BASF to increase budget for agrochemicals

Date:05-19-2009

Germany-based BASF SE will give crop protection a larger share of its research budget as agriculture withstands an economic slump that’s hurting demand for its other products, says Bloomberg. While orders for plastics, coatings, and other chemical products have been down, spurring BASF and other companies such as Dow Chemical Co. and DuPont to cut jobs and reduce production, agriculture continues to be a bright spot, with no signs of slowing. BASFs Agricultural Solutions unit was its only sector to report a profit increase and double-digit sales growth in the first quarter, with a 21% gain.

“We literally pour our heart and soul into this area,” said Stefan Marcinowski, the BASF board member who manages its Agricultural Solutions business. “We are not taking half- measures, and it shows.” Last year, 35% of BASF’s research and development budget went into Agricultural Solutions, which accounts for only 5.5% of sales. In 2009, the company plans to spend more, according to Marcinowski, even while total research spending will slightly decline.

UK-based agricultural consulting company Phillips McDougall put full-year sales at BASF’s crop division at $5 billion, a 16% increase. Marcinowski said the company’s pipeline of 16 crop protection products could potentially generate $2.8 billion of peak sales, helping the German company catch up the top three, Syngenta AG, Bayer AG, and Monsanto. “Kixor,” a herbicide targeted for US introduction in 2010, “may well” exceed its predicted peak of US $136 million in annual sales, Marcinowski said in an interview at a May 11 trade show in Frankfurt.

While group sales and operating profit are forecast to decline “significantly” this year, the agriculture unit sees a record year with an increase in sales and earnings and a profit margin target of at least 25%. “We are well on track to achieve that,” Marcinowski said.