Who are Monsanto's main competitors

Syngenta boss Erik Fyrwald now rules an agrochemical company that is almost twice as large

Thanks to the addition of business in China, the turnover of the Basel company suddenly rose to more than 20 billion dollars. Syngenta remains a Swiss company, emphasized CEO Erik Fyrwald in an interview with the NZZ.

Erik Fyrwald, the head of the largest supplier of crop protection products, Syngenta, looks relaxed. Like almost all top managers, he has not had to go on tiring business trips in the past three months because of the lockdown - not even to Beijing, where the owners of the Basel company, which has been controlled by the Chinese state for three years, are based.

As he emphasized in an interview with the NZZ, Fyrwald is convinced that the number of business trips will settle at a significantly lower level in the long term than before the outbreak of the coronavirus pandemic. "We will only travel half as much."

Workforce rises to almost 50,000

Another circumstance is likely to provide even more relief for the soon-to-be-60-year-old manager: Syngenta has almost doubled sales within just five years that the CEO set out to do in 2017. The American with Norwegian roots admits that this was only done organically to a limited extent. But he didn't say that everything could be done on one's own.

In 2017, when the Chinese state-owned company Chem China completed the acquisition of Syngenta for $ 43 billion, group revenues had reached $ 12.7 billion. Now, on a pro forma basis, income has risen suddenly from a good $ 13 billion to around $ 23 billion compared to the previous year - the workforce has increased from 28,000 to 48,000 employees.

The rapid growth is due to the new group structure, which the owners announced at the beginning of this year and which implementation has now been completed on June 18. The core business of crop protection as well as the previous second division of Syngenta, the production of seeds, have been supplemented by the activities of the Sino-Israeli company Adama and the agricultural sector of the Chinese state-owned company Sinochem.

The Adama company, which specializes in copying crop protection products that are no longer patented, has long been controlled by almost three-quarters of Chem China. Sinochem is a diversified chemical company that has so far distinguished itself in the agricultural business primarily in the manufacture of fertilizers.

Away from bulk goods

Sinochem's agriculture division is the largest division in the new Syngenta construct with sales of over $ 5 billion after crop protection products (10.5 billion). It is the market leader in the fertilizer business in the Middle Kingdom, but many of its products are bulk commodities.

Under the Syngenta umbrella, this area will also increasingly turn to products with greater innovative strength, assures Fyrwald. Like its two main competitors Bayer Crop Science and Corteva Agriscience, the Basel group defines itself primarily through innovation and thus tries to differentiate itself from the army of manufacturers of bulk goods.

Leading agrochemical companies

Similar to Syngenta, the German provider Bayer and its American competitor Corteva also owe their position to consolidation steps that do not go far back. At the beginning of June 2018, Bayer acquired the world's largest seed manufacturer, Monsanto, for over $ 60 billion after a lengthy investigation by the antitrust authorities. Corteva was spun off from the merged American chemical giant Dow-DuPont just a year ago and combines the activities of the predecessor companies in crop protection and seeds.

According to Fyrwald, thanks to the two newly consolidated units, the Syngenta Group will increase its share of the global crop protection product business from 20 to 25%, which means that it is still ahead of Bayer. In third place are Corteva and the also German chemical giant BASF with roughly the same sales. In the case of seeds, the Syngenta boss puts the gain in market share at just two percentage points - the share rose from 8 to 10%. Thanks to the takeover of Monsanto, Bayer remains the clear market leader, ahead of Corteva.

Shops with strawberries

Syngenta has long struggled with seed marketing and lost market share. Fyrwald is now placing great hopes in the high-growth and apparently particularly high-margin sub-area of ​​vegetable and fruit cultivation. They currently control about 10% of this $ 7 billion market, says the manager and adds: "There's still a lot in there."

Probably because it is harvest time for strawberries, the American points to a new business area for this fruit. In China, the group has started helping farmers sell strawberries directly to consumers through the country's leading e-commerce platform, Alibaba.

This business model eliminates the need for costly warehouses and allows farmers to harvest strawberries in a more ripe condition than if they worked with middlemen. “Strawberries are often offered half white and half red in conventional stores and they don't taste good,” says Fyrwald.

From product to system provider

Like most industrial companies, Syngenta is trying to become a kind of systems provider whose business includes not only products but services as well. The fruit growers in China are offered packages that also include business advisory services, further training offers, software and even the use of - in-house - drones to spray crop protection products.

Fyrwald gets going when he raves about the high-tech solutions that the company is trying to make attractive to Chinese farmers. He also points to the above-average growth opportunities that the Chinese agricultural market promises. The annual expansion rate will continue to move in the double-digit percentage range, he says. Worldwide development is more leisurely - with growth of 2 to 3% for crop protection products and 4 to 5% for seeds.

Development worker for China

But despite all the technical subtleties that the company can come up with, it too has to acknowledge that large parts of Chinese agriculture are still working with outdated methods. It remains to be seen whether the farms will ever have the same purchasing power as high-tech farms in the USA, Europe or Latin America.

The state owners are still very happy to use Syngenta as a development aid worker in China. Such an activity is not available for free. As critical market observers point out, it tends to come at the expense of the margin.

How do international investors react?

How the intentions of the Beijing government and the interests of private investors can one day reconcile is another question. Fyrwald reaffirms what his supervisor, Chairman of the Board of Directors Frank Ning, recently publicly emphasized once again: Syngenta is still striving to return to the stock market by 2022. A double listing can be assumed - in China and on a western stock exchange. Fyrwald says that Switzerland will "definitely" be looked at more closely in the selection process. After all, things have gone “very well” for Syngenta on the SIX Swiss Exchange in the past.

And how safe is the Swiss headquarters of the significantly enlarged Syngenta Group? For Fyrwald, who has lived in Switzerland since his appointment as Syngenta boss four years ago, it is clear that the group will remain based in this country. There is no plan B, not even in the event that the Swiss electorate accepts the initiative to ban synthetic pesticides next year. "I trust that reason will prevail in this vote too."