SYDNEY--BASF AG (BAS.XE) will use Australia as a launch pad for
growth across Asia, as it seeks to more than double sales of crop
protection products in the region by 2020, the head of its
agriculture division said Friday.
"Australia is in the top ten agriculture markets globally,"
Markus Heldt, BASF's global president for crop protection, told the
Wall Street Journal in a telephone interview during a trip to
Australia. "Soon 50% of the world's population will live on the
doorstep of Australia in the Asian market. Australia will be a
significant contributor to our growth."
The comments come as the world's largest chemical company by
revenue plans to re-enter the Australian farm market as a solo
player after a decade's absence when its contract with local
distributor Nufarm Ltd. (NUF.AU) ends in March 2014. BASF will use
the Australian footprint of its recently acquired Becker Underwood
business to relaunch Down Under, more than doubling its headcount
and introducing a suite of new products aimed at Australia's
farms.
With Australia's agrochemical market worth around 1.5 billion
euros (US$2 billion), Mr. Heldt said the country will play a key
role in boosting sales in the region. BASF plans to more than
double its Asian agrochemical sales to around EUR1 billion, or a
sixth of its business, in the next seven years, as it cashes in on
booming food demand from the region's growing middle class. Last
year, Mr. Heldt's division achieved Asian sales of EUR487 million,
up 10% on the year.
Australia already produces enough food to feed its population
three times over and exports millions of tons of vital crops, such
as wheat and sugar, every year. But rising demand for more
Western-style diets from Asia's rapidly expanding population--which
the United Nations predicts will be the main reason world food
demand will double by 2050--has made it an increasingly important
player in world agricultural markets.
That in turn has meant companies vying to grab a larger slice of
Australia's farm industry--Agrium Inc.(AGU), the U.S.'s largest
farm chemicals retailer, bought agricultural retailer Landmark from
AWB in 2010 and is also buying Viterra Inc.'s (VT.T) retail
operations from Glencore.
BASF itself bought crop-technology company Becker Underwood for
EUR785 million in September last year from private-equity company
Norwest Equity Partners, which had owned it since 2004. The Ames,
Iowa, based company gives BASF a share of the EUR2.5 billion seed
treatment industry, which Jeffries & Co. estimates is growing
by 10% to 12% a year, as well as a foothold in the growing market
for natural forms of pest control favored by environmental
groups.
BASF will target Australia's horticulture industry with new
"biopesticides" developed by Becker Underwood, which use insects
such as tiny worms to control pests like weevils and moths, Mr.
Heldt said. The German chemical maker will also launch products to
tackle chemical-resistant weeds that affect wheat crops and a suite
of products under its Clearfield brand that have lifted canola
yields by up to 15% in Canada, he added.
And it's not just new products that BASF plans--the increased
headcount will also include marketing professionals.
"We see Australian agriculture as high tech and professional but
also very competitive," Mr. Heldt said. "With the significant
amount that needs to be invested in research and development these
days it's important that we are in charge of our own marketing
approach."
Write to Caroline Henshaw at caroline.henshaw@wsj.com
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