Trade Summit: Future of the Crop Input Industry

If 2019 looks like a challenging environment for the crop input industry that’s ready to turn the corner, don’t hold your breath.

The next five years won’t get any easier, was the overriding message of a panel discussion on the second day of Biostimulant CommerceCon/AgriBusiness Global Trade Summit in Atlantic City.

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Trade Summit: Future of the Crop Input Industry

(From left:) Bob Trogele, Diego Taube, C S Liew, Subhra Jyoti Roy; photo credit: Paul Skowronski

The panel, moderated by CropLife and AgriBusiness Global Senior Editor Eric Sfiligoj, addressed how the chain reactions set off by consolidation, ag tech innovation, protectionist trade environments, environmental and safety concerns along with a more stringent regulatory landscape and consumer demands, will force all players in the channel to adapt more nimbly than perhaps ever before.

“The biggest change I see is the maturing of our industry at the farm level,” said Bob Trogele, AMVAC Chief Operating Officer, who expects that “there’s a second round (of consolidation) coming.”

The positive side, he said, is that for smaller companies, opportunities abound. “There is going to be new owners of those assets. There’s a lot of money out there to be placed. The biggest downside is, if you’re not participating, you’re missing the train.”

Against a backdrop of still more consolidation, China’s environmental crackdown continues to disrupt raw material and intermediates supplies.

Trade Summit: Future of the Crop Input Industry

The panel speaks to a packed audience on day 2 of AgriBusiness Global Trade Summit 2019.

“The new normal is going to be higher prices throughout the supply chain. As we sit here, more plants are being closed down,” said C S Liew, Managing Director of Pacific Agriscience Pte Ltd. He pointed out China’s shortage of yellow phosphorus, a key raw material in glyphosate, and expects similar scarcities to linger.

As India looks to fill the supply gap, it is working hard to backward integrate, Liew explained. “But to be successful, they will need to collaborate amongst themselves. If five producers are in need of a certain raw material, it would be cost efficient for them to work together instead of all five parties trying to do the same thing.”

Partnership, Productivity

The focus on innovation, both in application technology and in soil health, is poised to shift the ag landscape. Trogele sees startups as the source of much of that innovation, and, “if you follow the money, it’s going into those small companies …. There is a lot of disruption, and a lot of opportunity,” he said, adding, “You have to stay closer to your customer, because they’re going to drive that innovation with you.”

With $7 billion being sunk into ag sector R&D in the coming years, and 50 products set to fall off patent by 2023, panel participants remarked on not only the promise of innovations to come, but also the importance of staying on top of change. Liew advised organizations to stay proactive and delegate a task force or will be led by those that do.

“More and more, countries have issues in finding cheap labor to apply chemicals and to help older farmers. I think there will be much wider adoption of this (drone application technology) going forward, which leads to the need for new formulation development,” Liew said. “This is where we see technology is going to have a major driving force and impact over the next few years.”

“I think what’s going to be very important for all buyers across the globe in any business is the partnership model,” Subhra Jyoti Roy, Vice President International Business, Rallis India, said. “The key is how you’re going to leverage each other’s strengths. Partnership is something that’s going to be very important.”

From an Indian perspective, the coming five years will be digitally led, Roy said. “We have a long way to go, but the confidence and commitment demonstrated is unprecedented. A good number of Indian companies have already invested in digital applications.” Whether it’s via satellite imagery, drones, or other iterations of precision ag, “I think productivity is what everybody’s looking at.”