Bulgarian AGRIA: Entering global market with 100% European products that exceed standards; continues to support mancozeb renewal in EU
Jun. 10, 2020
“We are entering the market with 100% European products that exceed accepted standards……I believe that our qualities are in demand and are highly valued by consumers, and our ultimate goal is to differentiate ourselves from the competition.”
Bulgaria is an important agricultural country and an exporter of agricultural products in Central Europe. After the collapse of the Soviet Union and the rise of democracy in Eastern Europe, the implementation of an extreme policy to turn over farm land to their owners led to a downturn of agriculture. After joining the European Union (EU), driven by the European Common Agricultural Policy, the Bulgarian government identified agriculture as a pillar industry for national development, and agricultural production has achieved considerable progress.
In the following interview, we invited Mr. Plamen Alexandrov (Member of the Supervisory Board of AGRIA S.A.) to talk about the current developments to Bulgarian agriculture and the country’s plant protection market. AGRIA is the only local plant protection manufacturer in Bulgaria, accounting for 15% of agrochemical market share. This market is seemingly small but highly attractive and competitive, and AGRIA has made mancozeb the mainstay of its business and its efforts to win in the market, through its high standards of quality and diversified product portfolio.
Alexandrov also expressed rational and objective views on the issue of mancozeb renewal in the EU, stating that AGRIA, as an applicant for mancozeb renewal in Europe, will continue to work hard to promote the renewal process.
Member of the Supervisory Board of AGRIA S.A.
AgroPages(A): Please introduce the overall situation in the Bulgarian agriculture market.
Plamen Alexandrov(P): Bulgaria’s utilized agricultural area is within its sustainable limits, ranging from between 5 to 5.2 million hectares and managed by almost 87,000 growers, while land not under cultivation has significantly decreased after Bulgaria's membership in the EU, ranging from 180,000 to 200,000 hectares. Winter cereals have the largest share in the agricultural market, accounting for 1.4 million hectares, followed by sunflower, maize and oilseed rape with 0.86, 0.48 and 0.2 million hectares, respectively. Other typical Bulgarian agriculture crops, even in rather smaller areas, are vineyards and orchards, which jointly account for an area of 150,000 hectares.
A: Please introduce the history of AGRIA S.A. and its main business model in international markets.
P: AGRIA has a long history, dating back to the 1940s. Established in 1932 to serve domestic agriculture, the company still has the only factory in the country that synthesis and produces PPP. The most significant moment in AGRIA’s history was in 1998, when the company was privatized. After privatization, the modernization of production facilities and investing in employees became the main goals of the company’s management, as we believe that modern technologies and well-trained staff are essential for the company’s growth and development. Therefore, from a state-owned factory specializing in the synthesis and formulation of dithiocarbamates, AGRIA became a modern European holding company with two plants, one in Plovdiv, Bulgaria, and a second in Ryazan, Russian Federation.
The AGRIA group also includes several subsidiaries worldwide, including in Serbia, South Africa, Chile, Ecuador, Indonesia and Cambodia, as well as representative offices in Vietnam and China. The activity of the company is not limited to the production of PPP. To maintain our 70 international markets, we maintain our own registrations, placed in some markets under our own distribution networks. Our plant protection products are key to our business, but we are also strongly placed in the biocide business and crop nutrition sector, with several high-tech formulations of foliar fertilizers.
A: AGRIA is the only local plant protection manufacturer in Bulgaria. Why are there few local production companies?
P: Indeed, AGRIA is the only manufacturer of plant protection products in Bulgaria, with access to developed technologies not only for formulation but also for synthesis. All types of fungicides, insecticides, herbicides, biocides and plant nutrition products are part of our industrial production. With regards to production capacity, it is currently around 10,000 metric tons of synthesis and around 40,000 metric tons of formulations, whether insecticides, fungicides and herbicides. Our second manufacturing site in Russia, Agrorus Ryazan, has a production capacity of 20,000 metric tons of formulations, whether insecticides, fungicides and herbicides.
It is not easy to be a manufacturer today. The challenges are considerable, and manufacturers often face difficulties, most notably regulatory ones related to environmental protection and the dynamics surrounding the use of PPPs, as well as climate change, resistance development, and so on. This is a serious reason why most market players prefer the role of trader in Europe. In any case, there is a place for everyone on the market and there are many opportunities for sustainable and profitable partnerships.
A: What is the current market capacity of the Bulgarian plant protection market? How’s the competition between the players and what is AGRIA's position in it?
P: The structure of Bulgarian agriculture determines the trends of the local PPP market, which is currently stable and without surprises unless affected by unusual climatic periods. The total market value is between EUR135 million and EUR140 million, and almost half is made up of cereals, some EUR63 million. Sunflower account for EUR27 million EUR, maize for EUR18 million, oilseed rape for EUR13 million, and vineyards for EUR9 million to EUR11 million. Most PPPs are imported as AGRIA is the only local manufacturer.
As part of the Common European Market, Bulgaria is open for everyone able to meet the regulatory requirements. There is almost no top 20 company that is not present in Bulgaria. Although we are small, we are a very attractive market and the competition is exceptional. In this highly competitive environment, we are not relying only on our good name and traditions, we are constantly striving to enrich our portfolio to achieve and maintain appropriate levels of competitiveness. In all major segments, we are present and stable, but we are also working to create innovative solutions in niche segments, such as organic production, herbs, vegetables, aromatic crops and others. In general, AGRIA’s market share in Bulgaria is around 15%.
A: We know that the core competitive product of AGRIA is mancozeb, please introduce this product and its advantages?
P: Mancozeb is just one of the products in AGRIA’s portfolio. Even though we are advanced in producing single mancozeb under different formulations, as well as various mancozeb mixtures, the group is no longer directly connected to mancozeb production. We have been moving towards business diversification for many years. For example, in the EU, where mancozeb is a recent actual topic, statistics show that the EU mancozeb market is around 10% of the total mancozeb market.
Regardless of the circumstances, the main factor is that AGRIA maintains it business with high-quality mancozeb, mancozeb mixtures and, of course, formulations, as well as satisfied customers and growers. Plant protection advances like any other industry and it is not enough to just pack powder, granules or liquids in glossy foil or bottles. Demand is limited, and at the same time alternatives are becoming more and more common, and the focus is shifting from price to quality. I dare say that we have the experience, we have perfected the technology of synthesis and formulation, and we are entering the market with 100% European products that exceed accepted standards. Therefore, we are meeting the ever-increasing requirements of end users. I believe that our qualities are in demand and are highly valued by consumers, and our ultimate goal is to differentiate ourselves from the competition.
A: How does AGRIA operate its mancozeb brand in the international market? How does it face international competition in terms of business strategy?
P: AGRIA operates with several mancozeb brands worldwide, which are Fortuna®, Fudan®, Cadilac®, Caliwa® and others. We are present in over 60 countries with our brands, focusing mainly on promoting them to end users, which is part of the services we offer to our partners, such as technical meetings, open field days and seminars with their clients, where we are able to present and explain the advantages of our formulations. This service is the foundation of making our brands recognizable. All our products, whether Indian, Chinese and Bulgarian, are available in our agrishop, but at the end of the day, it is the farmer who decides.
Creating demand along the chain, starting with farmers, is the strategy we follow. Our factory cannot be compared with Indian or Chinese factories in scale and production capacity. Therefore, to reach our capacity, we rely on maintaining quality and a high level of service, not on quantity.
A: In April this year, the European Union decided to not grant an extension approval for mancozeb. What impact will this decision have on AGRIA’s business? How will the company respond?
P: Mancozeb has succeeded in its past and present and will have a future in global agriculture. After its first introduction in 1962, mancozeb became the most important and commercially significant fungicide, with a total annual consumption of 166,000 metric tons.
As an applicant for renewal in Europe, AGRIA is aware of the regulatory difficulties facing mancozeb. We fully support the safe use of PPPs and we recognize the importance of maintaining public health and human, animal and environmental safety. However, оver-regulation of plant protection products can lead to significant economic, social and practical consequences to agriculture. Therefore, any decision should be taken according to scientific principles and consider scientific evidence and sound risk assessments. Currently, due to Brexit, another rapporteur member state, Greece, is dealing with mancozeb’s assessment, as new data was not considered in the UK assessment but will be included. Considering all provided data and studies, the ongoing assessment may result in mancozeb’s re-classification, supporting its renewal.
Regardless of the outcome of this assessment, the question is much more global and we would put it in this way, “What impact will this decision have on agriculture in general?” AGRIA is a chemical company and mancozeb is not so critical for our business, but there are serious concerns in the sector about the agronomic, economic and social consequences of the possible removal of mancozeb from the EU market. EU growers will somehow cope with the removal of mancozeb, but such a decision aims not only to limit the use of mancozeb as a PPP in Europe, but also to change mancozeb’s MRLs to the limit of quantification (0.01 mg/kg) in all imported commodities, which will indirectly exclude its use outside Europe for agricultural products destined for the European market. So what will happen to banana and soybean production in Latin America and some Asian countries, for example? Can local producers replace mancozeb with another fungicide that meets the required standards while not producing resistance and achieving economic efficiency? These questions need answers. We started this game with a clear awareness of the challenges, and will continue to support the renewal of mancozeb in Europe. However, the final decision will be in the hands of competent European authorities.
A: What are the major problems or challenges currently facing Bulgarian agriculture? How will AGRIA help local farmers meet these challenges?
P: Bulgarian agriculture has many challenges, but they are not related to plant protection. These challenges are mainly related to a number of European policies, such as allocating quotas for crops for member states. Some crops are more subsidized then others. Crops typical in Bulgarian agriculture in the past are now significantly reduced in terms of area, such as tobacco, fruits and vegetables, while others have completely or partially disappeared, such as sugar and fodder beet, chickpeas and rice. We, at AGRIA, are always there for Bulgarian producers, but these challenges should be addressed through policies. The industry has nothing to do here.
As far as the PPP market itself, as mentioned, it is open to every player and has the potential to grow because Bulgaria is one of the members of the EU with the lowest pesticide use per area. If the average value for the EU is a bit over 2.0 kilograms of PPP per hectare of utilized agricultural land, in Bulgaria these values are less than 0.5 kilograms of PPP per hectare.
A: What is AGRIA’s strategy regarding thepesticide procurement? How have the production suspension and lockdown of the two major pesticide suppliers, China and India, affected the company’s purchases this year?
AGRIA is a generic company and its long-term efforts are focused on developing products containing off-patent molecules. Key segments have been identified, such as cereals, maize, and sunflower in Europe; black pepper, citrus, banana, mango and other fruits in Asia; vineyards, potatoes and vegetables in Australia; and soybean, banana and vegetables in South and North America. Our development strategy is related to these identified segments, and we are taking slow but sure steps in this direction.
In the short-term, AGRIA, like many other companies in the industry, was also affected by the COVID-19 pandemic. The damage was quite limited, due to the fact that most raw materials we use for our production come from European suppliers. I would not say that the lockdown of Chinese and Indian factories has had any significant impact on AGRIA’s business. All of us in this industry are experienced, and we are able to overcome a short-term crisis. Let us hope that this crisis is coming to an end soon, and everyone has learned the correct lessons and will be even better prepared to meet future challenges.
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