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Observation of agrochemical companies worldwide during COVID-19 outbreak
Apr. 3, 2020
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Mickey Shan
Senior Editor; China Marketing Director
Since March 23, AgroPages has communicated with agrochemical companies around the world. While exchanging greetings, AgroPages had the chance of understanding their current business situation, measures taken against the epidemic and major concerns at the moment.
This year, business has not been easy for Chinese pesticide exporters. Some companies say that they have received the notification on the postponement of payment and cancellation of purchase orders. In correspondence with overseas pesticide companies, we could also feel the worry and anxiety of overseas companies. Nevertheless, at this critical moment, some companies are thinking like suppliers, rather than delaying payment at discretion, “The famous WIN-WIN here is not a strategy but respect and credibility.”
India
India is now under a national lockdown. Prime Minister Narendra Modi announced a 21-day complete lockdown from March 25 to stop the spread of the coronavirus. As a result, various factories have been shut. India is the world’s 4th largest pesticide producer, where the production capacity of pyrethroids, mancozeb, carbamates and pyridine base takes a large proportion of the world, thus the shutdown of production in India may adversely impact global supplies.
The coming Kharif season is a most important season for agricultural production in India. After the announcement of the national lockdown, the Government of India urgently issued an emergency exemption order to maintain production and operation of all agricultural inputs-related business, covering seed, fertilizer and pesticide, which is an important measure to ensure India's food security.
Although the government of India allowed the production of agricultural necessities to continue, the logistics are a greater challenge. Moreover, the widespread fear of infection has led to the shortage of the labor force, therefore some factories have been forced to shut down. Up to now, AgroPages has tried to contact several Indian pesticide companies, all of whom are running with staff working from home at the moment. Although pesticide production is exempted from lockdown, lots of companies have prioritized the health of their employees and have thus closed down productions, including Rallis, Dhanuka, Aimco and RFCL etc.
In India, the sale of agricultural material is mostly dependent on marketing activities in the field. Now, it has become impossible to conduct marketing activities like before. Hence, the whole industry is virtually in suspended animation. On the other side, the logistics are an issue. Some local distributors say that the warehouses of pesticide companies have closed down, and even if they have their stocks, the products cannot be delivered to dealers and the rural level retailers. The profitability of a large number of companies will suffer.
The positive thing is, if the lockdown is effective and the epidemic situation improves, the factories will be able to start running in early or mid-April.
Many European countries have been seriously hit by the pandemic, with Italy and Spain completely suspending their economic activities and Germany making every effort to defend itself. We contacted BASF Agricultural Solutions in Limburgerhof to ask about the measures taken and the business situation there. The company said that currently, employees who can work from home are doing so in consultation with their superiors. For the employees who still need to work from the office of the company, BASF has taken the necessary measures and provided help in terms of commuting, dining, and daily business activities. The company has set up crisis teams in all regions to coordinate various measures. Furthermore, the global crisis team meets in Ludwigshafen, Germany, on a daily basis, and is in close contact with the regional crisis teams. The teams evaluate current information from external and internal experts and decide on a daily basis which measures are appropriate for BASF at the respective sites and globally.
US
The US has become the most seriously epidemic-affected country in the world. Also as a result of the oil price fall, all US chemical industry sectors are have been affected. The US-headquartered company FMC has taken a series of actions to ensure the health and wellness of employees, including the alternative work arrangements, travel restrictions, and other measures around the world. The company has formulated a business continuation plan, its commercial teams are focused on supporting customers and ensuring farmers have the products they need. The company has so far sufficient product stock to meet anticipated customer needs for the immediate future. FMC’s sales and technical service teams continue to operate fully.
Farmers Business Network (FBNsm) is a US data and pesticide e-business company. Recently, the company has announced a discount sale of more than 80 kinds of key seeds and pesticides at a special rate, with 15% discount on top of the current low prices, which will help farmers cope with the financial stress in this difficult period, which happens to be a planting season. The online selling mode will play a more complementary role in facilitation of the offline sales channels under the epidemic circumstance. FBN says that its products can be ordered by phone or online, and can be delivered from more than 70 FBN warehouses in the United States.
EU
Many European countries have been seriously hit by the pandemic, with Italy and Spain completely suspending their economic activities and Germany making every effort to defend itself. We contacted BASF Agricultural Solutions in Limburgerhof to ask about the measures taken and the business situation there. The company said that currently, employees who can work from home are doing so in consultation with their superiors. For the employees who still need to work from the office of the company, BASF has taken the necessary measures and provided help in terms of commuting, dining, and daily business activities. The company has set up crisis teams in all regions to coordinate various measures. Furthermore, the global crisis team meets in Ludwigshafen, Germany, on a daily basis, and is in close contact with the regional crisis teams. The teams evaluate current information from external and internal experts and decide on a daily basis which measures are appropriate for BASF at the respective sites and globally.
The market demand for BASF healthcare is very strong at the moment. However, some of their customer industries are particularly affected by the pandemic, such as the automotive industry. There is still uncertainty over the impact on the agricultural business and the changes that may occur during the coming period.
A Belgium company, Certis Europe, which relies on the supply of active ingredients from Japan and China, told us that at present, the pandemic has forced employees to change their way of working. Under the special circumstances, the company is trying to support, as far as possible, its customers and farmers while placing orders and some "panic-buying" has been observed. However, so far, the supplies from stocks are still sufficient. The pandemic has not had a significant impact on the company's business yet, and will depend on how the situation develops in the next 1-2 months.
Another European company said that it is mainly engaged in import and export trade, and business has obviously been affected by the pandemic, although some businesses are still operational. Besides the health of the employees, the biggest challenge lies in the rising operating cost and the declining revenue. As a normal trading company, it will not maintain a large amount of stock; the running of the business relies on the trading turnover to maintain the cash flow. Meanwhile, the lockdown will inevitably lead to an increase in logistical costs later. It is foreseen that financial stress will be a big issue for the company this year.
Eastern Europe
Although the pandemic in the Eastern European countries is not as serious as the other part of Europe, Russia's outbreak prevention and control still faces challenges. On March 30, Russia began closing all its borders. A Russian agricultural product company told us that the factory capacity is currently running at full load, but for the sake of safety, the office staff is working from home. Russia's main crop is wheat, which is now between sowing and harvesting. If the pandemic spreads to Russia, it may pose a threat to wheat production. Furthermore, Russia is facing an increase in the planting cost, resulting from the depreciating currency.
In Poland, “the outbreak has just begun”, said health minister, Lukasz Szumowski, at a press conference on March 30. As there is an outbreak precedent due to poor prevention and control in European countries, so far, the Polish government has taken relatively stricter control measures. A local distributor in Poland said that its employees are all working from home. Their business model is to sell products directly to farmers or retailers, and the issue right now is delivering the products on time, supplying active ingredients and supplying the products. It is predicted that the business volume this year will decline as a result of the coronavirus outbreak.
Africa
The overall situation of the coronavirus pandemic in Africa appears better than other continents, but it still faces considerable challenges due to weak economies and the lack of medical facilities. South Africa is the most affected country in Africa. The Intelichem Group, a local agricultural company, told AgroPages that the company's employees are presently working from home. Intelichem produces supplies of pesticides, fertilizers and biological formulations, making it an indispensable part of South Africa's food supply chain, and its factories are still running non-stop. The company has also stored stocks of supplies to cope with market demand.
At present, agricultural and chemical companies in South Africa may need to tackle social problems. South Africa has a large number of low-income and under-educated people who are difficult to isolate in shanty towns. Unfortunately, corruption in South Africa has also depleted its emergency funds and has made it a country on the verge of bankruptcy and crisis. Racial and cultural barriers could also hinder the unified efforts to counter the pandemic. There are even cases where a large a crowd of people on the streets were shouting, "Only white people will die from this." Such a social environment makes business operations more difficult.
South America
Brazil is the most seriously affected country in South America. However, Jair Bolsonaro (President of Brazil) does not seem to be paying enough attention to the severity of the pandemic. In an interview on 30th March, Bolsonaro not only said that no further isolation measures would be implemented, but he even criticized some local government isolation measures to contain the spread of the virus. We contacted the China Region GM from IHARA, a Brazilian agrochemical company, who is currently staying in Brazil. Back in January, he expressed his desire to return to China to start working as soon as possible. However, contrary to his expectations, he had to work from home in Brazil. In fact, many people are dissatisfied with the government's failure to undertake further lockdown measures.
Renato Seraphim, the CEO of Agro100, a leading distributor in Brazil, said that the virus outbreak is the most serious he has witnessed throughout his entire professional life, stressing that it as a test of leadership. In this context, he shared some of the company's response strategies. Brazil is a large agricultural country, where farmers need to secure agricultural materials to maintain agricultural production. The company has utilized many possible means, including home offices and shifts, limit supplier visits, ensuring billing shifts for customers to ensure the health of employees while business is still being maintained. Agro100 has set up a Covid-19 crisis committee, which is fully dedicated and focused and communicating relevant actions and monitoring KPIs on a daily basis.
Seraphim predicts a high probability of a substantial revenue disruption, leading to a potential liquidity crisis for many companies. Therefore, he proposed to cut down costs and freeze all expenses on staff replacement and recruitment, extension of projects, and so on. He also stressed that the postponement of payments to suppliers is not a good way of dealing with the crisis, adding that many suppliers are now in an even worse situation. “The famous WIN-WIN here is not the strategy, it should be respect and credibility,” he said.
Argentina has also implemented a nationwide forced isolation policy, and domestic transportation is now limited. The prices of soybean and corn are lower than in the same period last year, resulting in farmers having to limit their sales to cover their spending as much as possible. The staff of some agrochemical companies have begun to work from home, but some companies are still working in their offices. A local agrochemical formulation packaging company told us that they are still working in the office, but their production capacity has been reduced, adding that the most important thing at present is to focus on production without being influenced by external interference.
During this difficult time when the business activities of most agrochemical companies are being hampered, as a global agrochemical media outlet, AgroPages wants to contribute to the joint efforts to counter coronavirus, by launching a “Business Promotion Plan.” If you do not want to suspend your marketing and business activities because of the lockdown and home isolation, join in this plan and use our platform resources to support your daily business.
To participate in the plan, you will receive a package that includes:
♦ A free online interview to showcase your products and your company‘s strength, which will be published on our website and read by our 100,000+ industry readers.
♦ Free trial account of our “China pesticide export database” of designated products or three products selected by you.
You are welcome to contact us at agropages@vip.163.com. Provide your basic company profile and get your free database account.
Source: AgroNews
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