The wave of consolidation among major agrichemicals groups
will be a boon to smaller rivals, Plant Impact said, even as it unveiled
results marked by a hiccup in tie-up with sector giant Bayer.
The merger spree which is seeing Bayer bid for Monsanto, ChemChina
for Syngenta, and Dow and DuPont form a merged ag business, "will benefit small
companies" in the sector, said John Brubaker, the Plant Impact chief executive.
The lesson from the pharmaceuticals sector, after its own
consolidation, under which the number of sector majors shrank from 60 to 10 in
the 20 years to 2015, was that the large drug development companies expanded
their quest outside for technologies to underpin their leadership.
In agrichemicals too, "these companies as they go through
consolidation will become more open to partnership… and seeking product from smaller
Whether this quest for fresh intellectual property leads to fresh
acquisitions of more minor groups was too early to say, Mr Brubaker said.
"It may be that smaller companies themselves pair up,"
although this was in the realm of "crystal ball gazing", he told Agrimoney.com.
Plant Impact highlighted the role of "depressed" crop prices
in spurring the deals between the top players, with the weak values creating "significant
pressure on growers' profitability", feeding through into the supply chain too.
"Cost-cutting behaviour by farmers has reduced input
consumption, creating significant channel inventory in many markets, notably
Brazil and the US," said David Jones, the Plant Impact chairman.
"The industry is adjusting to these new conditions in a
number of ways, most conspicuously by consolidation."
Plant Impact had itself fallen victim to the trend of stockbuilding
through its flagship Veritas product, which promotes soybean yields, and is
sold in Brazil through a deal with Bayer.
"We did not achieve the campaign plan that both we and Bayer
CropScience, our partner in the country, had set for the season," Mr Brubaker
said, adding that "this resulted in a build-up in channel inventory levels
which adversely impacted Bayer's planned purchase volumes for the forthcoming
2017-18 growing season".
However, this represents only a "temporary setback" he said.
The Brazil setback curtailed to 17%, to £8.45m, growth in
group revenues for the year to end of July, despite the boost to sterling-denominated
results from the weakness of the currency against the dollar, in which Plant
Impact invoices most of its orders.
The group reported a widening to £3.13m in losses, from
£706,000 a year before, thanks largely to increased costs of sales, as the
group expanded its commercial activities in Argentina and the US, and of
research and development.
Thanks in part to learning from the experience of the
pharmaceuticals industry, Plant Impact has enhanced its processes and taken on
extra staff to boost "significantly… the flow of potential new molecules into
our screening process", Mr Brubaker said.
Benefit of diversity
Indeed, Mr Brubaker termed as one of the group's defining advances
of its latest financial year its expansion from a single-product company into
one also selling Banzai in the cocoa sector and Fortalis, a sister soybean spray
And Plant Impact is targeting further expansion, both in use
of its existing technology on other crops, such as cotton or canola, and on fresh
products, with applications being developed to boost yield through the complete
soybean plant cycle.
"Our sales force will have a much easier time saying they have
five products to sell, rather than just one," he said.
A broader portfolio would also make the group "more
appealing to prospective partners".
Plant Impact shares stood 2.8% higher at 27p in morning
deals in London.