MercoPress. South Atlantic News Agency

Argentina's soy king explains modern farming and taxing

Argentina's major soy businessman Gustavo Grobocopatel said that “modern farming has nothing to do with rich against poor”.

Contrary to widespread belief, soy king Gustavo Grobocopatel's business is not directly the widely demonized agricultural pools (he defines his activity as the design of networks for the provision of farming services) but he sprang to their defense anyway, describing them as the key to "making the small big". Speaking as honor guest at the Buenos Aires Club de la Unión Nacional, Grobocopatel deplored export duties as being hardest on the smallest farmers and marginal production (a position he has maintained for the past four years, not months), preferring a fixed land tax over even income taxation. This was not a bid to lower state revenues, he said â€" taxation could even be higher than the current 30% of Gross Domestic Product if the economy grew sufficiently. But growth was the bottom line â€" the creation of wealth and the addition of value rather than the current "redistribution without inclusion" â€" and a protein-hungry world offered opportunities which other South American countries were only too eager to grasp if Argentina passed them up. But beyond the Argentine farmers stand off with the government of the past last four months, Grobocopatel detects deeper flaws in Argentine attitudes â€" the notion of politics and macro-economics as a zero-sum game rather than a win-win situation, the perception of wealth as being the result of luck not effort and the accompanying "cortar cabezas" (knocking heads off) mentality. Asked if this year's farm crisis has changed his investment plans, the soy kingpin replied in the negative but this should not be seen as a vote of confidence in current policies â€" in the past two or three years he has been shifting the focus of his group to Brazil. In the course of his speech, Grobocopatel proceeded to demolish various stereotypes about the farming sector in a changing and globalized world (about which last week's Argentine Congress debate revealed widespread ignorance, he pointed out). Farmers no longer necessarily come from rural families and, despite the government's frequent use of the word "oligarchy," 80% of today's major producers in Argentina had little or no land 10 years ago. Around half of farmland was in the pool network with modern management, Grobocopatel said â€" the segmentation into big and small farmers in the brand-new law did not match the agricultural reality of product clusters. Know-how, competitive skills and teamwork were the keys to successful farming today â€" it is not rich versus poor but the smart against the others. Nor were there even that many farmers in the agricultural sector. There are continuously less farmers (their numbers have been declining since 1960, in fact) and more services â€" the number of trucks on the roads in Argentina has exploded from 300,000 to 700,000 since 2002 (60-70% transporting grain) while in the same period there were around 100,000 less farmers. Despite his criticisms of Argentine government policy, Grobocopatel does not deny a state role or trust blindly in the free market (which lags behind monopolistic practices here, he said), unlike many overawed businessmen. Corporate social responsibility has also become a core business strategy (far more than a good sales or operations manager) since business must tap society to recruit clients and talent. Replying to questions, Grobocopatel made the claim that soy actually improves the soil beyond conservation and asserted that the exchange rate is neutral for farmers since their costs are heavily dollarized. Asked about the proposed land rent law, he said that it had some positive aspects but its social clauses were insane in the capital-intensive agriculture of today â€" he further explained that a majority of farmers had been hit especially hard by the soaring export duties because they had paid higher rents at the start of the year on the expectation of increased soy earnings which were now being taxed away. (BAH).-