no other. The advancement of no-till and the increasing digitization of the industry are attributable to him. In the case of "Siembra directa" (direct sowing), sowing takes place immediately after the harvest, without first cultivating the soil. The soil is spared, fuel and management costs are saved. At the same time it is easier to dry out the surfaces. 90 percent of Argentine farmers use this method.
"There is no soybean boom. It is protein. Many poor people, especially in China and India, eat more of it than 20 years ago, "Grobocopatel says at the beginning of the interview. We are sitting in a small café in the east of Buenos Aires. Grobocopatel is no longer a pure producer. In 1984, the trained agricultural scientist joined the company Los Grobo Agropecuaria, founded by his father Adolfo (today a division of Grupo Los Grobo, note). Initially, Gustavo was only supposed to handle the technical issues, but his father quickly recognized his sense of business.
In 2001, the junior was finally president and CEO of Los Grobo. Since then, the "soy king" is building the company into a large-scale ecosystem. It covers 80,000 hectares to be cultivated, extending from Argentina to Uruguay and Paraguay, with diversified activities: providing services and technologies to farmers, grain storage, logistics solutions, chemical and fertilizer supplies. Only 10 percent is the production of soy, corn and wheat, but Los Grobo is a heavyweight: it was 400,000 tons in 2017, 40 percent of it soy. Similar to Roggero, Los Grobo leases the bulk of its acreage: "We have developed the business model on a grand scale, so you do not have to own production machinery, labor or capital to be a farmer. Rather, you can lease land, outsource work, and capitalize on investors.
The only thing you need is know-how and management skills. "At Grobocopatel, these characteristics are particularly evident in identifying and engaging in network partnerships: several specialists are being combined to form a larger agricultural project co-ordinated by Los Grobo with ample room for innovation creates. One of the reasons for the rapid growth over the last quarter of a century: In 1984, his father's company still had five employees, a tractor and 3,500 hectares. Today, there are 700 employees, 4,000 customers and annual sales of around US $ 700 million. However, critical voices are also loud: Not every small farmer likes large companies like Los Grobo, Cargill or Bunge to control more and more land.
"We are growing fast. But you have to put that in the right context. The Kirchner government was against our business. It was my dream to create a big, multinational company. But I could not achieve this, "says Grobocopatel.
During the presidence of Néstor Kirchner (2003-2008) and his wife Cristina Fernández de Kirchner (2008-2015), the agricultural sector underwent strict conditions. Because of their motto to keep food for their own people in the country, they sealed off Argentina from the world market. Export taxes and export restrictions on cereals, maize or meat were imposed. In 2006 and 2009, meat exports were stopped for several months, and more and more cattle farmers became soybean farmers (see page 64). Especially soy was seen as a way out of the aftermath of state bankruptcy in 2001. For soybeans so-called "retenciones" (export taxes) of 35 percent were charged. This also affected Los Grobo, as the company exports 95 percent of its soybean production - one third to the EU, China and the rest of the world.
"The protectionist policy has led to big clashes between the farmers and the government," recalls Roggero. Taxes on soybeans under the new Mauricio Macris government (since 2015) are still at 30 percent - especially to halt the rapid growth of soybean acreage. By 2019, however, they should be lowered to 18 percent. Meanwhile, the soybean industry is shrinking; it is less produced today than 2015.
Nevertheless, Macri wants to help agriculture to old strength. According to estimates by the Ministry of Agriculture, production could increase by 50 percent within the next five years. This, in turn, would play a big role for Los Grobo, as the growth rate for wheat and corn is rising: "I will fight to the end to convince people that our inclusive business model is the best way to fight poverty," explains Grobocopatel. And Roggero? For the first harvest season he is happy with a break-even, but in the long run he wants to dedicate himself to cattle breeding: "That's more stable. Because in times of crisis you can also sell the livestock."
This article was published in our March 2018 issue "Food" of Forbes.
(Automatic translation from German)