Nufarm Ltd.

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Nufarm Ltd.

AUSTRALIAN CROP PROTECTOR IN 1956

INTERNATIONAL EXPANSION STARTING IN 1991

CROP PROTECTION STRATEGY FOR THE NEW CENTURY

AUSTRALIAN CROP PROTECTOR IN 1956

Nufarm was originally established by Max Fremder as a distributor of phenoxy-based herbicides to the agricultural market of Victoria, Australia. Fremder’s company grew strongly, backed by the boom in Australia’s agricultural sector during the 1960s and 1970s. By 1972, the company had a new large-scale manufacturing plant in Laverton. That site also became the company’s headquarters.

The global agricultural market was then at the beginning of a massive transformation. While much of the world’s agricultural markets remained tied to a model based largely on smaller-scale, low-yield farms, the United States had inaugurated the new agro-industrial era. This new model focused on a smaller number of extremely large-scale farms, which, through the unbridled use of herbicides, pesticides, and other so-called crop protection products, raised per-acre production levels far beyond what had previously been obtainable. The development of more and more effective, and selective, crop protection products, such as the phenoxy-based herbicides, the first of which, 2.4D and known as Weedone, occurred during the 1940s. The shift of Australia’s agricultural market to the newer large-scale, chemical-intensive methods provided new opportunities for Nufarm into the early 1980s.

By then, Nufarm had come under the leadership of Doug Rathbone, who held degrees both in chemical engineering and commerce. Rathbone, who became managing director of Nufarm in the late 1970s, recognized that the still small company, with sales of just AUD 100 million at the start of the 1980s, needed a larger partner in order to gain a leadership in the Australian market. By 1982, Nufarm had found its partner, in the form of chemicals producer and distributor Fernz Corporation, based in New Zealand. Fernz, originally known as Fertilizers of New Zealand, initially acquired an equity investment in Nufarm, before taking full control of the company and moving its headquarters to New Zealand in 1987. Rathbone then became managing director of the larger company, and obtained a seat on the board.

Before long, the Nufarm operations, and agro-chemicals in general came to represent the fastest-growing part of Fernz, as Nufarm rapidly became the leading producer of herbicides in Australia and New Zealand. Yet the company’s success, and its history producing such notorious chemicals as DDT, also made it a target of the Australian section of environmental activist group Greenpeace. In 1990, the company was accused of having caused massive pollution at its Melbourne plant. The scandal forced a government investigation that shut down the plant for some three months. While Nufarm was cleared of wrongdoing in the end, the episode proved a public relations disaster for the company.

INTERNATIONAL EXPANSION STARTING IN 1991

This led the company instead to make a move into international markets in the early 1990s. The company founded its first foreign distribution subsidiary in 1991, in Malaysia. The company then opened an office in Singapore the following year, and launched its first manufacturing operations in the region at this time as well. Before long, Nufarm’s Asian operations had reached Indonesia, Thailand, Japan, the Philippines, and China.

Nufarm’s Asian business was destined to remain just a small part of the company, however. Instead, Nufarm increasingly turned its attention toward the West. The company, which had launched exports of phenoxy herbicides to the United States in 1988, entered that market directly in 1992, setting up its first office there. The United States provided the base for the company’s further expansion throughout the region, with new subsidiaries added in Canada by the middle of the decade. Into the 2000s, the company had entered the South American market as well.

Europe, however, provided the group’s primary expansion grounds during the 1990s, in part because the consolidation and restructuring of the European Union’s agricultural chemicals sector had placed a large number of businesses up for sale. Fernz Nufarm, as the company became known into the middle of the decade, first targeted the United Kingdom. While its expansion into the American and Asian markets had been especially through the development of a distribution market, Nufarm targeted the manufacturing sector for its European expansion. In 1994, the company made its first European purchase, buying Rhone Poulenc’s phenoxy herbicides production facility in Belvedere, England.

COMPANY PERSPECTIVES

Nufarm Limited manufactures and markets a wide range of quality crop protection products. Our mission is to meet the interests of all stakeholders in a manner that shows we care about: the growth and success of the business; the wellbeing of our employees; the environment and the communities in which we operate; our customers and suppliers; and the reputation and performance of our products and service.

Austria became the company’s next new market, when it bought Agrolinz, based in Linz, Austria. That acquisition not only gave the company a strong position in the Austrian market, it also gave it control of Agrolinz’s strong exports operations. Following the completion of the acquisition in 1995, the Austrian unit was renamed as Nufarm GmbH & Co. Kg.

The company’s new U.K. and Austrian operations helped shift its geographic focus, so that more than two-thirds of its revenues were generated outside of Australia and New Zealand. The company’s internationalization continued into 1996, with the acquisition of Akzo Nobel’s Crop Protection Chemical division. Based at a facility in Rotterdam, in the Netherlands, the Akzo Nobel operation focused on the production of MCPA, related to Nufarm’s core 2-4D products, adding annual production capacity of 11,000 tons per year. The acquisition, which cost Nufarm AUD 20 million, further increased the share of international revenues to 78 percent. Nonetheless, the company had not neglected its home market. In 1996, also, the company paid AUD 51 million to buy specialty chemicals group Laporte Plc, adding its range of construction and timber protection chemicals.

Yet the crop protection market remained the company’s fastest-growing segment. The company added a new major market when it bought France’s CFPI (Compagnie Française de Produits Industriels), which had been founded in 1928. CFPI had been producing Weedone under license since the 1940s, and had also developed a strong business developing crop protection products specifically for the wine industry. The company completed the CFPI purchase by 1998. The addition of CFPI also gave the company an entry into Spain, while boosting its U.S. operations as well. That same year, the company boosted its North American presence, buying Rhone Poulenc’s phenoxy herbicide manufacturing operations in the United States and Canada, which gave it control of the Weedone brand. The company also bought a stake in (and later full control of) Westrade USA Inc., in partnership with du Pont, for the production of the trifluralin herbicide. Meanwhile, the group’s relationship with Rhone Poulenc expanded with the spinoff of CFPI’s ethephon growth regulator business into a joint venture majority controlled by the chemicals giant.

That spinoff came as part of Nufarm’s decision to focus its business on its herbicides and pesticides operations. In 1999, the company sold its fertilizer operations, which had remained primarily based in New Zealand, while the company’s crop protection operations in the region were concentrated in Australia. As a result, Nufarm decided to move its headquarters to its main Laverton North facility in Victoria, delisting its shares from the New Zealand stock exchange. The company then formally adopted the new name of Nufarm Ltd., and shifted its listing to the Australian Stock Exchange.

CROP PROTECTION STRATEGY FOR THE NEW CENTURY

Nufarm continued to build up its diversified geographic base at the beginning of the 2000s. The company returned to the United States in 2001, buying Agtrol International, which also had strong operations in France. The Agtrol purchase was also part of the company’s newly emerging product diversification strategy, adding Agtrol’s production of fungicides, including vine protection products. By the end of 2001, Nufarm had not only entered a new geographic market, it had added a third component to its crop protection package. This came through the acquisition of a 14 percent stake in India’s Excel Industries Limited, a producer of insecticides.

KEY DATES

1956:: Max Fremder founds Nufarm in order to manufacture and distribute phenoxy herbicides in Victoria, Australia.
1982:: Under Managing Director Doug Rathbone, Nufarm is acquired by New Zealand’s Fernz Corporation.
1991:: Nufarm begins international expansion, establishing subsidiary in Malaysia.
1994:: Company completes its first European acquisition, in the United Kingdom.
2000:: Fernz Nufarm refocuses around core crop protection operations, moving its headquarters and stock listing to Australia and renaming itself as Nufarm Ltd.
2001:: Nufarm acquires Agtrol International in United States.
2006:: Nufarm acquires Agrosol crop protection business in Italy.

Back at home, Nufarm boosted its domestic presence with the purchase of Artfern’s pesticides and specialty chemicals manufacturing operations, including its sulfonyl urea herbicides, in 2001. The following year, the company acquired another Australian herbicide producer, Crop Care Australasia, which had been set up as a joint venture between two other companies, Orica and Incitec.

Nufarm boosted its product portfolio again in 2002, when it acquired the production and marketing license for Australia and New Zealand for Monsanto’s Roundup brand. The company later increased its share of the Roundup brand in these markets when it bought the license for Roundup Ready canola seeds and traits in September 2006.

By then, Nufarm had further strengthened its position in the global crop protection market, becoming one of the leading crop protection specialists. In 2004, The company reached an agreement with BASF of Germany to acquire the distribution license for that company’s cereal fungicides, including the Sportak and other brands. This deal followed the company’s acquisition of all of BASF’s internationally based phenoxy herbicides operations.

Nufarm also made its entry into the Latin American market in 2004, buying 49.9 percent of Brazil’s Agripec Quimica e Farmacêutica SA. The purchase, at a cost of $120 million, placed Nufarm in the top ranks of that country’s crop protection market. It also provided the springboard for the company’s further penetration in the South American region. By 2006, Nufarm had added operations in Colombia as well, buying Agroquimicos Genéricos SA, based in Cali. That company specialized in the production of generic herbicides and other agricultural chemicals, and helped boost Nufarm’s profile not only in Colombia, but in Venezuela, Peru, and the other Andean region markets.

Nufarm continued to seek additions to its product portfolio as well. In August 2006, for example, the company reached a multiyear supply and distribution agreement for Bayer CropScience’s diflufenican (DFF), a cereal-specific weed killer, and DFF-based products for the European market. At the same time, Nufarm entered a new market, through its September 2006 acquisition of the crop protection distribution business of Agrosol SRL, based in Italy. With sales nearing AUD 1.7 billion ($1.3 billion), Nufarm had established itself as one of the world’s leading pure-play global crop protection companies.

M. L. Cohen

PRINCIPAL SUBSIDIARIES

Agripec Quimica e Farmaceutica SA (Brazil); Agrogen Nufarm de Colombia; Ag-Seed Research Pty Ltd.; Crop Care Australasia Pty Ltd.; Croplands Equipment Pty Ltd.; Croplands Equipment Pty Ltd. (New Zealand); Framchem S.A. (Egypt); Kwinana; Nufarm Agriculture Inc. (Canada); Nufarm Americas; Nufarm b.v. (Netherlands); Nufarm Chemical (Shanghai) Co., Ltd. (China); Nufarm Chile Ltda.; Nufarm Coogee Pty Ltd.; Nufarm Deutschland GmbH; Nufarm do Brasil Ltda.; Nufarm España S.A. (Spain); Nufarm GmbH & Co. KG (Austria); Nufarm Italia srl; Nufarm K.K. (Japan); Nufarm Malaysia Sdn Bhd; Nufarm NZ (New Zealand); Nufarm Portugal Ltda.; Nufarm S.A. (Argentina); Nufarm S.A. (France); Nufarm SRL (Romania); Nufarm Turf and Specialty (U.S.A.); Nufarm UK Ltd.; Nugrain Pty Ltd.; Nuseed; Pt Nufarm Indonesia.