Doing Business in the U.S.

By Renee Targos

The United States synthetic crop protection market is facing challenges spanning from the banning of active ingredients to dealing with more sophisticated growers. Our experts gave us a few tips on what changes and trends are affecting the U.S. crop protection industry and what to do about them.

Mike Snyder, President/Owner of Red Rocket Consulting, LLC, says after working 42 years in the U.S. ag chem industry, he’s noticed “the time it takes from registering a technical and bringing out an End Use Product (EUP) to market,” says Snyder. “It used to be a two-year timeline and now it is three to four years. The PRIA date model is not working.  You can get a PRIA date, but it is no longer a delivery date you can feel comfortable with. This does not seem to be just an issue with the EPA but also with getting state registrations. This really impacts commitments with formulators and the coordination with technical and launch resources with manufacturers.”

Once companies get through the hurdle of regulations, they face a new generation of business savvy ag retailers who deal with educated growers looking to get a good return on investment for every product purchased.

Chris Payne, President and CEO of CNI Ag, a distribution company to U.S. independent ag retailers with products and services based in Leesburg, Ga., says, “Seed germplasm, genetic traits and new crop protection technologies all are on the minds of U.S. farmers as they strive to maximize production. While cutting input costs can be an important element of success, U.S. farmers are very astute in their selections of crop inputs, always trying to achieve maximum performance and return.”

Harlan Asmus, President and CEO of Asmus Farm Supply, Inc., a U.S. ag retailer based in Rake, Iowa, agrees. “The complexity of building a successful production plan is what is changing. Pest resistance, regulations affecting crop inputs, and manufacturers’ rebate bundling programs are things growers need to consider when trying to raise a crop in a very business-minded model.”

Looking ahead at 2025, sales agronomists will need to have solid performance data when placing new products with growers. Asmus says to be ready for pessimistic behavior and cautious investment. “Most growers will be cautious to invest in non-essential production products until they see how good the crop looks in the summer of 2025,” says Asmus.

Payne agrees with Asmus’ 2025 outlook.

“The 2025 market year appears to be difficult with soft commodity prices,” says Payne.  “With supply chains stabilizing and most crop protection supply in adequate or excess availability, caution and multiyear strategies are prudent.”

Along with getting products through regulations and then presenting products to an educated consumer, companies selling off-patent products face growing competition with generics.

“There are a lot of generic suppliers trying to figure out how to squeeze an additional 2% -5% margin out of their go-to-market costs, data comp, inventory, and launch costs, like headcount and all the expenses associated with headcount,” says Snyder. “From a macro perspective, if a product has just come off patent and there are generic players, then the cost of that product will definitely drop anywhere from 20% – 50% in the first year, depending on how many generic suppliers get a registration in the first year.”

For crop protection companies, there is also the need to deal with public perception.

Jake Brodsgaard, Executive Vice President North America, ADAMA, says, “We face is the prevalent public perception that synthetic crop protection products are harmful. There’s a lot of negativity about synthetic chemistries, and we deal with that by addressing the issue head-on. We constantly educate people about the science-based reality of crop protection products, the benefits they bring, and the enormous effort we invest to ensure that our products are both safe and effective.”

Brodsgaard also says that U.S. distribution system is challenging due to its size and complexity based on regional differences.

“While it may seem straightforward, the channels operate differently depending on the region. Reaching the farmer and effectively communicating the innovation and return on investment our products bring across such a vast country can be quite complex,” says Brodsgaard. “We address that by making sure that we stay nimble and agile. Because we’ve been in the US for several decades, we have a lot of experience in identifying what the different market segments need, so we customize our approach for different customers and channel partners.”

The 8-Point Checklist Before Your Launch

Before taking your product to the U.S. market, here are eight points to consider.

1. 1. Local Stories: Getting your product tested locally will build confidence with growers. “Local testing where performance stories can be built by the retailers selling in those areas,” says Asmus. “You need at least one year, if not two, to build local messaging around features and benefits of new products.

“You will sell something into the U.S. market,” Asmus continues. “By one, being the cheapest price all of the time, or two, having a professional sales staff that knows customers, talks with them, and builds a plan for success. In my opinion, you will be more successful over a longer period of time utilizing option two.”

1. 1. Value Propositions: Creating specific points of how your product is different and meets the needs of growers is crucial in a saturated market.“Look at the competitive landscape,” says Snyder. “How many equal or similar competitors are there going to be? Find out if there is any way to differentiate your product before launching, such as premixing, formulation differentiation, even simplifying the branding.”
   2. Keeping Costs Down: With heavy competition in generics, keeping your cost down is essential.
      “The most important point with a generic launch is doing all you can to lower your cost/unit,” says Snyder.  “There is an old saying in the generic world and that is: You don’t get to set your price, your competition does.  If you do not feel comfortable with your cost, be very careful.”

1. 4. Detailed Marketing Plan:Make sure you set objectives for volumes and your financial plan.
      “What are you bringing to market? What are your distribution patterns or are you selling direct to farm?” Snyder asks. “What are your tactics? What is your pricing, number of reps, promotion, trade shows, and training?

1. 5. Registrations: Right from the start, Snyder says to “take the extra step to figure out how to differentiate your product starting with the EUP formulation.”
   6. Formulation/Tolling: At this stage, you need to plan for mishaps, delays, and other interruptions. “Build in flexibility to your schedule and look at all the costs going to the formulator, cost of formulation and freight cost to market,” says Snyder.
   7. Distribution Strategy: When working with ag retailers, its important to think about the long-term game plan, which involves building relationships.“Get on the road and meet the distributors you are considering,” says Snyder. “Look at them as partners, not just customers buying your product. Develop an understanding of how you plan to handle things like: late products, changes in freight cost, farmer questions and complaints, and even product quality issues, like formulation stability.”

1. 8. Know Your Customer: Each region of the U.S. is very different, as well as soil types, weather, culture and crops. Make sure that you know what growers are facing in each region.“Learn the crop and market you are planning to sell into,” says Snyder.  “Timing and method of application [are important]. You will need less package versus totes in a market controlled by aerial applicators.”

Common Mistakes 

While many companies are successful in the U.S. when launching their products, Snyder and Asmus have seen common mistakes that lead to failure.

“Making ‘new’ products out of old ingredients is the typical mistake,” says Asmus. “They may be successful at gaining a registration to mix things together that no competitor has, but that isn’t a long-term strategy to helping production challenges on the farm, nor support long-term successful sales of the product.”

Other mistakes include not understanding how a product will perform in different environments or in integrated pest management systems or the market value of a new product.

“The market is highly knowledgeable, and is seeking proof of value, so you need boots on the ground explaining your product and giving farmers a reason to believe in your differentiated value,” says Brodsgaard. “This takes both time and money. You need to run plenty of tests, demos plots, collaboration with universities, and more, all to demonstrate the value of the new solution.”

Brodsgaard continues, “Farming is seasonal, so you get one chance each year to show that value. If something doesn’t go according to play, it’ll be another year before you can interest the channel in the new solution. It could take five years before you can feel confident that the channel will deliver the value that you know is there.”

Another issue is understanding the market value of a new product.

“You may find out that your cost will not allow you to even go to market,” says Snyder, “or you may find out that there is more profit in launching in smaller markets with limited distribution partners.”

This also applies to distribution strategies. “If you don’t have a lot of funding for a sales team then the Tier 1 distributors may be best (Nutrien, Helena, Simplot, Winfield),” says Snyder. “If you have more of a sales and marketing budget then maybe Tier 2 distribution is better, (Tenkoz, IAP, WestLink). You can expect a little more margin but will have more cost in sales and marketing.”

Building Your Reputation 

Taking the time to create a strategy, build relationships, and studying the market is a plan to create long-term success in the U.S. This includes working with the growers, but also ag retailers.

“I can’t stress enough how short-sighted it is to build your marketing strategy on being the cheapest vendor of inputs there is in all categories,” says Asmus. “This may be appealing at the grower level, but it does a terrible disservice to the ag industry’s ability to compete in a worldwide production market for the long term.”

The way to launch your product and keep it on the shelves because growers are asking for it is to learn the many entry points and what market changes influencing the U.S. grower.

“Doing business in the U.S. involves much more than simply bringing product in,” says Payne. “There is an understanding of the value of relationships, grower programs, financing, distribution and retail channels, and consultant influence that must be considered in order to succeed.”

4 Tips for Launching Crop Protection Products in the EU   AgriBusiness Global spoke with Sergio Dedominici Paz, EVP Europe, Africa & Middle East, ADAMA, to get tips on how to successful introduce new synthetic crop protection products to EU growers. Build Relationships with Growers and Channel Partners: With regulation bans and climate change creating challenges for growers to secure yields, its important to find out what growers need and deliver Sergio Dedominici Paz products that will help. “We must be able to anticipate future farmer needs and changing consumer demands as much as 10 years ahead of time,” says Dedominici Paz. “This is a huge challenge and requires companies like ADAMA to remain agile, dynamic, and very close to farmers to be able to successfully identify and address future key pain points. This also requires significant financial commitment.” Embrace IPM programs: The Green Deal pesticide reduction for 2030 incentivizes growers to use less chemicals. When launching a product, find out how it works with biologicals and other products and customize purchase plans to help growers achieve lower MRLs. “[IPM] targets the benefits of the chemical crop protection while reducing potential impact on the environment,” says Dedominici Paz. “ADAMA firmly supports IPM approaches. That’s why we’re innovating with new formulations and application techniques that deliver effective control and support farmers.” Invest in Innovation: As EU growers use regenerative agriculture practices to preserve soil and reduce chemical use, innovative formulations that work with drones and other ag tech are important to consider. “Captan, our multi-site fungicide, has recently passed a rigorous process to renew its registration in the EU and is the first active ingredient to be renewed with conditions specifically tied to precision agriculture, setting a new standard for environmentally responsible crop protection products,” says Dedominici Paz. Marketing and Distribution: As in any region of the world, your marketing strategy and distribution partnerships will make or break how your product reaches and is accepted into the market. “Both our people and our relationships with our customers are fundamental to successful product launch,” says Dedominici Paz.” We value our excellent distribution partners and pride ourselves on our technical, marketing and sales experts, who support our new product introductions across Europe and enable our innovations to reach the farmer.”

 

Photo Credits: Mike Snyder, Red Rocket Consulting;  Chris Payne, CNI;  Harlan Asmus, Amus Farm Supply; Jake Brodsgaard