Syngenta Ukraine Crop Protection Agents Marketing Director: That half of the farmers do not go out into the field is impossible

Syngenta Ukraine Crop Protection Agents Marketing Director: That half of the farmers do not go out into the field is impossible

One of the largest resource suppliers for the agro-industrial complex on the synergy of synthetic and biological products, war changes in the industry, and the harvest forecasts.

Syngenta Ukraine Crop Protection Agents Marketing Director: That half of the farmers do not go out into the field is impossible

Biologicals were used long before the advent of synthetic fertilizers. Science and technology based on the understanding of physiological mechanisms of plants and their interaction with soil microbiome have now made possible to develop them at an industry level.

News about the use of ants as a natural enemy of pests or the use of substances based on the principle of antipheromones to ward off insects from crops has passed the stages of "whim"  "interesting experiment"  "promising results"  "development" and today has formed a billion-dollar niche of biological products, becoming a full-fledged component of high-tech agriculture, which is steadily growing.

The turbulent events of the past three years  the COVID-19 pandemic, broken supply chains that led to a worsening food crisis, record-breaking energy prices, and Russia's full-scale invasion of Ukraine, seemed to reduce the relevance of the environmental agenda and the course towards sustainable agriculture.

It can be stated that this did not happen.

The best indicator of the prospects of biologicals products are big business and, first of all, multinational giants, investing in this direction. Two years ago, the world leader in the agrochemical market, Syngenta Group, closed the acquisition of Valagro, leader in biostimulants and specialty nutrients with over 40 years of history and headquartered in Atessa, Italy. In Ukraine, where Syngenta has been present since the first years of independence, the company also offers biological products to the agricultural market, combining their use with traditional synthetic products.

Kostiantyn Ivaniuk, Marketing Director of Syngenta Ukraine, told Mind about how the realities of 2022 affected the company's business, the behavior of farmers and how to find a place for innovation during the war.

On October 6, it will be two years since Syngenta Group's acquisition of Valagro, a leading biologicals manufacturer, was closed. You can already sum up the intermediate result – how are biological brands perceived in Ukraine?

First of all, it is necessary to note the regional specifics, since the market for biological preparations in Ukraine differs significantly from the European and global ones.

All biological preparations can be divided into two groups  biostimulants and biocontrol. Biocontrol are products that help plants tackle biotic stresses, such as fungal or bacterial infections, parasites, pests and weeds.  Biostimulants, on the other hand, stimulate physiological processes in plants to make them healthier and more productive: namely, by optimizing nutrient use efficiency and availability in the soil, by increasing crop quality and enhancing the plants’ resilience to abiotic stresses due to harsh environmental conditions. Biostimulants also include biofertilizers.

There is no biocontrol market in Ukraine as such. The use of biological fungicides and insecticides is not yet popular.

For the most part, such a type of bioproducts as biostimulants is presented in Ukraine. This segment is present in Ukraine, developing, it has powerful players, including international ones. There are also a sufficient number of locally produced products.

I note that there are also more biostimulants in the world than biocontrol products, but the global growth of the biopesticidal component is very fast, while in Ukraine  again, so far  it is almost invisible.

Syngenta has both its own biologicals and products manufactured by Valagro in its portfolio. For example, the innovative biostimulant Quantis, which was launched this year and showed good results, is a preparation for field crops. Earlier, we brought Isabion to the market, it is also a powerful biostimulant, but for special crops  berries, grapes, vegetables.

The use of Valagro products shows good results in terms of sustainable crop production, CO2 control and conservation of soil fertility. Now we are actively experimenting with the Valagro line in Ukraine and creating a synergy of protection technologies for various drugs. Preliminary results are quite promising.

The global market for biologicals is growing at 8% annually. The Chinese one – by 18%. What is the dynamics in Ukraine?

If we take the category of biostimulants, then depending on the product, the growth can be from 5-15%. Here the Ukrainian market completely coincides with the global trend and is growing, it just does not have a biocontrol component or it is minimal.

Considering the small physical volumes of this market, it still looks like a tribute to fashion.

First of all, this is a global trend. It is only a matter of time when it will fully come to Ukraine, but this is exactly “when”, and not “if”.

The world has taken a course to reduce the load of synthetic products. The European Green Deal implies that by the fourth quarter of 2024, approximately half of the active ingredients will be withdrawn from circulation.

This simply cannot but affect Ukraine, and the timing of when this happens depends on the speed of harmonization of our legislation with the European one. But this market will develop even without coercion "from above". It's just that in the case of an administrative directive, it will happen faster.

That bio is the future is obvious. That is why Syngenta invests in this area and betts big on bio products, and why transactions such as the purchase of Valagro take place.

If bio is the future, then how to avoid cannibalism with the synthetic part of the business?

We do not reason in terms of either/or. At least for now and at least in Ukraine.

The future lies in the synergy of the use of synthetic and biological products within the same protection technology. And our experiences show that such synergy exists and, as a result, gives additional profit to the client.

If we talk about the legislative basis of the market for biological products, then what can and should be done here?

The legislator  and I think this is true for any industry  should move away from the "force" category in favour of the "stimulate" strategy.

First of all, the state should promote the responsible use of synthetic products. So far, only we've been doing this for the most part. We educate, hold workshops, invest in research. Without undue modesty  we are very effective in this, but at the industry level, the position and proactivity of the regulator will always be decisive.

In terms of encouraging the use of biologicals, it may be worth looking at their registration as a separate process. It should obviously differ in the direction of liberalization from the registration procedure for synthetic products.

The smarter and easier the registration process in a country is, the faster innovations come to such a market.

And why don't you mention the price factor that can stimulate the use of biologicals?

Because the price factor is generally difficult to apply when the processes in the agro-industrial complex are not linear.
Let's start with the fact that the unit price itself  a litre or a kilogramme  says little. Different products have different concentrations, different active ingredients, and even within the same class of products there may be a different application rate  one needs half a litr per hectare, and the other  50 ml. Therefore, the final price per hectare matters and what we buy for this price.

We buy a certain efficiency. Getting rid of plants from diseases, pests, etc. In terms of biostimulants, our goal may be, for example, to lengthen the growing season, some corrections for the accumulation of useful substances. In the spectrum of what we will get, we need to add not only the direct effect of getting rid of pests, etc., or an increase in yield in bunker weight  but also related results.

For example, the level of pesticide load on the soil, adherence to the principles of Sustainable agriculture, price premium, access to export  all these benefits need to be summarized and take into account which of them the client needs in a particular situation.

There are technological niches in which biopreparations will have advantage over synthetic ones and even be uncontested. The price in this case becomes a secondary parameter.

It is the identification and formation of such niches that we are now engaged in, since in Ukraine, there is still very little knowledge of how to optimally combine technologies and get the maximum effect.

What percentage of farmers, according to your estimates, uses biological products consciously, and not as a one-time experiment, in Ukraine?

There are only 40,000+ farms in Ukraine, but I can assume that there is not a single one who would not know what biostimulants are and would never try them in one form or another.

The development of biocontrol in Ukraine is also inevitable. I'm sure it will start with those niches where it will bring the most obvious benefits, including from product positioning considerations.

There are products that are very sensitive to this component. These are typically products that are consumed without processing, fresh, straight from the garden and which are not stored for a long time. For example, blueberries and any berries in general. For this niche, biocontrol is certainly very promising, the heyday will begin from there.

Obviously, in the future, the market should establish a balance between synthetic and biological preparations. What ratio between these categories do you consider optimal?

It depends on how to measure. If in cultivated areas, then this can be far from the monetary equivalent. Nonetheless, biostimulants are an excellent element of technology, the use of which is economically justified and the possibilities of which have not been exhausted.

According to our forecasts, in the future, the plant protection system will be supplemented with biostimulants everywhere. That is, this element will become so common and so in demand that its prevalence in arable areas will be close to 100%.

In terms of biopesticides, the situation is more complicated and the forecast is a derivative of the dynamics of macro-movements in the world and in Ukraine. Here the regulatory field will have a huge impact  this segment will be maximally stimulated by the administrative factor

Will the status of a candidate member of the European Union received by Ukraine stimulate the development of the biological component of agriculture?

Europe is moving in this direction much faster than Ukraine. Synchronization of processes depends on how quickly the harmonization of legislation takes place. If this process accelerates, we will catch up accordingly.

Given the increased risks associated with the war in the agro-industrial complex, do you think that farmers will prefer more familiar solutions with a guaranteed result?

I would like to clarify the positioning of this product category.

It is wrong to think that biostimulants are some kind of optional thing that one could do without, but if there is extra money, then why not try it. This is fundamentally not true. I admit that there is a practice of application on the market according to the “the neighbor did, and I will try” principle, but these are special cases due to misunderstanding. The use of biological products is a calculated element of technology or a reaction to a certain situation.

When we talk about the reaction to abiotic factors, for example, if there was a return frost and it is necessary to remove the plants from stress under the threat of significant losses, then the use of biostimulants is often the only option.

If the crops were hit by hail, then there is a war, not a war, but you need to react by adjusting the technology. In this case, the farmer understands that he will invest a percentage of the cost per hectare, but in return he will receive a clear effect. In this sense, all the tragic circumstances of 2022 will not radically affect the class of solutions that are designed to deal with plant stress, since the cost of abandoning them is too high.

And when the product becomes an objective necessity, then the question is not “to use or not to use”.

The question is whether there is money for this or the opportunity to attract them.

That is, this segment sank evenly with the entire market?

The main subsidence in the market is due to areas temporarily dropped out of circulation. Due to the occupation, what we call the addressable area has now decreased by 30%. This estimate includes both inaccessible areas and territories contaminated with explosive elements, where it is not yet possible to work safely. Physical reduction is the main factor that has affected the market for agro-industrial products.

If you look at the areas that remain in circulation, the investment per hectare tends to decrease. This happened this year and will intensify even more next year. Our forecast for a drawdown of investments per hectare in dollar terms is 5-7% in 2023 by 2022, primarily due to a lack of liquidity.

A lot of grain, but no money?


It should be borne in mind that for the current season, the stocks of resources, for example, seeds, were formed ahead of time; most farmers incurred the maximum costs before 24 February. In 2023 the situation will be different. The farmer will look at the product and adjust the technology elements in an effort to achieve efficiency while reducing costs. If there is no money, then there is none.

Did the scheme of payment for and resources in grain come from this?

It originated earlier, but yes, this year it has expanded significantly. We have taken over the trading functions and are trying to turn this grain into money ourselves.

If the price factor comes to the fore, can we expect an expansion of the gray part of the market, where the product is a priori cheaper?

"Greyness" comes in different shades.

There is counterfeit  that is, an illegally imported product equivalent to the one that is registered in Ukraine. Here everything will depend on the quality of control at the borders.

And there is a fake – that is, a product that looks like a product, but is not such. It is possible that there will be those who will take advantage of situations and try to increase the production of counterfeit products, offering them cheaper, but we are ready for such a scenario.

Can we assume that the 2023 harvest in Ukraine will be lower than in 2022?

Minus 30% of the area and minus 5-7% reduction in investment in intensity form a rather tense picture.
Reduced fertilizer supply will play a role. This is a necessary element, and if it is not physically present, then there is nothing to oppose to this.

With a decrease in yield, it is necessary to adapt the plant protection system. This is what we see in the future for the next year and what we are going to the farmer with.

Does the autumn sowing season confirm your expectations?

It's hard to say yet, as widespread rains are stopping work. We expect the expansion of industrial crops, primarily rapeseed, against the backdrop of a decrease in corn and possibly cereal crops.

What is the logic of such changes?

A relatively attractive price has been established for industrial crops, although the spread between the domestic and foreign markets is huge.

They are easier to process, sell and export, which fuels their popularity.

There is an issue of redistribution and geographical location of the areas of cultivation of certain crops. For example, half of our sunflower seeds were sown in the South-East. Due to the high concentration, losses in this segment can be estimated immediately at 50%, not 30%, as the industry average. But due to the redistribution of space, this subsidence will be partially compensated for.

Compensated primarily by corn, which is more difficult to grow, store and sell. In general, too much luxury for today. Therefore, we have pessimistic expectations for this crop, and conservative expectations for cereal grains, that is, winter wheat and barley.

But we need to make a reservation that different signals come from our client farmers. Someone plans to save the area, someone vice versa. This is very correlated with the location: the more west the farm is located, the more ambitious plans it has.

We are ready to reduce the area to the extent that part of the fields will remain fallow. But this will not be a mass phenomenon. So that half of the farmers do not go out into the field is impossible.

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