Advancing in China, Serving Globally - UPL's Sustainable Development Strategy Powered by Natural Plant Protection (NPP)

Facing the severe test of global climate change and the public's pursuit of environmental sustainability, the demand for eco-friendly agriculture is becoming increasingly urgent. As the first agrochemical company to enter the Dow Jones Sustainability Index (DJSI), UPL not only represents the honor of the industry but also shoulders the mission of promoting sustainable agriculture worldwide. In the Chinese market, UPL's development is particularly eye-catching. Faced with industry downturns and severe challenges in business operations, UPL has vigorously promoted the development of Natural Plant Protection (NPP) business and continuously expanded its strategic layout through the acquisition of Corteva's mancozeb assets and investment in factories in China, demonstrating the company's foresight and firm confidence in the development of the industry.

Recently, AgroPages reporters exclusively interviewed Devendra Gangwar, the head of UPL Greater China, to deeply understand how UPL practices its sustainable development strategy and how the company responds to current market challenges and opportunities. In this interview, Mr. Devendra shared UPL's strategic thinking in product innovation, market expansion, and partnership building, as well as the company's profound insights into the future of agriculture.

Devendra Gangwar, Head of UPL Greater China

Facing global climate change and the requirements of society and the environment for sustainable development, as one of the top five multinational agrochemical companies in the world, UPL has demonstrated its firm commitment to sustainable development through innovative practices from the production end to the development and application end of products, making a positive contribution to the green transformation of global agriculture.

What are the core concepts of UPL's sustainability? What does it mean for the company to be the first agrochemical company listed in the Dow Jones Sustainability Index (DJSI)?

UPL's strategic focus is on sustainable development, that is, we are committed to reducing our carbon footprint and protecting the environment globally. Over the past 4-5 years, UPL has made significant achievements in sustainable development. We place special emphasis on building a product portfolio, establishing alliances or partnerships with many companies committed to sustainable development, and by balancing resources, we have built and optimized our product portfolio and built a professional team, especially the establishment of the NPP business department. We believe that in this way, we can ensure resource balance and allow future generations to enjoy sustainable results.

In 2019, UPL became the first agrochemical company to enter the Dow Jones Sustainability Index (DJSI). DJSI uses a comprehensive set of indicators to quantify and evaluate the sustainable development capabilities of companies from long-term economic, environmental, and social dimensions, and selects outstanding companies for the list. UPL's inclusion is a source of pride and motivates us to keep making progress. Since then, UPL's ranking on the list has continued to rise, with the index score increasing to 99%. This reflects our determination to transform from chemical products to natural products and our deep concern for environmental protection and human health. As I said, we are building product pipelines, product portfolios, and partnerships to launch more natural products. Our goal is to make the total revenue from biological products reach 30% of our business revenue, which is also UPL's firm commitment to DJSI.

In the process of achieving the company's sustainable development goals, what are some noteworthy practice cases of UPL in the Chinese and global markets? Faced with increasingly severe global climate change and harsh environmental challenges, how does UPL adjust its research and development and product strategies to adapt to these changes and promote sustainable agriculture?

Over the past few years, UPL has made significant progress in business development. Last year, in the Chinese market, our revenue from NPP products accounted for 15%. We are committed to fulfilling our promises to society, farmers, and the government, and continue to invest in sustainable agriculture education to change farmers' dependence on chemical pesticides. Although chemical products can quickly control pests, natural products are equally effective, but the effect takes longer. Therefore, we educate farmers and retailers to promote natural products to promote sustainable agriculture. We have invested a lot of resources in publicity and education, aiming to make agricultural producers realize the importance of resource conservation, ensuring future food security and a healthy life.

As a leading agrochemical company, UPL is deeply aware of the importance of achieving sustainable development in the production and emission treatment of chemical products. We actively promote energy-saving projects, use green energy, and effectively manage waste, striving to achieve zero waste and zero pollution emissions from our factories. In fact, UPL has several factories that have achieved standards for zero waste and zero pollution emissions. In addition, we also cooperate with production enterprises that lack waste treatment capabilities, assisting them in collecting, decomposing, and disposing of waste to achieve resource recycling. Through these measures, UPL has established an end-to-end sustainability value chain from production to the end user. In this value chain, we are committed to saving energy and reducing carbon emissions in the manufacturing process, and building a sustainable product portfolio to meet the needs of customers and end users, thus promoting the entire industry to a more green and environmentally friendly future.

At present, global warming and extreme climate phenomena such as El Niño and La Niña have become hot topics across industries. Extreme weather poses a huge challenge to agricultural production. Our strategy is to continuously innovate, develop new products, and help farmers adapt to these climate changes to ensure the sustainability of agricultural production.

UPL's management team regards research and development as the core, focusing on developing natural products as a sustainable alternative to synthetic chemicals to meet industry challenges. Take our star product Zeba as an example, it is a completely natural product based on corn starch. When Zeba is applied during sowing, it can absorb and store hundreds of times its own weight in rainwater, providing continuous moisture for crop roots, significantly improving the crops' drought resistance, thus reducing the burden on farmers. Zeba can naturally degrade in the soil, and its 4-6 month life cycle coincides with the growth cycle of most crops, ensuring the water needs of the entire growing season for crops. This innovative product not only improves the water use efficiency of crops but also demonstrates UPL's firm commitment to promoting sustainable agriculture. 

Zeba also contains biological ingredients. When facing environmental pressures such as high temperatures and drought, its degradation products mix with the soil, promoting microbial activity, which is beneficial to the health of the soil ecosystem, enhances the absorption of nutrients by plants, improves the texture and structure of crops, and increases the stress resistance and water retention time of crops.

Zeba plays a key role in improving the yield and quality of crops such as bananas in the Philippines, potatoes in Thailand, and potatoes in India, winning high satisfaction from farmers. This product not only improves the water retention capacity of crops but also significantly saves water resources, reducing dependence on groundwater and river water, and thus reducing the need for diesel or gasoline to drive water pumps. From a broader perspective, the promotion of Zeba is an important link in the complete sustainable value chain. It not only improves the sustainability of agricultural production but also makes a positive contribution to environmental protection.

Now, we have completed the product registration of Zeba in China and are conducting trials, which will soon be launched to the market. In addition, our R&D department is developing bio-control products similar to Zeba. In addition to natural product ingredients, we are also developing innovative formulations such as soluble capsules, saving a large amount of outer packaging plastic and promoting environmental sustainability. We are very excited to be able to contribute to the development of sustainable agriculture in China in this way.

The construction progress of UPL Jiangsu factory is rapid, and the completion ceremony is expected to be held within the year. The factory focuses on the production of NPP products, using the latest technology and automation systems, following global quality production standards, and will work with UPL Shanghai and Yoloo to promote the company's overall sustainable development strategy.

How is the construction progress of UPL Jiangsu factory, which has been under construction for a year? What is the significance of the construction and production of UPL Jiangsu factory for UPL's business development in China and the Asia-Pacific region?

We would like to express our sincere gratitude to all government agencies that have supported this project. With their active support, the construction progress of the Jiangsu factory has been smoother than expected. Since the project started in October last year, after a full year, the first phase of the project has been completed by 90%, and we expect to hold the factory's completion ceremony and plan to trial production by the end of this year.

UPL already has the Yoloo factory in North China, and the reason we are establishing a new factory in the south is based on the following strategic considerations: Firstly, to reduce logistics costs, because transporting products from the north to the south will increase transportation costs and extend delivery times. We do not want to pass on these additional costs to farmers, so establishing a factory in the south will help reduce logistics expenses. Secondly, to improve production efficiency. The cold winter climate in North limits the factory's round-the-clock operation, leading to increased energy consumption and labor shortages, which in turn affects production and supply. The establishment of the Jiangsu factory will ensure full-load production throughout the year, save energy, and align with the concept of sustainable development. Finally, to get closer to the market. UPL has many businesses in the central and southern parts of China, and the establishment of the Jiangsu factory will bring us closer to the market and customers, allowing us to quickly respond to market demands and deliver products on time.

UPL Jiangsu factory focuses on the professional production of NPP products, not only producing NPP products locally but also importing products from global subsidiaries and establishing cooperative relationships with local and international partners, aiming to provide a more diverse range of natural products. Given China's huge production capacity, we plan to fully utilize the production capacity of the first phase of the project and launch the second phase in a timely manner according to market demand to expand production scale and meet domestic and international demands. Our goal is to increase the business volume of NPP products to 50-60%, and work with UPL Shanghai and Yoloo to promote the company's sustainable development strategy.

What are the innovations and advantages of UPL Jiangsu factory in production technology, automation, and environmental protection and emission reduction?

UPL Jiangsu factory reflects the continuous progress and technological innovation of our industry. The factory is equipped with the most advanced equipment made in China, including filling lines, dedicated to product formulation, and uses a distributed control system (DCS) to achieve automation of the production process, reducing energy consumption and labor requirements. In our first phase project, digital control and automation systems have been fully implemented, and the production workshop has achieved a high degree of automation, with only a few supervisors needed on site.

To ensure high standards of process flows, we regularly invite experts from India for on-site guidance and supervision, which is part of our standard operating procedures. Our goal is to integrate China's innovative technology with global manufacturing experience; to this end, our professional team regularly visits the factory to provide technical guidance, develop and implement standards, and contribute to the technological value addition and sustainable development of the factory. Our experts supervise and manage according to international standards to ensure that the factory meets global standards in terms of safe production, waste management, sustainability, energy consumption, and energy conservation and environmental protection.

After acquiring the global mancozeb business of Corteva (excluding some countries), UPL further consolidated its leading position in the global market. Faced with supply challenges, UPL is working hard to increase production to meet market demand. In China, UPL continues to enhance the market competitiveness of mancozeb by continuously expanding its formulated product range and distributor network, ensuring continuous innovation and lifecycle management of the product.

At the beginning of 2024, UPL announced the acquisition of the global single-component mancozeb business assets of Corteva (excluding China, Japan, South Korea, the United Kingdom, Switzerland, and EU member states). What are the positive impacts of this acquisition on UPL's global mancozeb business layout, and how does UPL organically integrate it with its existing business?

UPL's acquisition of the Corteva mancozeb brand marks an important milestone in our strategic development. As a leader in the field of mergers and acquisitions, UPL has accumulated rich experience in corporate mergers and brand operations. This year is our first year after the acquisition and we have started to promote the commercialization of the Corteva brand. Our strategy is clear and simple: to maintain brand value and keep the channels vibrant. We promise to maintain the stability of channels, brands, and formulations, continue to provide the original high-quality products, and are committed to improving service levels, carefully maintaining existing channels, and expanding our influence by reaching a broader group of farmers through diversified channels. Our goal is to maintain the independence of the brand, rather than concentrating all brands in a single channel.

UPL is recognized globally as a leader in the field of mancozeb. This multi-purpose fungicide is favored by farmers and widely used for various crops such as grains, vegetables, and fruits. Our company has accumulated profound knowledge and extensive experience in the production of mancozeb, not only as one of the world's largest manufacturers but also by developing a variety of formulated products and formulations, including WP, SC, and OD. In addition, UPL offers a series of formulated products for different crops to meet various needs. Our technical expertise has made UPL's products unique in the global market, earning widespread recognition and trust.

In addition to providing mancozeb single agents, we have also launched a variety of mixed agent products to strengthen resistance management. This allows us to provide farmers with more comprehensive end-to-end solutions to help them effectively deal with various crop diseases and pests, thereby enhancing the sustainability of agricultural production.

After the acquisition, we encountered a short-term supply shortage. However, with the increasing demand for mancozeb, its prices have also shown an upward trend. UPL's global team is working extensively with farmers, and our factories are operating at full capacity to meet the growing production demand. In the Chinese market, mancozeb has attracted much attention due to its wide application and general acceptance by farmers. Looking ahead, we anticipate that the supply of mancozeb may face challenges, but we are actively taking measures to ensure a stable product supply.

Mancozeb is a relatively old product, and in the global and Chinese markets, what measures will UPL take to continue to expand its application and maintain the product's lifecycle?

The EU's decision to ban mancozeb may have some impact on its global market, but this product still has a wide range of applications worldwide, and its market vitality remains strong. UPL sees this as an opportunity to consolidate its market position. UPL's R&D and marketing teams are highly innovative, and they are extending the product's market life through lifecycle management, including formulating with other safe active ingredients, reducing the proportion of mancozeb, and adding natural or safer ingredients, among other strategies. In some countries, UPL uses its unique Rainshield technology to prevent wash-off by rain and helps the product redistribute in crops under wet conditions, greatly improving the product's use efficiency and further enhancing its market competitiveness. These efforts have maintained mancozeb's market position and ensured its long-term provision of effective crop protection for farmers worldwide.

In the Chinese market, UPL will continue the success of mancozeb products based on our production and R&D technology. We offer a diverse range of products, including WDG, SC, OD, and other formulations to meet the application needs of different crops. We also provide customized formulation services for modern plant protection technologies such as  drone spraying.

Thanks to users' trust in the product's effectiveness, UPL's mancozeb products enjoy a premium position in the Chinese market. We are upgrading mancozeb formulations, launching a more diverse range of products, providing higher quality services, and setting more competitive prices to meet the needs of farmers. UPL is the only manufacturer in the market that can mix mancozeb with bordeaux mixture and the only company in China that has obtained registration for such products. The "oil-copper-mancozeb" package that has taken the citrus farming community by storm in recent years is now available all in one place at UPL.

We are expanding our Chinese distributor network, authorizing them to sell UPL's high-quality formulations. Overall, the innovative formulations, a strong partner network, and product diversity constitute the three core competencies of UPL's mancozeb business.

During the downturn in the agrochemical market, UPL China avoids the highly competitive API market and focuses on NPP products and brand building, addressing challenges by optimizing product lifecycles and building connections with farmers. Globally, UPL has strengthened its market position through acquisitions, demonstrating an open cooperative corporate culture and strong confidence in the market.

The current downturn in the agrochemical market, with overcapacity and insufficient demand, poses operational challenges for most companies. How is UPL responding to this market pressure? What is UPL's overall development strategy in the Chinese market against this backdrop?

We are indeed facing supply challenges, with rising raw material prices in Europe and increased ocean freight costs putting pressure on our costs. Although we strive to absorb these costs, the shortage of demand means we cannot fully offset the increased costs. Geopolitical turmoil and strikes have further driven up costs. The overcapacity issue is particularly severe, impacting many companies. We expect this situation to gradually improve.

Against this backdrop, UPL China will focus on branded products and invest in the development of NPP and other sustainable products. We will build teams, channels, and brands, and establish close ties with farmers to maintain business operations and benefits. Our goal is to optimize product lifecycle management, enhance profits by providing high-value formulations, and educate farmers on sustainable agriculture constantly.

The UPL Jiangsu factory project demonstrates our thoughtful market positioning. Although we produce a large amount of APIs in India, we choose to avoid direct participation in the highly competitive API market. Our strategy is to work closely with farmers worldwide, continuously invest in marketing, and launch innovative and advanced product portfolios. We focus on brand operations to reduce dependence on fluctuations in the API market. The new UPL Jiangsu factory will focus on branded products rather than API production, with the core being to build teams, expand channels, build product portfolios, and focus on marketing, which is key to our business success.

The demand for high-quality and sustainable food in China continues to grow, driving the desire for advanced agricultural technology and products. Although the prices of agrochemical products have dropped significantly, the increase in sales volume and the temporary fluctuation in market value indicate a future recovery. Chinese agriculture is developing towards scaling and intensification, which will increase the demand for high-quality products and drive market growth. In the future, more and more farmers and retailers will accept NPP products and health care products. As Chinese agriculture modernizes and integrates, the market will become more orderly, and the demand for efficient and environmentally friendly agricultural solutions will continue to grow. UPL is working hard to adapt to this trend and develop innovative products such as Vacciplant to enhance plant health and reduce food waste, also contributing to the sustainability of the entire food chain.

UPL is a company that has openness written into its genes. Even during the current difficult times in the industry, UPL has still carried out several global acquisitions. How do you view this strategic thinking of UPL?

UPL is a company with a global perspective, and its corporate culture is open and inclusive. Even during times when the industry development is more challenging, the company has orderly carried out several acquisitions, such as the global mancozeb business acquisition last year and the acquisition of PT Excel Meg Indo in Indonesia this year. These actions reflect UPL's open attitude towards global resources and values and its emphasis on strengthening global cooperation.

As a regional head, I am keen to establish mutually beneficial relationships with partners to achieve complementarity and jointly make up for shortcomings. Our core strength lies in NPP products. In cooperation, I focus more on how to provide better solutions for the industry and agricultural producers through collaboration and communication. This is the focus of our team's work.

At present, our company has no plans for large-scale acquisition activities. However, we are open to exploring cooperation possibilities through various forms such as equity participation, acquisition, or establishing alliances with small and medium-sized enterprises that have unique advantages in the fields of seed treatment, and NPP. Although our focus is on establishing mutually beneficial partnerships rather than pure equity transactions, if appropriate small-scale mergers and acquisitions can significantly enhance our product portfolio and bring practical benefits to farmers, we will actively consider them.

You have been in the industry for 20 years and have experienced several peaks and troughs in the industry. How did UPL's team respond during the last downturn? What practices are worth learning from for the industry?

Indeed the current situation may be the biggest challenge we have ever faced, but fortunately, our team's outstanding contribution has kept UPL's business in China growing steadily last year. This achievement is attributed to team members who diligently completed three key tasks: filling gaps, seizing opportunities, and establishing partnerships. They continuously sought and filled deficiencies with an innovative spirit and relentless efforts, keenly capturing every opportunity and working tirelessly day and night. Last year, we successfully launched some products that we had not directly sold before, significantly enhancing our competitiveness in the Chinese market. We also expanded our partner network, with the team actively engaging with customers, looking for cooperation opportunities, and establishing solid partnerships through mutual support and understanding. This is the complementary cooperation I advocate—providing what each other needs and achieving win-win through partnerships.

For the future of the market, we should remain optimistic. Although the market will have its ups and downs and challenges are always present, the most important thing is to build a team that can face challenges and find opportunities within them. Opportunities, partnerships, product portfolios— these three elements form the core of our success.