AgriBusiness Global Report: Adjuvant Market Opportunities and Four Successful Sourcing Tips
12 April 2024 In this episode of AgriBusiness Global Report, Fanwood Chemical President Jim DeLisi interviews Council of Producers and Distributors of Agrotechnology (CPDA) President Terry Kippley about adjuvants in drone formulations, adjuvant market opportunities in Latin America and beyond, and tips for building international sourcing relationships. You can find more information from CPDA at the CPDA Adjuvants, Inerts & Crop Protection Conference in Tucson, Ariz., April 29-May 1, 2024.
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*This is an edited version of the interview.
Jim DeLisi: Are you seeing any interesting opportunities for adjuvants in drone formulations?
Terry Kippley: We certainly are seeing some. As drone use increases in the U.S. and other regions globally, there’s a very important role for adjuvants. You’re using low volume with the setup of the drones. Adjuvants can really help with the drift deposition and compatibility of pesticide products. They are very important. It’s an emerging opportunity.
JD: What’s your opinion on the adjuvant market in Latin America? The U.S.? Growing, slowing down, or where is it headed?
TK: In the U.S., we have a stable market. I think that there’s clearly an emerging need for the use of adjuvants. When we talk to our members, we ask them what is the market penetration for drift reduction adjuvants, and they say somewhere in the 20% area. The biggest issue is the lack of use. But I think as there’s more and more emphasis on climate smart technology and reducing trips across the field, I think adjuvants will continue play an important role. As I talk to our members in Latin America, they’re telling me that it’s a little bit farther behind in the U.S., but that there’s more and more interest as they work to continue with all the development work that’s required to be able to show growers a return of that investment.
JD: Let’s get off adjuvants a little bit and talk about your experience in sourcing active ingredients. With your experience, are there any tips or other things that you could offer folks that are trying to work outsourcing issues with active ingredients that you could offer?
TK: In my past commercial life, I spent nearly 20 years working with Chinese and Indian pesticide manufacturers, and I’ve procured about a half a billion dollars over my time dealing with those factories. And, more importantly, the factory owners.
When I think about sourcing, there’s a couple of key things to keep in mind. I think the first point is when you think about having a sourcing strategy, a common way to go is wanting to be dual sourced or multi-sourced. If you have a supplier in China and have a supplier in India, then the conclusion is that you are dual sourced. However, with the reliance that the global pesticide industry has on China, is your supplier in India buying key intermediates from China? If so, are you truly multi-sourced? If everything goes back to China, and there’s a lot of geopolitical issues, then you are looking at some potential problems. Think about having a truly robust supply chain and strategy that might include different regions.
A second point is fully understanding that U.S. manufacturing relies on offshoring in China and India. Where are you with your marketing strategy? Where do you want to be in the next five years? Have a deep look at your partner offshore. What are their strategic intents? And where do you fit into those strategies for the long term?
Going back 15 years ago, the market was very different. We would ask ourselves, dealing with that supplier, where are they at in terms of their ability to enter markets? Are they content truly being a manufacturer? Or do they see themselves eventually being a marketer? As you think through those strategic questions, it’s going to help you understand who you want to aligned with.
A third important point is that your relationships need to be about trust and credibility. And what happens with that relationship, contract or not, when things go bad? If there is a supply issue, or there’s something in the market where product is short and your supplier is meeting your needs and others, how significantly are you strategically to them? Are you really a partner? Or are you more of a transactional purchaser of their products? And do you have the type of relationship where when you need relief from a financial standpoint, in the post patent world volumes move on very narrow margins, do they have a cost of goods position because the market there is such that they could give a little bit? But then are you really able, when the shoe is on the other foot, to give in return? That always was my definition of a true partnership. You know you can sit in meetings and work with companies, but if they’re willing to give and you have to give in return. I think those strategic nature relationships are important.
A fourth point to consider, things have changed a lot where many companies in China and India have become public. The owner may or may not be there or available during the negotiation of your annual procurement needs. I think you’ll lose something in that scenario. Obviously, when you deal with professional management versus with the order of the company, or who you’re even sitting and dealing with, do they truly have the ability to make short- and long-term decisions?
These are the four points that come to mind in my past nearly 20 years of global procurement experience.
JD: Can you describe a little bit of what makes your background unique to be the President of the CPDA?
TK: I am a farm boy. I spent my teenage years on a dairy farm. I got an education at the University of Wisconsin, and then I started out of Monsanto Chemical Company. I really learned the business as a sales representative walking fields, working with dealers.
I went on work in marketing and manufacturing inerts that were used in a chemical formulation, and then onto a global pesticide registrant company and really learned the business from a China sourcing and formulation standpoint.
What really drew me to CPDA is being able to advocate for the industry at the U.S. Environmental Protection Agency and others about the importance of our industry.
JD: That brings us to what is CPDA’s mission?
TK: CPDA is first and foremost an advocacy organization. The organization has been around for more than 35 years. It was originally formed by post-patent manufacturing companies that were looking to have a level playing field when it came to legislative issues pertaining to bringing these products into the market. Our members are the producers and distributors of agrotechnology representing post-patent inerts and adjuvants. We’ve been able to double our membership over the last two years, and we represent from a distribution standpoint, over 80% of the $16 billion pesticide market in the U.S.
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