Dubbed the Soybean King, Gustavo Grobocopatel heads a family business, Los Grobo — one of the largest farming enterprises in Argentina. He farms more than 630,000 acres of prime production land in the Argentine pampas, with annual revenues of some $750 milion. Over 40% of the acreage is devoted to soybean production, making him the largest soybean farmer globally.
Los Grobo was founded in 1984 by Grobocopatel's father Adolfo in the town of Carlos Casares, 161 miles southwest of Buenos Aires. The group was one of the major players responsible for Argentina's assent to the position of third-largest global soybean producer. Not only is the group active in Argentina, it also has extensive operations in Uruguay, Paraguay and Brazil.
Grobocopatel is no ordinary farmer. For one, he is landless. Virtually all the land is either leased from third parties or he collaborates with other farmers, providing inputs such as seeds, finance, technical advice and the sale and marketing of crops.
By basing his business model on renting and working with other farm producers, he has grown his business profitably without recourse to large capital requirements. The planting and harvesting is subcontracted out to third parties, comprising a vast network of 3,800 small and medium agricultural suppliers who provide trucking, planting, spraying, harvesting and technical services.
LOS GROBO WAS one of the first to take advantage of the major technical innovations that characterized Argentine agriculture in 1990s: no-till, biotech soybeans and the use of cheaper herbicides.
The group also emphasized the deployment of technology such as GPS and agricultural simulation models to better manage soil resources and deal with climate risk. This allowed them to tailor production inputs to specific locations, reducing input costs and increasing yields.
Grobocopatel, CEO of Los Grobo, credits his success to hard work. “After that, you need to have a wide understanding of what is happening in the sector and what the major trends are. Then you need to adapt the business model and organizational design to the situation. It's crucial to choose good people with potential and ensure that the organization allows them achieve their aims,” he says.
There is a big difference between sowing pools and Los Grobo's model. “Los Grobo basically provides service to other producers, like finance, logistics, risk management, technology transfer and cutting-edge management practices,” explains Grobocopatel.
“We have two core areas of business: industrial — specializing in milling wheat — and agricultural production, where investors have partnerships with our clients. Los Grobo is not a pool but provides services,” he says. “Clients are, in effect, our customers. We help create pools, enabling them to grow. In that sense we could be called the mother of sowing pools.”
Its business activities are currently focused on South America, but over the medium to longer term the group may look at North America. “We currently provide consultant services in various countries,” Grobocopatel says. “The U.S. could be a good place to work. I believe that our network organization model, our development of value chains and clusters may be useful.”
This is part of a series on agriculture in Argentina by John Kennedy, a writer and economic consultant. You can contact him at [email protected].