Interview with Mitsui Chemical Agro: At a critical juncture in the third year of the merger

Date:05-20-2011

Mitsui Chemical Agro was created in April 2009 through the amalgamation of Sankyo Agro and Mitsui Chemicals’ agrochemicals division. Takehiko Kanai, the company’s president, explained to JCWeb that to support Japan’s agriculture industry, domestic makers of agrochemicals have to develop products that meet users’ need, including pest controls for minor crops. He added that the company plans to contribute to the stable supply of safe foods by sharing its profits with farmers through its products and technologies.

Q: Would you tell us about Mitsui Chemicals Agro’s performance in fiscal 2010?

A: Our performance was in line with the domestic agrochemical market, which is shrinking. Our sales through the agricultural-cooperative route were better than the industry standard, but our sales through other routes were lackluster. Bad weather and the strong yen caused our overseas business to perform below expectations in South Korea and Southeast Asia, where our major Dinotefuran insecticide has high market shares. The March 11 earthquake at the end of fiscal 2010 also affected our sales, but even though we posted overall sales and profit declines, we secured a certain level of profit.

Q: What will you focus on during this fiscal year?

A: This year is the third year of the merger, and we are at a critical juncture. Mitsui Chemicals, our parent company, identified the agrochemical business as one of five strategic businesses and decided to expand the business under its fiscal 2011-2013 medium-term management plan. New products will be the key to this expansion. We plan to increase the sales of our Aphet Flowable fungicide, which was launched last year, and our Aniki emulsion insecticide. For paddy cultivation we will emphasize our Ineking one-shot herbicide, which is used in the beginning and middle stages, and our Follow-Up granules, which (require only 1 kg for 10 are of farmland and) are used in later stages. We will promote sales through the agricultural-cooperative route.

Q: Mitsui Chemicals Agro implemented a business restructuring.

A: Yes, we decided to optimize the allocation of our human and business resources to tackle several issues. Our sales division will concentrate on our domestic pesticide business and maximize the direct sales of our products as well as the sales of our active ingredients to other companies. It will collaborate with our R&D division to spread our application technologies among users. We spun off our sales division’s overseas business and our professional pest management (PPM) division, which deals in non-agricultural pesticides and fungicides, so that they report directly to the president. We will pursue quicker business expansion. We established a new production-integration division to comprehensively manage our operations, from production to logistics, allowing production, sales and inventory information to be brought together to uncover streamlining possibilities.

Q: What is the outlook for R&D?

A: The largest synergies from our merger were generated in R&D. The development of new active ingredients is difficult around the world, but we were able to launch two new ingredients last year. The commissioned testing of two fungicides, one insecticide and one herbicide is in progress. We will accelerate their development and advance their registrations as agrochemicals for their global dissemination.

Q: How are you responding to business globalization?

A: Overseas markets are important for our business expansion. We want to raise our ratio of overseas sales to total sales to 37% over the next four years, from the current 15%. By registering Dinotefuran as an agrochemical in China, India and Brazil, we will spread our sales network. Our business in pet pesticides has been strong in the US, so we will extend it to Europe. We also wish our pest-control products to aid in the prevention of infectious diseases like malaria.

Source: JCWeb