Global Crop Inputs Industry: 6 Things To Watch For in 2020

The AgriBusiness Global Advisory Board met during the AgriBusiness Global Trade Summit held this year at the Harrah’s Resort in Atlantic City, New Jersey.

The AgriBusiness Global Advisory Board comprises some of the industry’s most experienced and talented executives in the crop inputs. Each year during the AgriBusiness Global Trade Summit, we bring the group together to get their thoughts on issues – trends, disruptions, changes — facing the industry and to look at where it’s headed.

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This year’s meeting was held at Harrah’s Resort in Atlantic City, New Jersey. The far-reaching discussion covered a wide range of issues facing the crop inputs industry. Below are some insights from the collective wisdom.

The Unknown Impact of a SinoChem / ChemChina Merger

If Chemchina and Sinochem merge it would create a $100-billion company, by far the largest crop protection company in the world. This comes on top of the ChemChina’s $43 billion acquisition of Syngenta. According to the AgriBusiness Global Advisory Board, the only way that new entity could make money “is to play monopolist.”

Jason Mann, AgraCity (R) and Nicolas Potrie, Tafirel

With a substantial portion of chemistry coming out of China, a ChemChina/Sinochem could control a significant portion of product. As one Advisory Board member put it: “That’s where the world’s chemistry is coming from, very vulnerable. If you know where operations are can make judgments.”

One challenge of such a merger, is to figure out how to detangle the companies’ product lines.

The Impact of Consolidation

While a ChemChina/Sinochem merger would likely have a profound impact on the industry, previous consolidations over the past couple of years are still working their way through the system. The merger of Dow/DuPont, now Corteva; Bayer’s acquisition of Monsanto and the aforementioned ChemChina pickup of Syngenta are all still playing out in a number of ways throughout the crop input world.

The past several years has already seen a slowdown of new AIs entering the market. Instead they seem to focus more on new formulations. It will be interesting to see how generic companies respond to products coming off patent.

As consolidations continue to play out and as the companies divest their overlapping solutions, products should be come available for smaller companies to pick up.

Impact of the Glyphosate Verdicts

Bob Fairclough, Kleffmann Group

One has to wonder if Bayer executives are regretting their decision to buy glyphosate. Currently the product is so pervasive, it would be difficult, if not impossible, for the industry (and of course growers) to simply stop using the product. But it’s certainly easy to see regulatory opposition to the product growing.

In Europe, three countries carry weight, France, Germany, and UK. Most of Europe wants to keep glyphosate, but the EU will look at it again and science will hopefully prevail, shared one Advisory Board member. Brazil tried to ban glyphosate, but that lasted a mere 24 hours.

Some discussion was had on how the industry should be addressing the lawsuits. To date the message has been to trumpet science over emotion. It hasn’t been working. Currently, only Bayer is facing lawsuits, but the question came up about how long it would be before activists started going after any company that produces glyphosate.

One suggestion was for Bayer (and other supporters) to go on the offensive, to sue activists seeking damages for lost profits. “Fighting fear with science doesn’t work.”

Jim Delisi, Fanwood Chemical Inc.

Disruptive E-commerce

Farmers Business Network (FBN) has seen its share of press and has certainly forced parts of the supply chain to sit up and take notice. So far, it seems, that organization’s impact on crop protection has been minimal.

As one Advisory Board member put it: “On the crop protection side, I haven’t seen companies making money.” It seems the one e-commerce model that works has been Nutrien. “That’s the one that could disrupt. They also control fertilizer, which is a bigger market, they have the wherewithal.”

As another member put it, “I’m not afraid of FBN because I can deliver to grower in 2 hours. “FBN can’t do that.”

It might be a challenge for the biological side of crop inputs which require “a higher service level, a more consultative sale. You’ve got to handhold to get biologicals to work in a pragmatic way. It’s not going to happen if you go to Amazon.com.”

Precision Application is Coming Faster than Anyone Thinks

Precision agriculture is “going to be farm driven and a faster, harder change than anybody believes,” one Advisory Board member suggests. “There is an enormous amount of money flowing into companies in precision application tech. Think about the ’90s when you didn’t have Internet, now you do. It’s going to be like that only quicker.”

The questions the industry faces is, “How are we going to help it happen so we can be part of that change?”

Melissa McCann, Adama (L.) and Stephen Pearce, AWP Associates & Bancella Ltd

“What are we doing to help that value chain, whether it’s through original equipment manufacturers, chemical manufacturers, new service models, push through manufacturing? What does that (new) value chain look like?”

“If you’re in drone business, it’s a one-time sale for quite some time. Drones coming from outside of industry, I don’t sense OEMs are interested because it’s a one-time sale. There’s not enough money.”

The solutions that will be successful will have integrate into the existing technology. It’s not the OEMs that have that know how. It will be the members of the crop input supply chain that will have to provide it.”

“The trigger point hasn’t come yet. Until we reach that trigger point when it balances out time and financially, we aren’t there yet.”

The other drivers could come from government, consumer demands, labor issues, residues, and the need to track inputs to understand land loss and soil health. that are drivers. Finally, the push could come from regulatory authorities or even supermarket chains appeasing their customers.

Editor’s note: For more on this, attend the Precision Application Asia Conference, where we’ll discuss how crop protection formulations, volumes, and use scenarios will change amid a potential disruption.

China is Still a Wildcard

China continues its efforts to crackdown on manufacturers. The government’s efforts will reduce the number of chemical parks in Jiangsu Province from 50 to 20 in two years, and chemical factories from 7,000 to 2,000 during that same time and then to 1,000 by 2022. Currently Jiangsu province accounts for 40% of the synthesized AIs. Across the country there are 600 chemical parks.

The full implications of these changes have yet to be seen or felt. India might be able to pick up some of the slack, but it’s unlikely and unexpected to be able to make up any shortfalls caused by China.

Members of the AgriBusiness Global Advisory Board:

  • Dr. Bob Fairclough, Kleffmann Group
  • Jim Delisi, Fanwood Chemical Inc.
  • Diego Taube, Chempro SA
  • CS Liew, Pacific Agriscience Pte Ltd
  • Guido Azzari, Central America Toll Manufacture & Logistics, S.A.
  • Jason Mann, AgraCity Crop & Nutrition
  • Stephen Pearce, AWP Associates & Bancella Ltd
  • Nicolas Potrie, Tafirel
  • Antonio Calabrese, Anasac
  • Daniel Traverso, Anasac
  • Bob Trogele, AMVAC Chemical Corp
  • Melissa McCann, Adama
  • José João Dias Carvalho, knoell

Members unable to attend:

  • Giuseppe Natale, Valagro
  • Kevin Fry, Fry Brothers Fertilizer & Chemical
  • Dan Custis, Advance Biological Marketing
  • Subhra J. Roy, Rallis India Limited