Nov. 3 (Bloomberg) -- Los Grobo SA, Argentina’s second- largest soybean producer, plans to double its land holdings over the next three to four years to remain competitive as global demand for food increases, said its chief executive officer.

“Our farmlands currently cover 250,000 hectares and we believe the company should operate twice as much land in three or four years’ time,” said owner and CEO Gustavo Grobocopatel, 48, in an interview yesterday in Buenos Aires. “Growth will have to be mainly through Brazil because Brazil is where there is the most physical space available to grow.”

Brazil and Argentina are the world’s second- and third- biggest producers of the oilseed, behind the U.S. Both countries expect record crops in the 2009-2010 season. Brazilian farmers are expected by Safras & Mercados to plant 22.8 million hectares (56.3 million acres) of soybeans this year, while Argentina farmers are projected by the country’s soybean association to plant 19 million hectares (46.93 million acres).

“In Argentina there are only 3 or 4 million hectares left to expand crops and they are mostly marginal areas, while in Brazil there are 20 million hectares of prime quality farmland ready to be developed,” Grobocopatel said. “The price of land is important, but just as important is the degree of development of the agricultural industry and in Brazil it is well developed.”

Family owned Los Grobo operates in Brazil in partnership with the investment fund Vinci Partners. Los Grobo has 50 percent of its production in Argentina, 30 percent in Uruguay and 20 percent in Brazil.

Expanding Production

Los Grobo produces 2.5 million tons of soybeans a year. The company is targeting output of “at least 4 million tons over the next four years,” he said.

The Argentine government’s export tariffs on grains and soybeans curb investments by small producers, Grobocopatel said, adding this isn’t the reason he prefers to invest in Brazil.

“Argentine production can be increased with better production systems and improved technology to increase production rates, but this requires investments and export tariffs block them,” said Grobocopatel. “This is mostly a problem for smaller producers rather than larger companies like us, because we already use better technology and techniques.”

Grobocopatel said his company doesn’t yet have an investment plan for its expansion.

“Over the years we have used all kinds of financial instruments, from investing our own capital to going to the market,” he said. “Our latest expansion was possible through contributions from partners.”

Management, Courses

Los Grobo rents most of the farmland on which it produces. The company also manages small-scale soybean farm networks and conducts management courses to improve farming techniques.

Soybean futures for January delivery gained 10 cents, or 1 percent, to $10.08 a bushel in Chicago, after touching $10.18, the highest since Oct. 26. Yesterday, the price rose 2.2 percent, the steepest increase for a most-active contract since Oct. 21. Futures dropped 3.1 percent last week.

Saladillo, Argentina-based El Tejar is the country’s biggest soybean producer.

To contact the reporter on this story: Rodrigo Orihuela in Buenos Aires at rorihuela@bloomberg.net.

Last Updated: November 3, 2009 13:25 EST