While talk of what the world will look like in 2050 may be superfluous to some, long-term shifts in global demand are at the heart of Syngenta’s strategy as a Switzerland-based agribusiness firm. Early this year, the UN reported that the world's population will grow from 7.2 billion in 2012 to 9.6 billion in 2050, with much of this growth coming from Africa. In July, Syngenta acquired a white corn seed plant in Zambia to capitalise on this long-term trend.
As some European executives busy themselves dealing with the current economic headwinds and the EU’s ongoing sovereign debt crisis, Syngenta chief executive Michael Mack believes the company’s long-term focus has enabled it to make timely bets on emerging markets, well ahead of the demand curve.
In his view, it is this ‘big picture’ strategy that has enabled the company to maintain robust growth, despite a lacklustre global trading environment. Syngenta’s approach to investing in its seed and fertiliser operations in countries as far flung as Brazil, South Africa, Singapore and the US enabled it to grow by 10% last year. “In 2012, our growth rates in developed and emerging regions reached 8% and 11%, respectively,” says Mr Mack. “The compound annual growth in our sales is expected to reach more than 10% by 2020.”
With 60% of the world’s available cropland located in Africa, the continent has played a prominent role in Syngenta’s investment strategy. And given the UN's predicted population growth, Syngenta is in the process of investing $500m across Africa to meet this demand. Mr Mack has ambitions to create a business worth $1bn by 2022. “Africa has the resources not only to feed its growing population, but also to become a major world food exporter. A year ago, we announced Syngenta’s aspiration to contribute to the transformation of African agriculture, making Africa one of our company’s strategic growth regions,” he says.
With a focus on catering to sub-Saharan Africa’s growing middle classes, Syngenta has worked to position itself as one of the suppliers of Africa’s numerous food producers, including supermarket chains and smallholder farmers, supplying products ranging from vegetable and farm produce to pesticides.
Yet Mr Mack is quick to add that, in addition to Africa, developing countries across Europe and the Americas will also be significant in Syngenta’s strategic outlook. “We have also announced investments in seed production capacity in Latin America and eastern Europe, supplemented by the acquisition in 2012 of Sunfield Seeds, a US-based provider of sunflower seed production and processing services,” says Mr Mack.
While the global economy is expected to grow by just 3.1% this year, according to the Organisation for Economic Co-operation and Development, the fact that Syngenta caters to a basic and essential demand for food gives the business an added robustness. Greenfield investment database fDi Markets found that between 2003 and 2013, the number of greenfield projects in the agriculture and fertilisers sub-sectors continuously increased from 90 projects in 2003 to 244 projects in 2011, worth $12bn. Although project numbers declined in 2012 to 182 projects, fDi Markets recorded 63 projects in the first two quarters of this year.
For Mr Mack, this highlights how the relentless growth of the global population is leading more far-sighted companies to focus on the bigger picture, rather than short-term economic downswings.
“By 2050, the world’s population will have increased by almost one-third,” says Mr Mack. “We will have... 80 million more mouths to feed every year. We need to produce more food in the next 50 years than in the previous 10,000 years, using less land. That necessity underlies Syngenta’s ambition, which is to help growers deliver greater food security in an environmentally sustainable way,” he says.