Why Many Try, But Few Succeed in Australia: Q&A with Dean Corbett, CEO of Accensi

Dean Corbett, Accensi CEO. Corbett is also a director and treasurer for Croplife Australia and a director for AgStewardship Australia. Dean has 24 years' experience in agriculture and has worked with Accensi for 21 years.

Dean Corbett, Accensi CEO. Corbett is also a director and treasurer for Croplife Australia and a director for AgStewardship Australia. He has 24 years’ experience in agriculture and has worked with Accensi for 21 years.

Editor’s note: Watch the September issue of Farm Chemicals International for an in-depth look at the Australian and New Zealand crop protection markets. Below is a preview featuring an interview with Dean Corbett, chief executive of Queensland-based Accensi.

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FCI: Can you please talk a bit about your company, Accensi’s work with local and multinational companies, and how you got started?

In the late 80s the business was started to produce arsenic-based timber treatment chemicals. It was a limited market and from day one we had market share and could go no further. The market was profitable but did not make good utilization of the site and the licensing requirements. It was two years after the patent on glyphosate had expired and there were more set to lapse. It was an era of good opportunity for the emerging generic market. In those days there was a lot of reluctance for distribution to take on a generic supplier. We quickly adopted a three-prong approach; we serviced the few generic start-ups, created our own label which we marketed to niche industries, therefore not competing with our clients, and we regularly met with the distribution network as they often discussed the idea of their own home brand labels.

In the mid-90s, IAMA (then the largest distribution company) launched its own label, Artfern. Market pressure applied to IAMA and to us was very strong; however our persistence saw the Artfern brand grow stronger each year. They had a good team of product managers who were quick to develop post-patent products, often trying to work with the multinationals. We worked very closely with them which saw our business double in size every year from 1995 to 2000.

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By 2000 we were well established, our quality of a high standard, and with ISO accreditation achieved in 1995 we were now taking on business from multinationals.

By 2003 we had facilities on both sides of the country and were therefore able to offer a service no other formulator could match.

 

FCI: What factors are unique or more pronounced in Australia as far as the crop protection market is concerned?

Australia is a small market compared to the rest of the world, yet our regulations for manufacturing are high. At the same time, our barriers to enter the market are low, registration for copies are cheap and relatively quick. Overseas companies see that as an easy entry with fully formulated products; however access to market is crucial and without it most fail.

The highly regulated manufacturing standards together with low margins on the market create a position where it is very hard to survive in the manufacturing segment. Those companies who don’t have the critical mass or market a single brand find it extremely hard to compete. We have seen this recently with a major company closing a few of their facilities.

Accensi’s position for the past 10 years is that volume is the key. By concentrating on this we have now reached a position whereby we need a third facility to service the market. By the end of Q1 2015 Accensi will have a new facility operating in Geelong (Victoria) to service the southern markets.

As margins contract, logistics come into play. We are seeing a need to produce in Queensland, Western Australia and Victoria in order to offer our clients the best value position. By using a local manufacturer, clients can decide at the last minute what formulation strength they want and what pack size to put it in. Add to this that we are now close to all three markets and our clients have the best value proposition in terms of JIT [“just in time” inventory strategy] and market demands.

 

FCI: Have there been supply chain concerns and if so, can you elaborate?

Not only is Australia a small market, it is also remote. Most ingredients are imported and with most companies in the downstream supply chain trying to keep minimal inventory levels, a delay in shipping, whether it be Chinese New Year or a local wharf issue, can result in stock outages at farmer levels. Astute farmers have learned to carry their own buffer of frequently used products.

 

FCI: What issues are most affecting growers and companies in the Australian market right now?

A concern that we see regularly is that imports are not from the registered source. You get occasions whereby an overseas registered factory will be out of stock of a product, so they simply call up their opposition and buy it from them. Being a recipient of many AIs, we see this inconsistency all the time. The regulator (AVPMA) will audit the local formulators like Accensi but do not audit the foreign suppliers. This is a huge hole in the system and it’s only a matter of time before the industry suffers from a contamination event that has occurred offshore. Recently we had a container of AI arrive that was not even the product ordered. it was totally different. It was lucky that it was an AI and not a finished product destined to be sprayed on food. The priorities of the APVMA need to change before a catastrophe occurs.

 

FCI: Can you talk about some of the major opportunities and growing regions? What AIs and formulations are growing in demand and for what crops?

In order to save freight there is a constant push to develop high-loading products, however the push should be in the other direction: Less active and the use of efficient wetting systems to get better uptake. In doing so the farmer can get a better cost position and lessen the effect of AI resistance. Dual actives are also making an emergence that will assist in resistance, however I doubt they will save money for the farmer.

 

FCI: How significant a concern is weed resistance and how are growers addressing the issue?

Accensi is three to four steps removed from the end user, however even back this far we can see changes in the usage trends of the products we produce. There is definitely a movement to alternate products and to better manage their usage.

 

FCI: If we’re looking at the big picture, how would you describe the current state of the Australian crop protection market and looking ahead into 2015?

The big influence is and always will be weather. We live in a very dry part of the world — the driest continent. If we get good summer rain across the country we all have a bumper season and that tends to be what we remember — the good times. Having run this business for 24 years I have seen way more dry years than good. The market is crowded because people only see the good seasons; each year there are more and more registrations of the same products yet the market on year-in year-out averages only grows at under 5%. I have seen a lot of companies badly burnt because they don’t have access to market and/or a strong position from manufacturing. The last few years have seen a lot of small players drop out of the market and a deconsolidation of many multinational trading arrangements. It’s almost like the rise and fall of the tides, but in each ebb and flow the overall industry margins are eroded even further.

 

FCI: What other topics warrant mentioning?

Australia is a country that offers its farmers very little support. Other than a few very good tax breaks there is little in the way of incentives  or subsidies. Australian farming relies on cheap inputs. Crop protection chemicals, nutrients and animal health products are all sold here at very low margins which is created by the government’s low barrier to enter the market. One day this model will fail and we will find ourselves with either an export or domestic crop contaminated or worse, harm to livestock or a person.

Australia needs to protect its people and its produce through a better regulated system.

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