Dow AgroSciences investing heavily in Africa
Dow AgroSciences, the American manufacturer of products devoted to crop protection, is deepening its investment into Africa in order to claim a bigger stake in the continent’s vast agricultural potential. It is doing this by entering new countries, and also by removing the middle man in countries where it already had operations, believing now that the best way to do business in Africa is to have a local presence.
Dow AgroSciences sells adjuvants, insecticides, herbicides, fumigants and fungicides to treat a range of crops from wheat to flowers and vegetables.
The need to focus on African agriculture
With Africa widely acknowledged as the next frontier in agricultural development, having as it does the largest portion of uncultivated arable land in the world, Dow AgroSciences is looking to the future of the industry by strengthening its African portfolio.
“We need to step up food production and one place in the world where there is great potential to do just that is Africa. This is where we can get real growth. We have to use existing farmland and intensify production. And to do so we need better technologies that are sustainable,” says marketing specialist at Dow Johan Janse van Rensburg.
Choice of developing markets with high growth potential
Jean Francois Rolland, portfolio manager for Africa at Dow AgroSciences, says his firm is making “a very substantial increase of resources” in numerous countries that include Ethiopia, Morocco, Egypt, Tunisia, Ghana, Cote d’Ivoire, Kenya and Tanzania. These countries have been selected based on their merits as emerging markets with high growth potential.
Speaking of the African market, Rolland says, “This is an important market for us because, as opposed to European markets which are mature, the African markets are still developing and there are opportunities for further growth. […] We look at Africa as a place where there are lots of crops for which the yields and quality can be improved. Farmers need sophisticated ways to tackle insect control. So we will invest more because we see agriculture as a driver in their economies.”
East African region to be managed locally
“We see the Southern and East Africa regions as very interesting developing markets,” says Rolland. Marketing specialist at Dow Johan Janse van Rensburg says that previously East Africa was managed remotely from France. The company has now changed policy and all English-speaking countries will have locally placed, English-speaking managers.
Rolland says his company is committed to working together with local partners, because “Without that, you cannot understand the local markets, the needs, the limitations and the potential.”
West African markets under consideration
Apart from Ghana, Dow AgroSciences is still adopting a cautious approach towards investment in the west of the continent. “The West Africa market is a little bit complex,” says Rolland, “because of political instability in some countries. For instance, Nigeria has a problematic political stability, but it is still a big country and lots of people who all need food. We have no direct presence there yet, but are considering it.”
Meeting the challenges of the African marketplace
In the past Dow AgroSciences has struggled to make its products affordable to African consumers, and to package them appropriately. “Other challenges,” says Rolland, “include foreign currency availability. Payment credit terms are also often a difficult subject. Sometimes farmers and distributors may have the need to buy your products but don’t have the means to pay. So we also have the job of arranging the credit side to make sure that they have access to finances.”
Dow AgroSciences’s parent company already has a substantial presence on the African continent; Dow Chemical Company (or Dow for short) has been operating in Africa for decades. In 2013 Dow made global sales of US$1.7 billion.