BASF Aims to Boost Sales 70% From 2012 Levels By 2020
BASF’s crop protection division is bullish enough on agriculture to aim for a 70% growth in sales over eight years heading into 2020.
Eight billion euros ($10.88 billion) is the company’s 2020 target, up from 2012’s 4.7 billion euros ($6.39 billion) in sales and 2015’s sales goal of 6 billion euros ($8.16 billion).
To get there, it plans to spur innovation by doubling what it annually spends on property, plants, and equipment. BASF is boosting the annual 150 million euros ($203 million) it spent from 2007 to 2012 to 300 million euros annually ($407 million) from 2013 to 2017.
“Innovation is the only tool to make sure we meet the challenge of increased world population of 9 billion people by 2050,” says Markus Heldt, president of BASF’s crop protection division. Heldt spoke at last week’s BASF annual media briefing in Limburgerhof, Germany.
Heldt notes the 2007 to 2012 time frame brought successful product launches like BASF’s Xemium fungicide brand and its Kixor stable of herbicides. The 2013 to 2017 phase will fuel additional expansion in technologies like Engenia herbicide. This is the new dicamba formulation for dicamba-tolerant soybeans that’s part of a joint venture between BASF and Monsanto. This technology is slated to debut later this decade, pending regulatory approval. Heldt adds BASF will continue putting 9% of agricultural sales revenues into R and D.
BASF’s Business Strategy
BASF passed on the flurry of chemical companies buying seed companies during the late 1990s and 2000s. “The business model we have is that of a trait technology partner,” says Heldt.
BASF’s main partner is Monsanto, with which it is collaborating with on several products including a drought-tolerant corn trait. BASF collaborated with Monsanto on the launch of Genuity DroughtGard Hybrids in the western Great Plains this year.
Last year, BASF re-located the subsidiary in this joint venture—BASF Plant Science—from Germany to North Carolina in 2012.
“It was driven by difficulties of the acceptance of biotechnology in Europe,” Heldt says. “It was decided after long and intense discussions to relocate the location, and focus on markets where biotechnology has a high level of acceptance, mainly North and South America.”
Rather than seed companies, BASF has steered its acquisitions toward companies like Becker Underwood, an Ames, Iowa, firm that makes seed-applied biological products like soybean inoculants.
“BASF has sold biological products for years, but with (the purchase of) Becker Underwood, it will go to a new level,” says Vincent Gros, BASF senior vice president of crop protection in Europe.