Ask the Expert
As you face challenges in the crop protection, biologicals, and plant health markets, AgriBusiness Global DIRECT gets your questions answered from industry leaders. Here experts answer a few questions from the AgriBusiness Global community.
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James Maude
Senior Vice President, Portfolio Development
Acadian Plant Health
ABG: With food production companies and governments investing in regenerative agricultural practices to improve soil, what kind of growth are you experiencing right now? What do you project for the next five years?
JM: The issue of sustainability is gaining widespread attention as more people recognize the importance of environmental health. This growing awareness is leading to increased emphasis on sustainable practices in various aspects of life, which has manifested in the regenerative agriculture movement.
The sustainable agriculture shift is creating a biostimulant market size that is anticipated to grow at more than 12% compound annual growth rate (CAGR) over the next several years. This increase in market value has many companies engaging extensively to develop innovative products — including Acadian Plant Health.
We see a market potential exponentially larger than last year or the year before. We need to produce 70% more food by 2050. The ag chem market is projected to grow to $280 billion by 2028. Regenerative and sustainable ag technologies need to support these macro trends. We are investing to support the demand by ensuring we have flexible raw material supply and manufacturing capacity. We are driven and planned by demand.
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CS Liew
Managing Director
Pacific Agriscience
ABG: How important is it to get outside/independent opinions on the value of a merger or acquisition?
CSL: Typically, major buyers have their own financial and commercial team members in-house to make assessments on valuation, and they may have already made several acquisitions before. So, for such companies, there is little need for outsiders to help make valuation assessments. Smaller companies, either the buyer or seller, could rely on agchem industry experienced consultants or deal makers to provide a reasonable assessment and advice. Sellers with strong emotional attachments to the business as well as having no idea on basic valuation methods are in need of external advice and education the most.
Personally, I have experienced a situation where I asked a business owner for his expectation on the value of his company. When he said $200 million, I immediately asked if he actually meant $20 million. This is because I already had an idea of the company, business environment, and profitability in the country that this company was operating in.
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Livio Tedeschi
President
BASF Agricultural Solutions
ABG: What has BASF learned about supply chain in this post-COVID era? How has it changed the way you do business?
LT: I think the last three years have been a revolution in the way we had to deal with supply chain. We have experienced every possible travel and issue from lack of truck drivers, lack of containers, and lack of raw materials. Some of those were caused by the general tension and bottlenecks in the global supply chain system, but also partly caused by weather conditions. We had extreme low temperatures in the Americas, which have caused problems in some of the production plants. We had floods, we had hurricanes, so I would say there’s been disruption from every angle now.
I think one important learning is we used to have a system which was very much focused on minimizing cost of production of our active ingredients and trying to concentrate our production in certain regions and then ship finished products all over the world. Now, it has become apparent that if you want to be close to customer, flexible, and react to variational demand very rapidly, you really need to have more localized production. This idea of driving costs down with a very central production steering has met its limitation, with the multiple challenges in the global logistics system. So what we have done is increase our formulation capacity, in particular, close to the major countries. And then we had very strong structures in Europe and North America. We’ve increased our presence in Asia with new formulation sites; one opened very recently in Singapore and in China. And with that we will be able to minimize the lead times in the growing regions, be able to respond to very deep variations on demand locally, and then continue to have the best possible service to our customers. Because I think in the end, everybody has experienced constrained systems, not only suppliers and distributors, but ultimately farmers. •
Photo Top:
Pixel-Shot – stock.adobe.com
Photo of James Maude courtesy of Acadian Plant Health
Photo of CS Liew courtesy of Pacific Agriscience Pte Ltd