November 29, 2018
The King of soy Gustavo Grobocopatel waits for golden times
Soybeans in Argentina Argentina is one of the largest soy producers in the world. Farmers are preparing for a lucrative year, as China no longer buys soy from the US, and it seems to have a good harvest.

Drizzle falls on an endless surface full of bright green soy plants. The round leaves flutter in the spring wind. "It's good times," says farmer Ariel Dario, as he sends his tractor into a nearby field full of golden wheat stalks. The previous harvest failed because Argentina was hit by the worst drought in 50 years. "Everything was here to waste, dried wheat, soy, corn. It looked like a battlefield. "But this year it will be a better harvest, he knows.

About a hundred kilometers outside of Buenos Aires, on both sides of the Pan Americana, the long highway that leads to the north of the country, are fields full of wheat, corn and soya. Argentina is the largest soy producer in the world after the United States and Brazil. Of the total agricultural production of about 130 million tons per year, on average more than 53 million tons of soy. Most of it is exported.

"Soy is our green gold", says Gustavo Grobocopatel (55) smiling. His grain company Los Grobo is one of the big soy producers in the country and Grobocopatel is called the 'soy king' of Argentina. He was a pioneer in the field of soya production in the late nineties. He stood at the cradle of the big soy tree that pulled Argentina out of the 2001 crisis. The demand for soy increased dramatically when the Chinese middle class began to grow and massively began to eat pork. "Because of the mad cow disease in Europe, soy became popular as food for the cattle and we saw opportunities", says Grobocopatel, a cheerful, ruddy Argentinian whose Russian-Jewish ancestors came to Argentina in 1912 as migrants. Under his leadership, the modest family business grew into a billion-dollar company with production on 350,000 hectares of land.

New crisis

Although Argentina is (again) in a deep economic crisis and President Mauricio Macri has sought refuge with the International Monetary Fund - he has signed an unprecedented high loan of $ 57 billion - the prospects for agriculture, especially for the soya sector , favorable.

That has everything to do with the trade war between the US and China that broke out earlier this year. US President Donald Trump has set import tariffs on Chinese products, including steel and aluminum. China has responded with a ban on the import of soy from the US, the largest soy producer in the world. "China was buying soya elsewhere. First it bought Brazil empty. And now it also buys soy from our country ", says Grobocopatel.

The Chinese demand for soybeans is so great, and the loss of the previous harvest so extensive that Argentine producers were forced to buy soy from the US, and then to sell it to the Chinese. For example, American soya is surprisingly enough to end up in China.

The big question is what will happen during, and after, the coming G20. It will start on Friday in Argentina. The trade war, which has an increasing impact, is one of the major themes.

"President Macri has a number of meetings with the Chinese top delegation afterwards, and he will probably try to use the favorable trade climate with the Chinese to also sell soya oil and soya meal at good prices to them," says Regional Director Marnix van Iterson of ING in Argentina. "Now the Chinese only buy the soya beans and process them into soya products in their own country." ING provides loans to mainly agricultural customers in Argentina. "Macri will have to change. He will want to do business with the Chinese, but at the same time he has to keep his ally Trump friend. "Trump has great influence within the IMF, where Argentina is so heavily financially leaning on. "He will be tactical," Van Iterson thinks.

'Deal ahead'

Experts take into account that the trade dispute is solved during the summit. "However favorable this trade war seems to be for countries like Brazil and Argentina, it causes international uncertainty. Nobody knows what it will lead to, "says Rogier Kievit, former regional manager Argentina of the international trading company Nidera. Nowadays he runs online platform Agree Market where farmers can trade soy.

"There is a big chance that a deal will come and new tariffs will be established that both countries can agree with". said Kievit. "It would be beneficial for Macri if the trade war was resolved during the G20. Then he can say that there was a breakthrough during a summit of which he hosted."

In the meantime, the Chinese are also gaining more and more control over the Argentine soy sector itself. For example, in Rosario, an important soy area with ports from where a lot of soy is shipped abroad. Chinese companies have interests in Argentine producers of soya seeds and are buying into banks that provide loans to Argentinian soy companies. China is becoming increasingly important for Argentina. "More and more beef is also going to China," says ING director Van Iterson, "there is not only a soy revolution." In fact, the Chinese market is growing enormously in several areas.

Soy King Grobocopatel prepares itself for a good harvest, now that the weather conditions are better. Last year total production in Argentina fell to 36 million tons. "We can overcome that blow. If the climate remains good, we will take that loss."

The soy plants around the Pan Americana are still low, but the farmers are hopeful. "I can already see from the leaves that things are going well, the color is good, the soil is not dry, says Ariel Dario. "It will be a nice harvest", he repeats, while he continues on his tractor.

Published by: (Holanda). Por Nina Jurna.
Automatic translation from dutch.

Go back