Agro-Kanesho's ‘farmer-oriented’ approach to product development

Mr. Hironori Kushibiki, President of agrochemical firm Agro-Kanesho, speaks to The Worldfolio about Japan’s leading role in agrochemical innovation, his own company’s ‘farmer-oriented’ approach to product development and overseas operations

Japan suffers from a shortage of usable land, especially in the agriculture sector. This situation has made Japan rely on agri cultural imports for its food consumption. What is the impact of food imports on Agro-Kanesho?

Japan’s agricultural fields reflect a decline particularly in paddy rice cultivation. Although Japan relies on imports to meet the nation’s food consumption needs, the company sells agrochemicals primarily to the vegetable and fruit markets. Because many Japanese consumers expect fresh and high-quality fruits and vegetables, imports have little effect on the company’s performance.
 
What is Agro-Kanesho’s position with regards to “organic food?”

Many consumers do not understand what the term ‘organic’ really means. In Japan, although certain volumes of vegetables have been cultivated by organic procedure without agrochemicals and chemical fertilizers, only 0.2% of the foods produced in Japan are “organic agricultural produce.”

Our goal is to reduce the use of agrochemicals on agricultural fields by offering appropriate agrochemicals and their recommended usage methods by diagnosing the in-field pest density leveraging on the research of our Soil Analysis Laboratory. Although the requirements for the “organic foods” category are unclear, we understand that the term refers to foods that are highly safe for human health and the environment.
 
Today, Japan has more patents in the agrochemical industry than any other country in the world (surpassing the USA). What are the benefits brought about by this focus on R&D?

Japan is a global leader in the ownership of agrochemical patents. With the world population increasing rapidly, food production is increasing, which necessitates the continuing development of innovative agrochemicals. The foremost priorities regarding foods are safety and reasonable pricing. Our agrochemical products are designed to achieve these priorities. Although R&D costs at Agro-Kanesho are still high, we are certain that we can quickly offer top-notch products at affordable prices.
 
Agro-Kanesho has been built on a “farmer-oriented approach.”. Can you tell us more about this philosophy?

To produce the highest-quality products, Agro-Kanesho has engaged in ongoing collaboration with growers since its foundation. Listening to growers’ opinions and reflecting them in our products forms a core part of our corporate philosophy. We have actually formulated a “Triangle Campaign” to facilitate the mutual exchange of information and deep communication among Agro-Kanesho’s Sales & Technical Promotion staff, growers and wholesalers/dealers. We conduct business activities fully considering growers’ requests and logistical needs. Activities that are based on an understanding of stakeholders’ desires are essential to success.

Through such activities, we engage in aggressive R&D activities. Agro-Kanesho never tries to sell its products against customers’ requests or without providing accurate explanations about the company’s products. We listen to customers’ specific needs and develop solutions to address their demands. Agro-Kanesho focuses on R&D in constant pursuit of innovative agrochemical compounds that can respond to customer requests. Agro-Kanesho has more than 60 years’ experience in the agrochemical industry. This historical background is a strength and one of our advantages. Our “grower-oriented approach” is the company’s strongest competitive advantage.
 
In FY 2016, your company received around 25% of its revenue from international operations. Can you tell us more about your international sales network?

In 2003, Agro-Kanesho and MITSUI & CO., LTD., jointly founded Kanesho Soil Treatment SPRL/BVBA (KST) as an international business base. KST handles two kinds of soil treatment chemicals and exports products to Europe, the Middle East and Japan. On the other hand, Agro-Kanesho directly exports products from Japan to the Middle East, the United States and Europe. Approximately 25% of the company’s consolidated net sales are from sales to overseas markets.
 
What will be your strategy to further penetrate the USA?

Compared to the scale of Japanese dedicated growers, the areas of the farms of U.S. growers are enormous. Our hope is to communicate directly with growers in the United States regarding the uses of our products by providing accurate and detailed explanations in the same way that we have done for our customers in Japan. However, unlike Japan, the U.S. logistics market is controlled by four or five companies. To succeed in selling our products, we need to sell through these dominating logistics companies’ channels. Being unable to communicate directly with growers is a challenge we are facing.

Timing is important in treatment using agrochemicals. A few years ago, we received a large-volume order from growers in the United States for Kanemite, a miticide product of ours that has been used for fruits and vegetables, to solve the problem of mites on hops. Kanemite’s significant success overseas boosted demand for this product, becoming a significant revenue source. As a matter of fact, demand for the product in the United States now is larger than that elsewhere.
 
Are you looking for partners abroad?

Agro-Kanesho will be glad to accept an opportunity to start another partnership. Our current partnership with MITSUI & CO., LTD., via which KST was founded jointly, has allowed Agro-Kanesho to utilize MITSUI’s trading network. We believe that partners to help boost the dissemination of the products we develop are those with strength in production and a sales network.
 
Both nationally and abroad your company lives in a tough market environment, competing with industrial giants such as Dupont, BASF or Syngesta. Looking at the future, what must be done in order to compete with these industrial giants?

Currently, about a 60-80 percent share of the global agrochemical industry is controlled by only a few giant enterprises. However, half of the 40 new agrochemicals that underwent full R&D and are currently waiting to be registered on the global market originated in Japan. If such a situation continues, we are certain that agrochemicals originating in Japan will account for approximately 50% of the international market share. In such circumstances, in the niche market specializing in fruits and vegetables, the patents held by the company provide a long-term competitive edge in growing the company’s share in the global agrochemical market. To develop together with growers, we will strengthen our competitive advantages by maximizing our technologies and sales capabilities.
 
Do you have a last message for our readers?

I would like to send a strong message. In March 11, 2011, an unfortunate incident occurred in Fukushima, Japan. Close to the nuclear power plant was Agro-Kanesho’s major factory, which accounted for 45% of the total production of the company. Because we have yet to be allowed to enter the premises, we decided to redeploy our business and found a building in Ibaraki. The previous owner of the building used it for R&D, and it was one of the world’s most highly efficient R&D labs. However, because the space there to construct a factory is limited, construction of another factory is on the agenda to meet growers’ demand.