Somersby, NSW, Australia - ‘Agribiologicals’ are set to become major money spinners for Australian and New Zealand agribusinesses.
Dr Peter Innes, the newly appointed CEO (previously, President) of Becker Underwood Inc., the acknowledged world leader in agribiologicals describes agribiologicals as, “products containing living organisms used to protect and/or boost crop and pasture productivity”.
According to both Dr Innes and the company’s Australian and New Zealand General Manager, Richard Waterworth, the development of Becker Underwood’s agribiologicals and seed enhancement business will deliver major rewards to rural distributors as well as farmers in both countries.
In April, 2004, Becker Underwood Inc — headquartered in Ames, Iowa, but with major R&D and manufacturing operations in Europe, Canada, and South America — acquired Bio-Care Technologies, then Australasia’s main manufacturer of legume inoculants and microbiological pest management products. Since the acquisition, Becker Underwood has steadily expanded the size, scope and reach of its business in Australia and New Zealand.
During a recent visit to Becker Underwood’s Australasian headquarters at Somersby, NSW, Dr Innes described how the company’s plans for development would benefit both distributors and rural producers.
Niche player
Dr Innes said Becker Underwood, since its inception in 1982, has always operated in niche markets and concentrated on producing high value, unique products.
Developing Becker Underwood’s niche businesses has been achieved both through R&D-based product development and also through strategic acquisitions.
The acquisition of Bio-Care Technologies — an acknowledged world leader in legume inoculants and fungal fermentation technology — has been a case in point.
In 2000, Becker Underwood acquired another agribiologicals business, MicroBio, in the UK.
Dr Innes said Bio-Care came onto Becker Underwood’s ‘radar’ soon after, as an ideal southern hemisphere fit with the MicroBio microbiologicals business.
“Like MicroBio, Bio-Care was a dedicated biologicals business which fitted our niche market strategy. And, buying Bio-Care also allowed us to establish a footprint in this part of the world for our existing portfolio,” he said.
Becker Underwood is keen to pursue further acquisitions in Australasia on the strict proviso that “targets meet our strict criteria of niche market development with limited competition and high market share”.
“Having said that, of our eleven acquisitions over the last four years, we have never bought a company that has come to us out of the blue and said, ‘Would you like to buy this business?’. All our acquisitions have been strategic targets.”
Better seedsThe largest component of Becker Underwood’s current Australasian business is legume inoculants. “However, our technology offerings are set to go a lot further,” Dr Innes said.
“Importantly, all of our biologically based crop management products are naturally occurring and not genetically modified. They are nature’s solutions to nature’s problems.
“Alongside of that, we also develop and market an expanding range of specialised seed colourants and high tech polymer coatings; products we like to describe as ‘taking over where seed genetics leaves off’
“The increasing value (and price) of seed dictates that every seed is given the best possible chance to germinate, establish and go on to produce the maximum possible grain or dry matter. Becker Underwood’s seed enhancement products are designed to both protect seed and increase the ease and efficiency with which seeds are handled and sown,” he said.
The initial demand for seed colourants emerged from a global statutory requirement that all chemically treated seed be clearly and permanently differentiated from untreated seed, to prevent its accidental inclusion into the food and feed chain. Since then, colourants and coatings have evolved to also become value-adding marketing tools, allowing seed companies and chemical suppliers to offer products which are colourful and attractive as well as being protected from pests and diseases, free flowing, and easy to handle.
As more and more ‘treatments’ are being applied to seeds, increasingly sophisticated coatings and adhesives are required to both maintain treatment integrity and enhance flowability.
As Richard Waterworth puts it, high value seed needs to “look the goods as well as deliver the goods”.
R&D drives contribution
Dr Innes describes Becker Underwood as “a manufacturing and sales and marketing company with a strong commitment to develop new products”.
“But, it is also important to recognise that we organise our business around our customers and we take great care to align our interests with those of our customers and all the way through the distribution channel.
“Our reputation as a business has always been built on the integrity of our people and our products. As long as you follow the instructions and use our products like they are supposed to be used, they will do exactly what we say they will do.
“It’s the same with our relationships and alignments of interest. We recognise that for us to succeed, our customers need to succeed and our job is to help them succeed,” he said.
But what do Becker Underwood’s vision, integrity, products and technologies mean and have in store for Australian and New Zealand distributors?
“As more and more conventional chemicals come off patent, the traditional sources of revenue and margins for our distributor customers has been eroded. To restore those margins we need to provide our customer base with unique, proprietary products which, by their very nature, command and support more reasonable margins,” Dr Innes said.
“The goal of our R&D program is to develop new, distinctive proprietary products … value proposition products … which will drive real and substantial cost benefits right down the distribution channel.”
Dr Innes said Becker Underwood’s investment in R&D was also aimed at providing customers with ‘marketing ammunition’ … data from independent efficacy trials, for instance, to help customers sell the company’s technologies more easily and cost-effectively.
“That’s why we have a dedicated research and development capabilities in Australia, the US, Canada, Europe and South America, to service and support local business customers as well as to develop new technology globally.
“Arising out of our disciplined approach, I am very confident that we will have some major and highly exciting product launches — especially in the area of inoculants and seed enhancement — to share with our Australian and New Zealand customers within the next three years,” he said.
The way forward
As Becker Underwood’s local manager, Richard Waterworth said he is pleased with his company’s progress in Australia and New Zealand since he took over the reins in early 2004.
Mr Waterworth said 2004 had been largely been about establishing contact with customers and other stakeholders, assessing what the company had in place and what it needed to do and acquire to progress.
“During 2005, we started to put plans into action, initiated a number of major developments and, most importantly, established a first rate sales and marketing team supported by a top class R&D business unit,” he said.
“2006 will see us actively pursuing a more hands-on customer focus. Now we have our legs on the ground, we can get to stores all over Australia, especially within the winter cropping belt, where so much of our seed enhancement products, especially inoculants, are required.
“Importantly, our customers will not just be seeing our sales people but also, increasingly, our R&D/technical team members who will be available to make presentations to local agronomists as well as to customer-hosted farmer meetings.”
Mr Waterworth said establishing and maintaining strong relationships with customers, at all levels, from head offices to far flung stores, is “fundamental to Becker Underwood’s success”.
“We need to recognise that, at present, Becker Underwood is not a ‘compelling case’. We don’t have a blockbuster chemical, and we don’t rule the agrochemical industry.
“So, we need to demonstrate our technology, reinforce its value in such a way that it makes our customers look bigger and better in the eyes of their customers.
“It is important, for instance, that we assist local store agronomists with the right tools to make their sales calls and advice more compelling. If we can do this, then our sales will automatically escalate,” he said.
Inoculants’ potential
Although legume inoculants have been around, as a technology, for over 50 years, the inoculant market, according to Mr Waterworth, is grossly undeveloped and has the potential to dramatically expand.
“From a distributor’s point of view, inoculants are an add-on sale. They get the sale of the seed and they also get a tied-in sale of a technology which offers their customers greater security, higher performance,” he said.
“At present, however, the number of ‘true believers’ is relatively small. And inoculants are not widely seen as ‘must haves’. Sadly, there’s been very little effort over the years to demonstrate the power and effectiveness of legume inoculants to provide low cost plant nutrient at a time when nitrogenous fertiliser prices are escalating.”
Since early 2005, Richard Waterworth and his team have put a major effort into setting up trials to provide, for the first time in decades, hard data on the performance of both existing and emerging inoculant technologies.
“Early results are already vindicating what we have felt all along about the value of our technology and its potential to make major money for us, our customers, and farmers across Australia,” he said.
“Our next task is for our sales and marketing force to work with our technical people in complementing our promotional and publicity activities and help our distributors get the message out to their customers that inoculation is back on the agenda in a big way.
“The thing is, with inoculants, we really don’t have any real competition other than ‘non-use’. That is the competition we have to beat. And, with our customer’s help, beat it we will, so we can all benefit.”
Mr Waterworth sees Becker Underwood’s granules as the next big development in inoculant technology.
“Granules won’t be cannibalising peat based seed treatment or fighting off competitors. Rather, for us, granules will help us get at farm stored seed. Granules will make it easier and less bothersome for farmers to inoculate, especially in WA but in other areas of broad acre legume-based cropping as well,” he said.
Colourants and coatings
While inoculants are likely to form the backbone of the business in Australia and New Zealand for some time, a major effort is being made to develop Becker Underwood’s seed coatings and colourants business especially in combination with other seed treatments.
As with inoculants, the use of seed coatings and colourants here is, at present, not high. Around 95 percent of seed sown in Australia is farmer-saved seed from the year before.
“The question is, how do we get at that seed and have it treated, inoculated or coloured?” Mr Waterworth asked.
“To us, it has to be through some kind of partnership approach, both with other suppliers and, importantly, distribution. Already, Bayer has eight seed treatment machines on the road and Hannafords are going from farm to farm treating seed at present,” he said.
Partnership revisited
So, who are Becker Underwood’s customers? And does it have any favourites?
“For Becker Underwood, globally, and particularly here in Australia and New Zealand, distribution is philosophically ‘open’,” Mr Waterworth said.
“If and when exclusivity is ever granted, circumstances would need to be exceptional and the exclusivity would have to be well and truly earned.
“Our preference, however, is for genuine partnerships with mutual obligations, responsibilities and benefits.
“For our part, we see our responsibility as providing superior quality, high value, niche market products and backing that with genuine marketing and technical support at all levels.
“From our customers, we look for support in the delivery of our messages, which will, of course, also benefit them as their agronomic expertise will be seen to be enhanced,” he said.
