Sales growth in BASF's reborn Australian marketplace, and rising Asian demand, have defied an otherwise tight trading year for the global chemical giant.
The company, which re-launched its hibernating crop protection business in Australia three years ago, is confident of at least doubling sales in the next five years.
It fully expects to be the third biggest player in the local farm chemical market by 2022.
Already the world’s third largest agricultural chemical business, it won’t disclose exactly how well the revamped Australian operations performed in 2016.
However, despite only just starting to build momentum with a portfolio of new product releases products, BASF “significantly exceeded its budgeted targets in Australia and New Zealand”, while total Asia Pacific sales grew by $33.5 million to $765m (549m euros).
Global sales increased 10 per cent in the final quarter of 2016, but overall earnings before income and tax were down by more than $90b to $110b for the full year.
The German-based giant reported higher fixed costs, partly resulting from new or expanded production facilities for products such as its popular herbicide, dicamba.
Overall sales revenue also fell about four per cent to $7.8 billion due to a “challenging market environment” for crop protection products, notably reduced South American insecticide demand and European fungicide sales, plus currency costs.
But sales volumes in the Asia Pacific were up 5pc, driven by big herbicide demand in India and “positive volume development in Indonesia and Australia”.
Local sales were bolstered by extensive spring rain and a record cropping season across much of the Australian grain belt.
“New products will give us a really strong platform of products across the herbicide, fungicide and insecticide categories in Australia,” said BASF’s global product registration head Dr Jurgen Oldeweme.
“We’re very excited by the developing opportunities in Australia – a producer of quality crops for the Asia-Pacific region and a top 10 global exporter of grain crops.
“Agricultural chemicals are very much an innovation driven business which sits very well with BASF’s chemistry business strategy.”
Agriculture attracts 25pc of BASF total $2.5b annual spend on research and development.
Late last year management approved use of newly developed compounds for new herbicide products eventually destined first for Australian cereal markets.
Even sooner, the recent Australian registration of a new mode of action herbicide, Butisan, will give canola growers fresh control options against ryegrass, including glyphosate resistant ryegrass, and other weeds this winter.
BASF currently has 120 agricultural products available to the Australia and NZ (ANZ) broadacre, horticulture and pest control sectors.
It plans to drive much of its growth momentum in the next five years with the release of 25 new products in ANZ.
Functional crop care products making use of biological control agents are part of the arsenal being lined up for Australian farmers, including Serifel, a preventative fungicide and pesticide based on the Bacillus amyloliquefaciens soil bacteria.
Initially for use in horticulture from 2018, Serifel has multiple modes of action against fungal diseases, insects and slugs.
“We have a very balanced pipeline which will help us fit into the growth story in Australia – there’s a lot of hope and commitment to growing here in response to local needs and opportunities,” said Dr Oldeweme, in Australia last month to meet many of BASF’s 60-plus agricultural team.
The chemical company is also tapping its massive non-agricultural strengths to support farmers, including co-developing new soil wetting technologies with the Co-operative Research Centre for Polymers.
That development work, to improve water use efficiency and yields, is due to conclude in a few months.
“Nobody in our market has any doubts we are here and we have a 100pc commitment to what we’re doing in Australia,” said ANZ agriculture head, Gavin Jackson.
“We don’t talk specifically about our market share, but were looking at organic growth which will be very surprising.
“We are looking at being two or three times our current market size in five years.
“We’ve set up our base, now it’s time to accelerate into what I think will be the most exciting times in the careers of anybody working for BASF in Australia in the next five years.”
Asia Pacific crop protection senior vice president, Gustavo Palerosi Carneiro, said while BASF had proven it was patient and realistic about its return to the farm chemical category in Australia, there was “no reason we cannot easily be number three in this market within five years”.
“We are patient, but we aren’t going to take 10 or 20 years to get our portfolio out there meeting Australian customers’ needs.”