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Crop farmers may become fishes' best friends

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What has yellow flowers, grows thousands of miles from the sea, and is the best friend of piscatorial kind?

The answer is canola.

If that sounds fishy, that's because it is. Nufarm, the agrichemicals and seeds group, is developing genetically modified canola seed which produces rather than typical canola oil (or rapeseed oil) long-chain, omega-3 oils, "similar to those found in fish oil".

Indeed, the GM seed has been derived through switching into canola the genes from marine microalgae which manufacture omega-3 oils, and which represent an important part of fish diets. Hence the concentrations of omega-3 oils in marine catches.

"This project adds microalgae genes to canola, using world-leading genetic breeding technologies, so that the crop is rich in these higher-value, higher-nutrition oils," said Australia-based Nufarm, whose shares touched a seven-year high on Wednesday.

Saviour of wild fish

The group added: "This new proprietary product aims to help relieve pressure on wild fish stocks, which are the current source for this important nutrient," with the harvest from one hectare of the crop seen producing omega-3 equivalent to 10,000 kilogrammes of fish.

The GM canola is seen meeting demand for omega-3 oils from aquaculture, as well as for human requirements.

Nufarm said that it was planning to grow up to 4,000 hectares of the crop this year under the stewardship of the US Department of Agriculture as part of the process for gaining approval for the crop.

Filings for US and Canadian consent are expected to be filed this month, with Victoria-based Nufarm having already applied to Australian regdulators for clearance.

"Pending regulatory approvals, commercialisation is expected to commence in 2018 or 2019," the group said.

Brazil credit squeeze

The announcement came as Nufarm unveiled a return to the black for the half year to the end of January, reporting earnings of Aus$20.0m, compared with a loss of Aus$91.0m a year before.

While the improved result was down in the main to the non-recurrence of huge restructuring costs which marred year-ago results - as the group shut factories in the face of tough conditions which caught out rivals such as Syngenta too - Nufam said that its underlying result had also improved markedly, by 67% to Aus$19.8m in earnings terms.

Group revenues rose 13.6% to Aus$1.36bn, while operating profits gained 19.2% to Aus$85.0m, with increases in all but the domestic market, held back by a dent to margins from a strategy of boosting volumes and market share, and in Latin America.

Although Nufarm saw an improvement in Latin American sales - echoing signs of improvement noted by many rivals, fertilizer companies and farm machinery groups too - it flagged pressure from recovery in Brazil's real, which resulted in "farmers delaying their purchases of crop protection inputs in anticipation of price reductions".

Furthermore, it flagged as a "feature of the Brazilian market" during the half-year period "continued challenges faced by [customers] in obtaining credit.

"The company remains vigilant on customer receivables."

Argentine rains fallout

Indeed, Nufarm said that for the rest of its financial year, which ends in July, "cash collections will be a major focus for the company, along with close management of customer credit and foreign currency exchange risk".

In Argentina too, the group said that its second-half results would be effects by "negative market conditions", with a weaker peso cutting contributions, in Australian dollar terms, and rains which prompted the loss of some soybean crops also preventing agrichemical applications.

"The Argentina business suffered from a delayed season, due to excessive rainfall.

"This caused growers to delay purchases and created pricing pressure in the market."

Shares hit seven-year high

Nonetheless, with strengthening demand in Europe, and "optimistic" prospects for the Australian canola sowing season, thanks to good summer rains in the key producing state of Western Australia, Nufarm forecast full-year results showing an improvement in operating profits.

Nufarm shares closed up 3.2% at Aus$9.67 in Sydney, earlier touching Aus$9.96, their highest since January 2010.

By Mike Verdin

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