August 9, 2011

 

BASF eyes crop protection business in emerging markets

 

 

German chemicals company BASF expects to benefit from strong growth in crop protection particularly in emerging markets over the next few years.

 

"We make a good 40% of our crop protection sales in emerging markets...by 2015 we want to make over 50% of sales from there," said Stefan Marcinowski, BASF's board member in charge of crop protection and plant biotechnology.

 

He expected a good performance in South America in the second half of the year.

 

"The 25% Ebitda margin is our general aim, good weather conditions and stable foreign exchange rates and stable harvest prices permitting," he said, adding that weather and currency were "not optimal" in the first half of the year.

 

BASF's Agricultural Solutions unit, which contains the crop protection and plant biotechnology businesses, is the company's smallest subsidiary with sales of EUR4 billion (US$5.67 billion) in 2010, making up just 6.3% of the company total. The unit should achieve its aim of increasing sales and earnings in 2011, Marcinowski said.

 

North and South America and certain Asian countries are the focus for BASF's genetically modified products, as those countries show "more willingness to accept these future technologies," than Europe, he added.

 

The manager does not expect strong resistance to genetically modified crops in Europe to dissipate in the near future. However Germany will remain a base of genetic technology development for the time being, he added.

 

The company did not rule out acquisitions in the crop protection business, which makes primarily fungicides, herbicides and insecticides amongst other things, but said the potential acquisition targets are limited and currently very expensive.

 

Marcinowski also expects strong growth in sales of genetically modified seeds in the coming years.

 

Unlike peers Bayer AG, Syngenta AG and Monsanto Co, BASF does not have its own seed business, preferring to market its knowledge in partnerships with other companies, a strategy which Marcinowski said will not change.

 

These partnerships focus on the largest crops such as wheat, corn, soy, rice, rapeseed and sugar cane and beet, he said.

 

At the moment, BASF does not make any money from its plant biotechnology business as it is still under development.

 

So far, BASF has invested more than EUR1 billion (US$1.42 billion) in plant technology and plans to invest an additional EUR150 million (US$212 million) annually in research and development.