New pattern of Argentine farming: Heavy on science and light on assets

Facing the adverse environmental factors, higher taxes, galloping inflation and etc, many Argentina’s agriculture groups have adopted different management strategies. El Tejar, once Argentina’s largest farming group and still the largest in the Americas, moved its headquarters to Brazil.

Los Grobo, a family-owned firm and the second-largest grain producer in Latin America, can be traced to 1915. It has chosen a different strategy metamorphosis - heavy on science and light on assets. Instead of decamping to Brazil, Los Grobo has sold its Brazilian operations and bought Agrofina, an Argentine crop protection company.

Whereas most of his rivals focus solely on grain production, Mr Grobocopatel, the chairman of Los Grobo, describes his company as a flexible “one-stop shop” that also provides other farmers with supplies, financing, trading services and transport.

Los Grobo’s production branch, which reaped nearly $150m in revenues in the 2012/2013 harvest, is also more nimble than most traditional grain operations thanks to its lack of overheads. The company does not own a single shovel or acre. Instead it leases machinery and land from others.

This outsourcing model is now used for nearly 60% of farmland in Argentina, where strong property-rights protection and inheritance laws make it ripe for leasing. Los Grobo is credited with pioneering its application on a large scale. Since the 2004-05 harvest, Los Grobo has rented at least 170,000 hectares of farmland. In its peak year, 2010-11, it leased 320,000 hectares in Argentina, Brazil and Uruguay on which it grew wheat, oilseeds and Argentina’s most popular crop, soyabeans.

At the same time as it was shedding its physical assets, Los Grobo invested heavily in developing new technology and cultivation techniques. It was one of the first big groups in Argentina to champion no-till farming, a technique that reduces soil erosion. It was also an early experimenter with genetically modified seeds. Both methods have since been widely adopted across the country.

Besides wheat and soyabeans, many of Los Grobo’s rented fields are being planted with sensors that send real-time data about soil temperature and humidity to the firm’s managers, to help them monitor the crops. Mr Grobocopatel sees scope for spreading his high-tech, low-asset model across South America and beyond: “Farming based on knowledge rather than assets will change the paradigm of agribusiness,” he says. “This is the model that is most appropriate for difficult places with inefficient or nascent farming sectors. If applied on a large scale, keeping in mind sustainability, innovation and organisational efficiency, it would mean a revolution.”