"The biological market is growing because the technology is getting better and if you look at our recent Agrinos acquisition, they have invested US$200 million in the biological space over the last 10 years and their technology is excellent."

Marco Salcedo

DIRECTOR, AMVAC MÉXICO

December 17, 2020

Can you provide an overview of AMVAC and its operations around the world?

AMVAC celebrated its 50th anniversary in 2019 and we have 12 operating companies around the world with a strong presence in Mexico and Central America. We do approximately US$500 million in sales per year and we trade on the New York Stock Exchange under ticker AVD. Our business model is to acquire, develop, manufacture and market a diverse group of agricultural products, specialty non-crop products, and application technologies that enhance agricultural productivity and safeguard public health. We want to be a technology solutions provider and we are looking to grow our portfolio through acquisitions.

What is the importance of Mexico to AMVAC’s broader business?

AMVAC has been present in Mexico for 20 years and our focus is on acquired technology that is well known and appreciated by growers. Two years ago, we redefined how we wanted to position ourselves from a strategic standpoint and started an intense process to introduce new concepts and greener technologies that will help us to offer an improved service to our customers, complement our portfolio and eventually better face regulatory challenges from authorities. The second priority we defined pertained to the structure of AMVAC México where we defined the proper profile we are looking for to join our team and added new functions to be closer to our customers. We are motivated to improve our market presence and grow both the chemical part of our business as well as our biological portfolio.

 We have made great progress and changed the way that AMVAC is perceived by customers. As part of our restructuring in Mexico, we now have not only sales people working directly for us, we also have a group that helps us to develop our concepts in the field. We have grown from three new projects in 2018 to 36 new concepts we are analyzing this year. We also grew revenue from US$17 million in 2017 to a 2020 target of US$33 million. Furthermore, we have grown our biologic portfolio from US$250,000 to US$1.8 million in 2020 and, with all new concepts and the acquisitions that we have been making at AMVAC Mexico, we are targeting this year to reach US$3.5 million of revenue generated from new products in our portfolio.

What factors are driving growth in biologics in Mexico?

One of the strongest factors encouraging the development of biologics has been a push from government authorities who have very strong ecological protection interests. They are applying a lot of pressure on the market to ban certain products and to reduce the use of chemicals. As a result, there has been a big push for biological fertilizers and other concepts as well.

It is also being driven by the consumer and, to a large extent, the large global companies in the industry, such as Bimbo, Chiquita, Dole and some initiatives like the Rainforest Alliance. The market is growing because the technology is getting better and if you look at our recent Agrinos acquisition, they have invested US$200 million in the biological space over the last 10 years and their technology is excellent. As technology for biological solutions increases, it then becomes increasingly more competitive with chemicals.

One of the other drivers is in the area of soil and plant health. The more we do intensive farming, the more we wear out the soil. At AMVAC we want to provide solutions which regenerate the soil. It is analogous to boosting human health with vitamins. That was the motivation for the Agrinos deal. They produce highly effective Biological products for the microbiological community in the soil as well as Bio stimulants that reduce the plant stress increasing the productivity and have a large plant in Mexico. The general interest in microbial solutions is growing rapidly, which basically increase the microbial health of the soil again improving the uptake of nutrients. This is where our SIMPAS Closed Delivery System, which will launch in the US in 2021, comes into play. Both the Agrinos products and SIMPAS together provide a solution for the grower that builds the biomass in the soil, while also measuring, validating and documenting it. That is our niche, because no other companies offer the combination of both technologies.

What has been the impact of USMCA on the agrochemical business in Mexico?

Overall  NAFTA and now USMCA is a net positive, because the grower is forced to learn how to better produce specific crops like avocados, berries, lemons and tomatoes. That is why asparagus production is growing rapidly in Mexico and berry production has exploded in certain areas. It is because the grower is discovering how to be competitive and adapting to succeed in this openly competitive landscape. My feeling is that the USMCA is helping to improve the quality of the products as well as the technology applied in the regions.

Do you have a final message for our readers?

On the corporate side, our financial objective is to grow the company from US$500 million to US$750 million and then to US$1 billion. We will achieve this through internal growth and acquisitions. The other thing that we really strive for is to be good citizens. We want to continue to invest in technologies like SIMPAS and biological technology, which will drive long term sustainability for our investors, employees and also for the community and customers. Our third objective is for AMVAC to be excellent both in manufacturing and in building our team.

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