Buenos Aires | Reuters –– The company that led the breakneck expansion of Argentine soy cultivation over the last two decades has quietly reduced the area it farms by more than half as inflation, trade restrictions and high taxes drain growers’ profits.
Los Grobo, once known as the South American country’s “King of Soy” has abdicated that throne in favor of what company president Gustavo Grobocopatel deems the future: biotechnology.
“Farming in Argentina is barely profitable, or unprofitable, because costs have gone up, grain prices have gone down and the tax burden is exorbitant,” he said. “It’s become subsistence farming.”
Among Argentine farmers’ problems are double-digit inflation, heavy foreign currency and import controls; a strict quota system for exporting corn and wheat; and a 35 percent tax on soybean exports.
Los Grobo has slashed its farm area under management to 50,000 hectares (123,553 acres) from 120,000 hectares three years ago.
“Farming has become a smaller part of our business while the services and industrial part has increased,” Grobocopatel said. “Growers need logistics, financing, risk management and transfer of technology and know-how. We want to be the one-stop shop.”
Hope is high among growers that October’s presidential election will usher in farm policy changes. Whether or not that happens, privately held Los Grobo reckons farmers who stay in the game will need more and better advice than ever.
“We are investing a lot in research and development,” Grobocopatel said. “Advances in farm technology over the last 20 years will be small compared with what’s coming over the next 10 years.”
Argentina remains the world’s No. 3 soybean exporter and No. 1 supplier of soymeal livestock feed.
“Through biotechnology, today you can design plants the way you design objects,” Grobocopatel said.
That includes precision planting, which identify what crops need on a square meter-by-meter basis. “What the microscope did for medicine, this will do for farming,” Grobocopatel said.
The three candidates mostly likely to win the presidency in October — Buenos Aires Mayor Mauricio Macri, provincial Governor Daniel Scioli and Congressman Sergio Massa — all promise farm-friendly reforms.
Incumbent Cristina Fernandez, who has fought for years with farmers over her policies, is barred from running for a third consecutive term.
Grobocopatel said simple tax and trade policy shifts could help Argentina increase yearly grain production from 100 million tonnes currently to 160 million over three or four years.
— Hugh Bronstein reports for Reuters from Buenos Aires.