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Chinese investment in MAI spells more crop protection optionsqrcode

Nov. 11, 2011

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Nov. 11, 2011

Chinese investment in MAI spells more crop protection options

The business model that has seen Makhteshim Agan take just over 10% of the UK crop protection market since the mid-1990s will continue to drive the company's growth under its new Chinese ownership, says UK managing director Mike Barrett.

The deal for state-owned ChemChina to take a 60% share in the Israel-based group was confirmed on 17 October.

"This merger has taken place at a time of huge change in the global agrochemical industry," says Mr Barrett. "Most agrochemical manufacturers are diverting their efforts away from chemical development and putting them into GM technology and traits. We're doing the opposite to that."

Bringing branded off-patent crop protection solutions to market remains the key focus, he explains, so that farmers and growers have a steady supply to help them deal with varied and complex challenges.

So what can growers and agronomists expect to see in the next two years? New sugar beet herbicides, the launch of multi-site protectant cereal fungicide chemistry and new potato blight sprays, promises Mr Barrett.

In the meantime, it will be business as usual, he stresses. "Our customer base will see the same levels of service and support, as well as product quality. Our commitment to the industry is unchanged.

"We're far from being just a generic manufacturer, which is what our competitors have been keen to pigeon-hole us as.

"We spend a significant amount on agrochemical development every year, bringing new solutions to the market and tweaking them as circumstances dictate. With ChemChina behind us, that will now be accelerated."

The consolidation that has taken place in recent years is also relevant, he says. "It's left its mark on both the manufacturing and the distribution sectors, with inevitable implications for the supply chain and development pipeline."

As a result, fewer new active ingredients have been launched and technical support for useful, older chemistry has been withdrawn, he says, adding that recent problems with product supply in the UK are another consequence of the change.
"That's why a new major player stepping into the sector, with money to invest, is such good news for growers. It will bring more choice, more competition and more value. For ChemChina, it offers a new route to market."

He is confident that the business strategy of buying chemistry as it comes off-patent and developing it will bring further rewards. "We're seeing changes in pathogens such as septoria, yellow rust and potato blight, which growers need alternative solutions for.

"Herbicide resistance in black-grass is another example. These challenges need to be addressed with more tools, not less. Patents expire all the time - our estimation is that there are US$20bn worth of sales up for grabs between now and 2020. We want a good slice of that."

For example, pre-emergence herbicide flufenacet is expected to be available through MA and others in 2013. But the merger also gives Makhteshim Agan a far bigger research and development budget and takes the company up to the next level, he says. Current annual investment in R&D and registration is about US$100m a year, the equivalent to 5% of sales turnover.

"Our visibility will be far greater and there will be more emphasis on development. The intention is to launch one or two new products every year, as well as to continue with ground-breaking work in areas such as formulation technology and packaging."

Another obvious outcome will be the expansion of the company's production capabilities, as state-owned ChemChina is the largest chemical producer in China.

The creation of a new agricultural technologies division shortly after the merger was announced is the first sign of things to come.

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