May 13, 2009

BASF, the world's largest chemical company, will give crop protection a larger share of its research budget as agriculture battles an economic slump that's hurting demand for its other products.

Agriculture is one of the bright spots for chemical producers as declining orders for plastics, coatings and catalysts forced BASF to cut jobs and curb production. Agricultural Solutions was Germany-based BASF's only unit to report a profit increase and double-digit sales growth in the first quarter, with a 21-percent gain.

Last year, BASF ploughed 35 percent of its R&D budget into Agricultural Solutions, which accounts for only 5.5 percent of sales, and the company plans to spend more again this year, said Stefan Marcinowski, the BASF board member who manages its Agricultural Solutions business.

Total research spending will decline to EUR1.35 billion this year from EUR1.36 billion in 2008.

In other parts of the business, CEO Juergen Hambrecht is cutting costs to ride out the global recession. First quarter net income fell 68 percent and planned job cuts were extended to 2,000, with a total of 7,000 workers put on shorter hours.

BASF is also expanding capacity, as the company will add production facilities for its F500 fungicide in Schwarzheide and expand Kixor production in Hannibal, Missouri, next year, said Marcinowski.