Nufarm’s rocky start to 2013 continues with the Australian manufacturer and distributor of crop protection products announcing the end of its second long-term deal with a global agricultural company in three months.
With increasingly more international majors seeing Australia as a stepping stone for access to the fast-growing Asian economies, Monsanto is the latest to break away from Nufarm—ending a decade-long deal worth A$100m in sales each year. The agreement will end on August 28, with Nufarm losing its right to the exclusive use of Monsanto’s Roundup brand.
In January, chemicals company BASF announced it would re-enter the Australian farm market in 2014 as a solo trader, using the local footprint of its recently acquired Becker Underwood business for its return.
The Wall Street Journal quoted Monsanto’s decision to to break up with Nufarm as a result of “changes in the glyphosate market in recent years and better alternatives to serve its customers in Australia and New Zealand.”
The company would not explain this line in any further detail. According to the paper, Melbourne-based Nufarm currently accounts for about half the glyphosate sales in Australia, and around 60% of those involve products marketed under Monsanto’s Roundup brand, which Nufarm said were worth about A$100m in the year to June 30.
Even though Nufarm claimed that the split would have no “material” effect on its earnings, now it no longer needs to pay a distribution fee to Monsanto, the company’s shares fell by over 12% on the Sydney Stock Exchange following the announcement of the news.
Just over a month ago, Nufarm announced the end of its BASF partnership, although Lachie McKinnon, Nufarm’s general manager, said the two companies were in discussions to find areas of potential collaboration in Australia.
“Our distribution relationship with Nufarm and Crop Care has been successful for 10 years. But to invest further in our portfolio of innovations for sustainable agriculture in Australia, we have taken the strategic decision to re-enter the market in our own right”, said Raman Ramachandran, senior vice-president of BASF Crop Protection Asia-Pacific.
“We are excited about this opportunity and look forward to building a strong presence in the Australian market with an expanded product offering.”