Opinion / Web Comments

Companies within Food Chains(II)

By Marcos Fava Neves ( Updated: 2013-03-22 15:17

This second article aims to discuss the major changes happening in the environment of crop input protection and seed companies in food chains, mostly in the largest farming countries (as the example of the USA, Brazil, Argentina and others).

They are called CPS companies in this article. The idea is to raise the facts that are changing, the impacts brought by these facts and leave an open discussion towards which acts should companies operating in the CPS business perform. These ideas are based on discussions with input suppliers, dealers, cooperatives and researchers in these 3 cited countries and are resumed here.

The first article focused on the facts, this second will focus on the impacts. So as promised, what are the impacts for CPS companies of all these changes? These facts or consolidated changes are bringing several impacts for CPS companies within the food chains:

- Increasing rivalry with other CP/Seed companies and generics, disputing people, channels and other assets, increasing costs.

- CPS companies tend to focus in the traditional strategic pathways:

a) low cost (generic, low marketing and relationship, low innovation and copier of value capturing innovations);

b) lock in strategy (offering complete package of solutions and services, innovative, relationship builder, chain manager, and even localized adaptations) or c) hi tech, being focused as the generator of new technologies)

- Increasing importance of the distribution network to leverage business of agri-input companies and be close to small and medium size farmers;

- To have a seed portfolio is a fundamental strategy of CPS companies to offer a complete package to farmers, since the seed market, mostly biotech will have a faster growth rate, demanding innovative solutions. CPS companies are increasing the value of R&D dedicated to seeds and traits.

- Increasing importance of fertilizers and seeds has reduced CP participation on dealers general business;

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