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Going For The Dream

Yvonnick Jambon knows the danger point. You start with an iconoclastic new kid on the block like Nufarm. It’s highly entrepreneurial, it grows fast, and it generates an enormous amount of its energy out of its biggest asset — the fact that it isn’t the other guys.

At first, growth looks sweet. But then comes the challenge. How can you keep growing without morphing into the very kind of company that you have always differentiated yourself against? How can you stop yourself becoming a Bayer or Syngenta?

When I meet Jambon to ask him, his voice is as crisp as his suit. He’s pleasant and friendly. In fact, because you know of his Old World roots, you’re tempted to think of words such as “charming.”

Even so, it’s clear he likes to lead, just like the people you meet in the head offices of his competitors. So I make it my first question. If he succeeds, won’t he fail? Won’t Nufarm get more like the companies it attacks, and thereby lose its market power?

“Never,” Jambon replies instantly. “It will never happen. We are unique.”

For farmers, there is a lot riding on whether he is right. Jambon sees a new three-layer paradigm for the ag chem business in Canada. At the top will be the traditional manufacturers, including names such as Syngenta, Dupont and Bayer. They will discover and introduce new chemistries, they’ll typically have mid to high-end pricing with strong product support and customer service, and they’ll get progressively more focused on customer loyalty, using programs and volume discounts to cross sell and increase their market share farm by farm.

On the bottom will be the generics, a category that Jambon lumps UPA and Farmers of North America into. They’ll sell off-patent chemistry, and they’ll build a niche among farmers who are either aggressively cost-oriented, mistrustful of multinationals, or both.

In the middle, Jambon sees Nufarm all alone. Unlike the traditionals, Nufarm won’t invent new chemistries, but unlike the generics, it won’t only bring older products to the market. Instead, Nufarm will also develop branded new co-packs and formulations to produce mainly at its Calgary plant.

Jambon says Nufarm will be the middle ground in a marketing sense too. Nufarm won’t adopt the kinds of sales and catalogue programs that the bigger companies are using, Jambon says. Yet Nufarm will also be differentiated from the generics by the amount of product support it supplies, including a 1-800 tech support line and a team of regional reps ready to follow up on customer queries and complaints.

The question is, will those farmers recognize the difference, and think it’s a big enough difference to vote with their wallets?

Jambon is be betting they will. He’s leery of making hard forecasts, but observes that Nufarm has grown its sales to $100 million in the 12 years it’s been doing business in Canada, and he is predicting double-digit growth for the next three years as his new Canadian plan rolls out.

There’s another dynamic to watch, however. Nufarm is mainly a herbicide company today, but price pressure is intense even with relatively new off-patent products. Nufarm sells Signal, containing clodinafop, the active ingredient in Horizon, but there are now five clodinafop generics on the Canadian market. “Canada is brand crazy,” Jambon says. “We believe in the future of agriculture and in the future of our business, but you have got to know that the margins aren’t going to be where they have been.”

In fact, the cut-throat generics market has been costly for Australia-based Nufarm in the last two years, especially after it bought glyphosate inventory just before world prices sank. The headlines haven’t been kind. Investors in New Zealand have launched a class action suit against Nufarm, saying the company issued financial forecasts that it should have known it couldn’t meet because the glyphosate millstone was weighing it down.

In one 18-month stretch from 2009 into 2010, Nufarm cut its earnings forecast five times, and the board also announced it had had to break conditions on some of its financing. Standard &Poor downgraded its rating of Nufarm to “BB” and said it expected the company to experience difficulty unless it was able to extend its debt maturity profile and hurry more high-margin products onto the market.

The controversies have taken Nufarm share prices for a roller-coaster ride. Mid-August, shares seemed to stabilize in the $4.30 range, but had a 52-week low of $3.28 and high of $5.80.

That said, Nufarm posted earnings of roughly $4 million in the first half of 2011, compared to a loss of $40 million for the same period the year earlier. It also posted stronger working numbers, and it expected net operating earnings to finish between $88 and $94 million for the 12 months ending July 31, 2011.

Oysters to Alberta

Jambon’s roots are actually in the seafood business. He grew up along the Brittany coast in northeast France, where his father was an oyster fisherman who built a shellfish-trading company. Jambon learned agriculture on his uncle’s nearby dairy and crops farm, however, and studied agriculture in school.

His global travels started soon after, beginning with an 18-month stint with Rhone-Poulenc in the U.S., and another three years with the company in southern France. That was followed by an assignment with a French fertilizer manufacturer to build its business in Romania, and his first posting with Nufarm, when he was hired in 2006 to launch the brand in Italy and Greece based on Nufarm’s purchase of companies that were doing $15 million in sales in the region. Within four years, sales were $70 million.

Jambon took the reins in Canada in March, 2010 when former Canadian head Darryl Matthews moved to Chicago to become head of the company’s NAFTA business.

Nufarm is a good fit, Jambon says, because he shares its belief that a big company can still be entrepreneurial, but only if it’s committed to that belief.

Local managers must have the power to make decisions, Jambon says. That’s essential not only so the business can be nimble, but also so it can attract and retain entrepreneurial thinkers who would feel stifled in a top-down system.

However, it’s equally important that the business have excellent internal communications systems so senior management can keep its finger on the pulse of the entire organization. It’s the only way management can provide timely, meaningful leadership, Jambon says.

“The biggest risk in a company like this is that the entrepreneurship begins to fade,” Jambon says. “I believe we know how to prevent that, with a very decentralized decision- making system backed up with leadership that knows what its team is doing.”

Kill the programs

Meanwhile, Jambon has a clear vision for the Canadian business. First and foremost, the company will dedicate more time to branding, with a focus on establishing in farmers’ minds the idea that Nufarm is all alone in the middle.

Nufarm is already knows for its no-program marketing, Jambon says, and it is getting known for product support and the depth of its product lineup. Now, he says, the company must drive its differention. “Our customers must look for the N,” Jambon says. “They must look for the Nufarm name because it is the company that is most in line with their own interests.”

That’s a tall order, although it’s one that Nufarm has already made significant progress on. Indeed, Jambon thinks his competitors are actually helping the cause by fuelling grower resentment with their buying programs.

Of course, those traditional manufacturers aren’t using programs in order to tick off their customers. Instead, they point out that cross-selling and volume-discounting are standard features that show the maturity of what has become a business-to-business as opposed to business-to-consumer market.

Nufarm’s competitors also have stacks of reports proving it costs less to increase sales by growing their share with current customers than by attracting new prospects.

In other words, the programs may not be popular, but they work.

“We will be simple to deal with,” Jambon responds. “We want our customers to think about efficiency, both in terms of how we do business and in terms of the products they buy from us,” Jambon says. “If they can kill the weed for $7 an acre with us, and we’re simpler to deal with, why would they spend $10 with somebody else?”

“As for me, I want us to go for the dream, to do the most that we can do.”CG

About the author

Editor

Tom Button

Tom Button is editor of Country Guide magazine.

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