Image: Nutrien website
It was a little over two years ago (July 2018) that the Nutrien Ag Solutions brand was launched in North and South America. What were the key things Nutrien had to do in order to get the new name out there and replace the long-standing predecessor brands (CPS in North America, ASP in South America and more recently rebranding in Australia), particularly while the overall company was only six months into its own rebrand as Nutrien? Firstly, our focus was always on serving customers. That was true in our legacy brands and it’s what we do today as Nutrien Ag Solutions. The new brand has given us the opportunity to step back and think about the future. How will agriculture evolve, and how can we be prepared to provide our customers even more value going forward? Our aspiration is to become the “ag retailer of the future.” Nutrien Ag Solutions is investing in training our employees, building new assets and upgrading others, and creating a digital hub that connects our agronomists with our customers and creates new opportunities for insights, service and convenience. So, while we introduced the new brand in both agriculture and mainstream media, as well as showcased it in events, Nutrien Ag Solutions really came to life for our growers at our local branches through their crop consultants. And now that we’re two years in, our goal is a successful future for both our growers and Nutrien Ag Solutions, where we and the agriculture industry thrive.
Since 2018, Nutrien has been active in the M&A space across different sectors – digital ag, retail and plant nutrition. Before looking at some of them more closely, is it possible to summarize Nutrien's general strategy since forming this combined entity? At Nutrien, our purpose is to grow our world from the ground up. As the world’s largest provider of crop inputs, services and solutions, Nutrien plays a critical role in feeding the future by helping growers to increase food production in a sustainable manner. We’re moving the agriculture industry and the world forward – today and for generations to come. Regarding M&A, Nutrien Ag Solutions is focused on investments that drive organic growth, as well as acquisitions that expand our footprint or give us access to new products or technologies that differentiate us in the marketplace and create real value for our customers. From a geographic standpoint, we are acquiring complementary assets that provide growth opportunities in North and South America, as well as Australia.
You reported that in the first half of 2020, the retail business grew by 20 per cent because of organic growth and acquisitions. In terms of international acquisitions, there was Ruralco/Australia (September 2019) and Agrosema/Brazil (January 2020). What is Nutrien's approach to integrating these international retail operations? For example, will Nutrien begin offering more of its North American products through these channels? As you know, agriculture is local – so each region has its own opportunities and challenges. What is similar in every region is that our focus is on helping our customers increase yields, reduce risk and farm more sustainably. So, we look for integration opportunities that help us improve our customer outcomes, while giving our local teams a lot of freedom to do what makes sense for the farmers in their region. We integrate in areas such as supply chain efficiencies, digital technology, proprietary product opportunities and supplier strategies.
Moving to digital ag – there was the acquisition of Agrible and Waypoint Analytical in 2018. How have the products of these companies been incorporated into Nutrien's portfolio? These two acquisitions, along with the recent acquisition of AgBridge, helped us build out our digital ag and sustainability capabilities. Let me give you a couple of examples: 1. Environmental science – Having world-leading meteorologists on staff provides Nutrien Ag Solutions a differentiated advantage in understanding one of the biggest uncontrollable risks in farming: the weather. 2. Sustainability – The Agrible sustainability platform is one of the most comprehensive and trusted systems in the industry to record, translate and report sustainability performance for growers and downstream partners. Our focus in digital agronomy is to create real, actionable insights that help our agronomists make the best recommendations for our customers. In addition, we are looking for ways to help our customers with their sustainability goals and to get rewarded downstream, when they do.
Your business is reliant on third-party suppliers for seed and crop protection, and you’ve also announced collaborations in your digital platform. What do you think about the broader ag input industry and the importance of collaboration? Collaboration with our key suppliers is a big part of our strategy, particularly those companies that invest heavily in R&D. The problems we are trying to solve for and with growers, whether logistical or agronomic, will require collaboration and bringing together complementary strengths. Therefore, we work closely with our suppliers to ensure their innovations are successful in the fields of our customers. With new products, their technical people will have years of experience testing those products in greenhouses and small plots. We combine that with our knowledge of the local fields and environmental factors, to ensure our customers are rewarded when they are trying new products and technologies. This industry is changing so fast, we also do a lot of testing ourselves with new products from big and small companies – always looking for ways to help our customers succeed. Finally, we do our own innovation too, but not the same innovation that basic manufacturers do. They are focused primarily on crop protection and seed innovation. We focus on “filling the gaps” of innovation so we are able to provide full-acre solutions to each grower that solve their specific needs or challenges. So, our combined innovation is very complementary.
Now moving to nutrition – Actagro/USA was acquired in March 2019 for US$340 million and has a range of organic acid products that are very much in the New Ag International wheelhouse. Obviously, a large part of Nutrien's business is commodity fertilizer, but this acquisition, along with Agrichem/Brazil, a supplier of liquid fertilizers and biostimulants, in 2018 shows Nutrien broadening its offering on plant nutrition, which Loveland Products – formerly of Agrium – has been doing for some years. Nutrien could have simply supplied these products through its retail arm without making acquisitions. So, what’s the driver here? Great question! There are a couple of drivers here: 1. First, over the last decade, we focused on back integrating our own differentiated technologies and products versus a simple “private label” product strategy. This allows us to bring innovation and value to our customers, while also participating in manufacturing margins by moving back into the value chain. 2. The other main driver here is that the companies we are acquiring, or investing in, are all innovation companies. While their current commercialized products and footprint are obviously attractive, it is equally attractive to have these unique innovation capabilities that were gaps for Loveland Products and Nutrien Ag Solutions. So, now we have these great capabilities and we can direct those innovation efforts into areas that are important to Nutrien Ag Solutions and our growers, like nutrient use efficiency, water management, greenhouse gas reductions, etc.
From the retail perspective, what are the challenges you see in selling biological products? The technology and efficacy around biological products (biostimulant, biochemical, biorational, biocontrol) have evolved and improved greatly since the early days. And a lot of investment is going into this space by more credible ag leaders, like Nutrien Ag Solutions and others, that we also collaborate with. We continue to invest in this area and see it as a key growth opportunity for us, which aligns with our aspiration to be the global leader in plant and soil health. The demand for these types of products has increased dramatically for various reasons, including consumer preference and regulatory pressure on synthetic products globally.
Taking the above-mentioned acquisitions into account, it looks like Nutrien is preparing for an agriculture that is more technologically driven than in the previous 50 years, with an emphasis on plant and soil nutrition. How do these efforts connect with and contribute to Nutrien’s commitment to sustainable agriculture? It’s a good observation, and yes, they are directly related. We believe that a focus on soil and plant health is going to help us in two ways: 1. Firstly, we are going to drive positive environmental impact (nutrient use efficiency, reduced greenhouse emissions, water management, etc.), which is what we are trying to do through our sustainability program. 2. Secondly, though, we believe that you can drive positive environmental impact AND grower profitability through higher yield, better efficiency and reduced risks. We are also seeing opportunities for growers to get rewarded downstream, once they adopt these practices.
Your business has historically been built on and driven by your employees’ relationships with their grower customers. Are you concerned that an emphasis on technology will distract from Nutrien Ag Solutions’ ability to provide that personal, grower-focused experience? No, not at all. It’s quite the opposite. Growers are technology savvy and they want to work with retailers and agronomists who can leverage technology to help them. As a result, our agronomists are using the Nutrien Ag Solutions digital tools to build stronger relationships with our customers. These tools help our agronomist and customers throughout the year, from planning to planting to harvest and everything that happens in between. They also make the entire experience more convenient. This is part of building the “ag retailer of the future” and it’s why we are so excited about what’s ahead.
Mike Frank
New Ag International SEPT/OCT 2020
