Erik Fyrwald, Syngenta chief executive officer, was interviewed by Bloomberg, discussing the company's initiative to tackle climate change and the future of the agrochemical industry. Below is the Q&A edited based on the interview record.
Q: You have just announced a 2 billion-dollar plan to spend over the next five years when it comes to tackling climate change, tell us the measures you are thinking of.
Erik: This is a critical time for agriculture with climate change, not only are farmers dealing with the worst weather extremes ever, but also we need agriculture to be part of the solution to climate change. So we announced a $2 billion investment going to breakthrough technologies, to help farmers deal with climate change, so products that will help them deal with flooding, high heat and drought, but also help farmers reduce the impact of farming on the climate, so reducing the amount of CO2 emissions from the farming, go toward carbon neutral farming, keep the carbon in the soil, higher yields, so we can farm on less land, stop deforestation, and actually reforest in the world.
Q: How close is Syngenta to IPO?
Erik: We said we would IPO within five years when we were purchased by ChemChina, that was 2.5 years ago. So we will IPO within the next 2.5 years.
Q: What steps are you taking in order to prepare for the IPO?
Erik: We are talking to banks, getting our story together. We are getting ready for when the market conditions are right, and when our performances are strong.
Q: What are the strengths in your seed business in order to better compete with your rivals?
Erik: We made a major acquisition last year in Brazil and Argentina. They are very important markets for us. We have been investing in our base business, adding more research capability, more commercial capability and more digital tool capability, which is very important. And now we are focused on significantly expanding our capability in China. We want to be leaders in China ahead of our IPO.
Q: As for being leaders there, how important is that market? What kind of growth or penetration do you want to see in China?
Erik: it is a hugely important market. If you look at the Chinese agricultural market, the technology players are all small. There are many Chinese seed companies and crop protection companies. All the international companies, like Syngenta, have been there for years, but we all have small single-digit market share. So China needs a leader. We are putting full effort into it, building our base business, investing more in people, strengthening our capabilities on the ground there. But we are also doing M&A work. So we expect the combination of those two to enable us to build a clear leadership position in both seed and crop protection. And once we get that, we will go for IPO.
Q: You are a Chinese state-own company. That’s also heavily dependent on U.S. farmers. So how is the U.S.-China trade war affecting your business, and what changes are you seeing in merging?
Erik: The U.S. is our largest market in the world. It was a huge challenge of this year mainly because of the weather. There was a horrendous flood in the U.S., but also the trade war. So next year, we are hoping for better weather, but we are also really hoping that a trade deal can happen, at least in agriculture, because it is really important both for China, who needs the agricultural products that the U.S. farmer makes and produces, but also important for the U.S. farmer, who needs the Chinese agricultural markets. So we are trying to encourage that a deal gets done. We would love to see that happen. It would be great for the U.S. farmers. And by the way the U.S. farmers are the most productive in the world. That is why we have so much capability here to serve the U.S. farmers. And the Chinese market is the biggest in the world. So it would be great to have those two lined up again.
Q: Progress is being made on the trade tensions. How much concern is there as your company could be affected by that?
Erik: We feel like things are getting better. We are hoping that something happens in the future, but at the same time we’ve got a large business all over the world. So we will keep serving farmers everywhere, including in the U.S.. Because the better the farmers do, the more options they have for exporting their products.
Q: You have talked about M&A is the one that boosts your business in China. Is there anything particular that you are looking at right now?
Erik: Yes, there a number of things we are looking at now: strengthening our base business, growing organically, strong double digits, but also acquisitions that I expect to announce sometime next year.
Q: We have heard from the Chinese ambassador to Switzerland that ChemChina’s acquisition of Syngenta was a mistake. Have you heard anything else on this front?
Erik: I heard about a day later, Frank Ning, chairman of ChemChina and Syngenta, a very senior Chinese official, also go publicly and say that Syngenta is a very important asset, and that’s a strong company that is doing well, and the Chinese are very pleased with their investment and looking forward to the future.