BASEL, SWITZERLAND, June 27 – Now that the acquisition is complete, leaders of both Syngenta and its new parent company, ChemChina, have a plan to make important changes as they advance their joint strategies. But they’ll work on keeping quite a few things the same.
“The transaction with ChemChina differs from others in the sector because it is not a merger but rather a change in ownership. We’ve exchanged many short-term oriented shareholders for one stable one. Moreover, the rationale for the transaction lies in its growth target and not in cost synergies,” said Michel Demaré, Vice Chairman of Syngenta and Lead Independent Director, during a briefing here today.
“Syngenta will remain firmly anchored here,” he added.
As the global leader in crop protection product sales, Syngenta pledged to strengthen its position by moving above 20 percent market share, but did not reveal a specific target.
“We expect to grow in all markets, but especially in the Asia-Pacific region, particularly with China to expand the fastest,” Syngenta CEO Erik Fyrwald said. “Fifty-three percent of our sales are in emerging markets. No other company has that level of commitment to emerging markets, and those are growth markets for today.Syngenta had $12.8 billion in sales last year.
And the company is clearly on the lookout for new additions to their global seed portfolio, including an expected play for Bayer's Liberty Link assets. Last month, Bayer said it will sell its Liberty branded agro-chemicals and Liberty Link trait technology in order to win antitrust approval for its acquisition of Monsanto.
“In seeds we are a distant #3. Our goal is to be a strong #3,” Fyrwald said.
Asked if the new Chinese ownership could lead to a better biotech approval process for new seed traits in China, Fyrwald didn’t shy away from the possibility.
“We are certainly encouraging that. We think that makes sense for the global system. Having invested a significant amount of money in Syngenta, I think they now have skin in the game that they didn’t have before to improve their regulatory process for all. And we hope that happens.”
China’s slow and relatively uncertain approval process has been the source of much uncertainty for U.S. companies and potentially, a pain in their pockets.
Just last week, a class of plaintiffs, represented by four Kansas growers, alleged they suffered economic loss from lower corn prices and lost sales when Syngenta sold two genetically modified strains of its corn seed – Agrisure Viptera and Agrisure Duracade – to the U.S. market before China had approved the traits for import. The jury awarded them almost $218 million.
Syngenta had argued that corn prices were already falling when China began rejecting the corn shipments, and that the country’s refusal to accept U.S. corn was unrelated to the discovery of traces of the MIR162 trait. But the jury rejected those arguments. China eventually approved the trait for import in December 2014, 13 months after it had stopped accepting U.S. corn.
Fyrwald said he was optimistic about President Donald Trump and Agriculture Secretary Sonny Perdue pushing for additional biotech trait approvals in the near term.
“We want to be helpful and be a bridge for American agriculture from the U.S. to China. The U.S. is our number one market. We have far more people, revenues, research, production and more capability than anywhere else in the U.S. and that will continue,” Fyrwald said.
“U.S. farmers are the number one to adopt new technology always,” he continued. “So we will always develop and launch new technologies in the U.S. and then globalize where they are valued over time.”
Looking ahead to the next decade, Fyrwald said the firm is working hard on comprehensive data tools as part of Syngenta’s Agri-Edge Excelsior program.
“I think that there’ll be collaborations between farmers and our agronomists using digital tools that will enable them to together pick the best products,” he said, adding that those products could help a producer know when to plant, when to harvest, what crop protection products to use, and what fertilizers to use "just to optimize their farms.”
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