AgroPages-ALCEDO: Adapting to EU regulatory changes to maintain position as leading plant protection distributor in Romania-Agricultural news

Romania is traditionally a major agricultural country in Europe, and was the largest grain producer in the continent in the middle of the last century. Although its agricultural technology is not as advanced compared to developed European countries, in 2018, Romania's corn and sunflower seed production still ranked first in the EU in terms of planting area and output while its cereal output ranked third, due to its rich agriculture resources.

After joining the EU in 2007, Romania’s crop protection regulations have been unified with EU standards, which facilitated the exportation of Romanian agricultural products. However, strict laws and regulations under the EU system also gives less developed agricultural markets, such as Romania’s, the practical problem of a shortage of alternative plant protection solutions.

In this report, we exclusively interviewed Gabriela Elena Rizescu, Director of Marketing at ALCEDO SRL, the largest distributor of plant protection products in Romania, who gave us a detailed introduction to the development of ALCEDO, the current problems facing the Romanian agricultural and plant protection markets, and how ALCEDO continues to lead the market.

Gabriela Elena Rizescu, Director of Marketing at ALCEDO SRL

AgroPages (A): Please briefly introduce ALCEDO's history and current development.

Gabriela Elena Rizescu (G): Exactly 30 years ago in May, four former researchers from the Romanian National Plant Protection Institute started a company called ALCEDO, whose business was mainly small phytosanitary treatments that enabled it to accumulate minor levels of capital for future development, becoming a distributor of phytosanitary products.

Our first collaboration in distribution stared in 1991 with the main local producer, OLTCHIM. Within the next year, in 1992, we began collaborations with multinationals, the first two companies added to our portfolio being Rohm & Haas and American Cyanamid. Since then, we have added more and more international suppliers every year, and we are now currently working with all major names in the industry.

In 1998, we established our formulation plant, ALCHIMEX, which is currently the leading formulator in the market. Products formulated in ACHIMEX are currently used in over 20 countries, and we provide toll formulation services for our partners.

In 2002, we added a new category to our portfolio, seeds, while in 2005, we started distributing fertilizers.

In 2011 ALCEDO become part of the big family of SUMITOMO CORPORATION.

In 2019, ALCEDO’s consolidated group turnover was EUR170.80 million. We are currently the largest distributor of plant protection products, with a market share, according to market research company Kleffmann, of almost 15% in 2019. We are also the number one distributor of seed varieties, with a market share of around 12%, and we are one of the top five fertilizer distributors.

A: What resources and support did Sumitomo’s investment bring to the development of ALCEDO since 2011?

G: When SUMITOMO decided to invest in ALCEDO, they invested in a management team that succeeded in keeping ALCEDO the number one company in terms of input distribution in the Romanian market, despite the ongoing changes. In 2007, the country joined the EU and competition increased each year. Their support came in three directions, firstly, by understanding Romanian management and performance, and ALCEDO has had the same management for 22 years. Secondly, by allowing the company to borrow money at a competitive rate compared to the local market, and thirdly, by facilitating connectivity with additional suppliers, including Japanese PPP manufacturers.

A: Please introduce Alchimex’s formulation technology and its advantages.

G: The first products ALCHIMEX produced in 1998 were wettable powder fungicides and insecticides, but that was over 20 years ago. Meanwhile, the formulation of our plant protection products has been upgraded to ensure the safety of formulators and users. So we added formulation lines where we can produce concentrated emulsions, concentrated suspensions and water solutions for biological classes, such as herbicides, insecticides, fungicides, adjuvants and foliar fertilizers.

ALCHIMEX is the proud owner of a modern sulfonylureas formulation plant, part of collaboration with DUPONT that continues today with FMC. Almost half of ALCHIMEX’s production is dedicated to Romanian markets, with the other half to international markets.

A: What are the characteristics and development trends of the Romanian agrochemical and agri-inputs distribution market? Many overseas agrochemical companies regard Romania as a springboard for entering the EU agrochemical market. What is your opinion on this?

G: After joining the EU, Romania became a more attractive market to almost all international players, and intensified the competition among our suppliers and distributors. As I mentioned, ALCEDO succeeded in maintaining its leading position due to its management team, which is able to understand farmers’ needs, technological developments and climate change to find the best solutions. Competition is tough, but we are continuing our farm-oriented approach.

From the outside, the Romanian market is quite appealing for many. After years of continuous growth, sometimes by two digits, 2019 was the first year when the market was flat, partly because of the weather, and partly because we were heading towards a saturated market. At the same time, Romania is now part of the EU, meaning that whatever legislation applies in France, Spain, Germany, or any other EU country also applies in Romania. From this point, we can say that access is restricted to those with products registered in the EU.

A: What are the major issues facing Romanian agriculture today?

G: The situation in Romania is very close to what is happening in Poland, although their crop structures are different, with the main crops being corn, wheat and sunflower, and the planting area of oil seed rape decreasing from 0.8 million hectares to 0.2 million hectares.

The biggest challenges facing Romania are:

· The increasing number of banned pesticides

· The decreasing margins in the industry

· The weather

Those are the challenges facing distributors in the EU today. But out of the three, the most difficult to control are the banning of active ingredients and the weather.

Every year, the effects of banning pesticides are becoming more significant. EU regulations do not consider the specific agricultural conditions of each member country, so resulting decisions can considerably affect farmers and their competiveness.

Many banned products have no replacements, leaving farmers with no solutions, such as the case with neonicotinoids for seed treatment, other than maybe more expensive solutions that are not always as effective. This is also the case in Romania, where farmers are saying that ecological sustainability should go hand-in-hand with economic sustainability, and food in Europe should continue to be available for everyone.

In the coming future EU is taking more active ingredients ‘OUT’, including some popular ones, such as tebuconazol, thiophanate-methyl and chlorothalonil. Therefore, a decline in the market should be considered. New and more environmentally-friendly technologies will be used, with crop protection using biological, physical and other non-chemical methods being on the radar for the future, and some farmers are already adopting these new technologies on their farms.

With regards to weather, even during this season, we have experienced major issues caused by drought. Therefore, technologies should be orientated towards water conservation. I think it is in farmers’ hands to do something is this direction, by adopting new systems such as no-till technologies and forest curtains in their plating areas. Our job is to encourage and support them.

A: What is the level of competition related to end products in the Romanian market? Regarding stricter EU regulations on chemical pesticides, what is ALCEDO’s strategy to lead future trends?

G: Some 95% of products consumed by the Romanian market come from multinationals, mainly European, American, Chinese and Australian. Although we formulate products locally, we do this in collaboration with major companies and by following their high standards. The rest of the market belongs to several minor European companies that are registered in their countries, and by mutual recognition, they are also registered in Romania.

As I mentioned, the EU is strictly assessing chemical products available in the market. While many solutions were available 10 years ago, now things have started to become critical because the rhythm for taking out molecules is far much higher than new solutions entering the market, putting in danger food security.

Regarding banned products, we must all deal with this situation and work with what we have available. This is the same for everyone. Food products in Europe today are cleaner and more affordable because of available technology. Europe is looking forward to replacing chemical products with bio-pesticides or alternative products, but as much we would like to do this, we do not currently have many effective and affordable solutions.

As with every company in this sector, at ALCEDO, we have been forced to adapt to the latest developments, and we have succeeded in doing this well. We also hope that Europe realizes, before it is too late, that we need affordable food. So, instead of banning compounds with no alternative solutions, we should enable agriculture to save resources. This is what we are trying to do with farmers.

A: How has the COVID-19 pandemic affected the Romanian agricultural product market and ALCEDO? What measures are the company taking to deal with the crisis?

G: I do not think that there is anyone on this planet not affected by the COVID-19 pandemic in some way, whether slightly or significantly. Romanian agriculture is in the same situation. Since the crisis started at end of March, the majority of key goods for this season were already delivered to our farmers. Due to closed borders, there were some delays to deliveries, but those were finally solved as soon as governments found ways to let trucks pass. Together with our team, we tried to find solutions to replacing products with available alternatives to ensure that farmers experience no delays to their work in the field. Currently, the spring season is almost finished, so we are now preparing for the autumn season, with the hope that everything will be back to normal as soon as possible.

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