What BASF Bought from Bayer
To head off potential antitrust concerns from the Monsanto purchase, Bayer had to sell a considerable part of its businesses to BASF that includes:
• LibertyLink technology, a glufosinate-tolerant-based weed-control system in corn, soybeans, and cotton
• Canola hybrids in North America under the InVigor brand using the LibertyLink trait technology
• Credenz soybeans
• Certain seed treatment products including Ilevo, a seed treatment that helps soybean farmers manage sudden death syndrome
• Xario digital farming platform
This week, BASF hosted the agricultural media at its U.S. headquarters in Research Triangle Park, North Carolina, to discuss its direction since the acquisitions.
Seed and chemical acquisitions and mergers in recent years have concerned some farmers and farm groups regarding increased concentration and lack of competition.
Still, a wide range of product in seed, crop protection, and digital technology exists, says Paul Rea, senior vice president for BASF’s Agriculture Solutions. Nor is innovation stifled. In BASF’s case, it’s bringing 39 new products to the marketplace by 2025, he says.
The Department of Justice (DOJ) conducted a thorough review of the transactions to ensure that competition remained high, says Rea.
“Investment in R and D (research and development) remains at a very high level for agriculture,” he says. “They (farmers) should feel confident they’ll have choice in the future.”
BASF officials also discussed the following:
• Seeds, Traits, and Seed Treatments. Around a decade ago, BASF termed itself as The Chemical Company. Recent acquisitions, though, have given it a considerable presence in the seeds and traits business. BASF now owns former Bayer CropScience technologies like Liberty Link herbicide-tolerant system, InVigor canola, Credenz soybeans, and Ilevo seed treatments.
“The business environment has changed dramatically over the last 10 years,” says Vincent Gros, president of BASF Agricultural Solutions. These days, interconnectivity between crop protection, seed treatments, seed, traits, and digital tools is the best way to serve BASF’s customers, he says.
“We are not yet a global seed company because that takes time, but we have a very strong foundation,” he says. “We are well equipped to be in that market.”
• Digital agriculture. Xarvio greatly builds on BASF’s digital agriculture strategy, says Rea.
“We did have existing capability, but it (the Xarvio acquisition) certainly expanded that massively,” says Rea. “We have a larger team of digital experts that have successfully already brought products to marketplace in other parts of the world. It is well established in Europe and growing quickly. Now, we’re bringing that technology to the U.S.”
He says the Xarvio platform will enable BASF to bring products to market faster and expand capabilities it formerly did not have.
Digital tools BASF has already released include Xarvio Scouting app, which farmers and consultants can use to identify weeds from smartphone photos.
• Revysol fungicide. BASF received federal approval for a new triazole fungicide called Revysol earlier this year. It’s a demethylation inhibitor (DMI) fungicide that is part of the triazole group of fungicides that BASF will label for a number of crops. In corn, its brand name is Veltyma fungicide. In soybeans, its brand name is Revytek fungicide.
“It’s highly efficacious,” says Rea. “It also has an excellent environmental profile as well. That’s why it was registered in record time by the EPA.”
• Inscalis insecticide. In soybeans, it’s labeled as Sefina insecticide, which had its first full year on the market. No pollinator restrictions are on the label, and it also has fast activity on pests like soybean aphids, says Chad Asmus, BASF product manager.
“It goes easy on the bees,” he says. “It is also selective on beneficial insects.”
Rather than selling chemical by the jug or seed by the bag or bulk unit, Bayer has a pilot outcome-based pricing program that sells metrics like a yield guarantee. If a prearranged metric isn’t realized, Bayer would compensate the farmer in either cash or product refunds or rebates. If a farmer follows specific agronomic steps outlined by Bayer and yields or other metrics swell above the prearranged level, both Bayer and the farmer share the extra bounty.
BASF currently doesn’t have such an offering. In a sense, though, Rea says BASF already sells outcomes.
“We know that our products have to do a certain job, or otherwise growers wouldn’t use them. An example is fungicides. We have to be able to show farmers the return they generate, and typically, that’s in yield.
“But I think we’re very open to what the future might look like and how farmers want to use and purchase and consume products,” he adds. Digital tools such as those in its Xarvio platform enable BASF to be more prescriptive in product use and in developing field-by-field recommendations, he says.
“We don’t have an (outcome-based pricing) offering in the marketplace today, but we will be evaluating how outcome-based pricing could be valuable with farmers in North America,” he says.
Rea cautions this model would not be for everyone. “I don’t think it’s something that the whole market would gravitate toward, to be perfectly honest,” he says. That’s because farmers are highly independent, and want to make their own decisions about products and product applications, he adds.