Origin Investor Day Throws Technology Centre 27 th June Connecting agri science with farming

Transcription

1 Origin Investor Day Throws Technology Centre 27 th June 2012 Connecting agri science with farming

2 Overview...

3 Agrii overview Market leader in the provision of agronomy services and strategic crop inputs We employ 880 staff in the UK We work with c.28,000 farm businesses We have the most extensive R&D capability in the UK and conduct 40k+ trial plots pa We have a national seed, fertiliser and distribution & storage business

4 Agrii overview We have an extensive logistics and storage capability: 45 distribution points 160 vehicles, driving 3m miles per annum 20 mobile seed plants, 36 agricultural sprayers manage 200k farm deliveries pa Service level is 90%+ same day/next day

5 UK Crop Protection Market

6 Agrii overview National Seed sales and production business: No. 1 in the market Leading quality brand 5 fixed production locations 20 mobile seed plants Production and cleaning capability for: Cereals Pulses OSR Linseed Grass Seed Turriff Finmere Lincoln Moreton Ingham Stowmarket

7 Agrii overview National Nutrition business: UK market c.3.6m tonnes No. 2 UK retailer of fertiliser Working closely alongside our Precision Agronomy offer to develop prescription nutrition offer

8 12 months since OFT approval of UAP acquisition OFT approval received on 3 rd June 2011 Integration Technical Commercial Finance & Admin IT Connecting agri science with farming

9 Agrii 12 months since OFT approval OFT approval received on 3 rd June 2011 Integration Simplified Regional Structure Connecting agri science with farming

10 Agrii Structure simplified and transparent From To Three Regions North East West Connecting agri science with farming

11 Agrii 12 months since OFT approval OFT approval received on 3 rd June 2011 Integration Simplified Regional Structure Built significant regional management capability Significant investment in IT and Decision Support structures Connecting agri science with farming

12 Agrii Decision Support a single ERP system November 2011 Masstock went live with Microsoft Dynamics AX software application ERP application to manage production, procurement, stocks, sales, logistics and finance November 2012 incorporate the UAP business on the system in order to: Unify and harmonise Agrii s business processes Improve sales and management information Customer relationship management Systems and process resilience for future expansion Connecting agri science with farming

13 Agrii 12 months since OFT approval OFT approval received on 3 rd June 2011 Integration Simplified Regional Structure Built significant regional management capability Significant investment in IT and Decision Support structures Launched a unifying and cohesive new identity Connecting agri science with farming

14 Agrii 12 months since OFT approval OFT approval received on 3 rd June 2011 Integration Simplified In addition Regional we have managed Structure to successfully Built run significant the day to day regional business, management meeting customer capability expectations in this transformational year for Significant investment in IT & Decision Support structures Launched a unifying & cohesive new identity Connecting agri science with farming

15 What does our combined business look like agronomists/field sales 35k tonnes mobile seed dressing Influencing c45% of UK farm output Largest Potato advisor in UK 65k tonnes cereal seed One of the biggest responsibilities in UK Agriculture 100k Ha s OSR seed 40k in house trial plots Largest Fruit business in UK Largest vegetable advisor in UK Connecting agri science with farming

16 Science & Agriculture Bridging the gap

17 How does agronomy work in the UK? Agronomist visits farm (up to 25x per year) Analyse farmer s needs Prescription creation Establishment Variety choice Nutrition Crop Protection Precision Agriculture Transmission of prescription Delivery to farmer

18 Global wheat yields Source: Chudleigh 2008, 5 year moving average

19 Source: Arvalis

20 Agrii Research and Development Why has the rate of increase slowed? Stagnation of genetic progress? Unlikely

21 The widening gap between theoretical and actual 12 Although genetics have shown a theoretical 0.5t/ha increase / decade over last 50 years, the gap between theoretical and actual is widening Why? Yield (t/ha) UK Rec List Trials UK Farm Yields

22 Agrii Research and Development Why has the rate of increase slowed? Stagnation of genetic progress? Unlikely More likely causes: Spring drought? High temperatures during grain fill? Loss of fungicide effectiveness? Herbicide resistance? Lack of nutrition innovation? Depletion of soils & soil knowledge? Legal constraints?..etc etc

23 Agrii Research and Development The way forward? Agronomy plus Genetics plus Chemistry plus IT/ Decision Support Where s the innovation going to come from? Is the government going to invest, given that we are well placed to deliver on yield? Agrii has the infrastructure... The UK is relatively robust with regard to climate change...

24 Agrii Research and Development Europe has a very high attractiveness index for food production / investment N.America S.America Europe Russia / Ukraine China India Europe (incl GM) Productivity Commercial support Technology adoption Adapted from Tray Thomas, Context Network

25 Agrii Research and Development in the UK The government believes it is investing huge amounts into agricultural R&D 280M per annum

26 Agrii Research and Development But how much is being spent on applied agronomy? Combinable crops Horticulture

27 Agrii Research and Development Our response to the challenge We all know about the Food Challenge..for global food security we need to: Increase by 50% by 2030* Increase by 70% by 2050* The UK is better placed than most countries to respond: High yields Less challenged by climate change Technically proficient farming industry Skilled R&D infrastructure Current yield in UK is at 7.8t/ha But new record field yield of 14.3t/ha set by a Lincolnshire farmer in 2011 So..it is possible! What, specifically, have Agrii done?

28 Agrii Research and Development Our response to the challenge We have a huge responsibility to ensure our customers can access the innovation required to meet the Food Production Challenge in a sustainable and profitable way Hence we have put Research & Development, together with Information Technology, right at the heart of Agrii... Agricultural research that is independent and integrated +

29 Agrii Research and Development Positioned at the core of the business Seeds / Varieties Crop Protection Fertilisers / Nutrition Agronomy Advice Business Management Contracting Precision Services Innovative Research & Development Information Technology

30 Agrii Research and Development Positioned at the core of the business Seeds / Varieties Crop Protection Fertilisers / Nutrition Agronomy Advice Business Management Contracting Precision Services Innovative Research & Development Information Technology Comprises: Replicated R&D + Agrii Technology sites + Data generation + Drives innovative agronomy strategy + Interface with customers + Interface with agronomists + Plugs knowledge / data gaps Agri Science connecting with agronomy Connecting Connecting agri-science agri science with farming

31 What does this mean? Research uplift to plug the knowledge gap 25% increase in replicated trials 50,000 plots planned for 2012/13 Broader geographic coverage Establishment of 5 major agri-technology centres 60 R&D sites know-how into do-how Upscale our Co-ordinated Growing Programmes Early access to Genetics Significant investment in Nutrition Broader crop coverage and investment To complement other research efforts, not duplicate Agrii Technology Centres R & D Sites

32 What does this mean? Connecting with agri-science Trials work: Quality of work is paramount All trials are ORETO approved so to CRD standards Agrii has an independent R&D strategy board: Chaired by Professor James Burke Chair of Crop Science at UCD Exclusive services of Bill Angus: Edited World Wheat Books Was Head of Wheat R&D Limagrain ORETO approved Establishing close links with Universities: Funding MSc s and PhD s Driver in establishing Soil & Water Centre at Harper Adams Lead collaborator in Weed Mapping Precision Ag project at Reading University Involved in LINK projects and in Nottingham Advance Training Partnership Working with: HGCA, ADAS and others

33 What does this mean? Connecting with agri-science P L A N T B R E E D E R S PGRO ADAS University Of Reading HAUC University of Nottingham UCD BBSRC HGCA M A N U F A C T U R E R R S Connecting agri science with farming

34 Agrii Research and Development Positioned at the core of the business Seeds / Varieties Crop Protection Fertilisers / Nutrition Agronomy Advice Business Management Contracting Precision Services Innovative Research & Development Information Technology Comprises: Replicated R&D + Agrii Technology sites + Data generation + Drives innovative agronomy strategy + Interface with customers + Interface with agronomists + Plugs knowledge / data gaps Agri Science connecting with agronomy Comprises: Farm recommendation software + Benchmarking (aggregated farm data) + Weather stations + Disease forecasting / alerts + Irrigation scheduling / management + Agronomy Apps + SoilQuest Precision Agronomy Agronomy Portal connecting customer data

35 Agrii Information Technology To further refine crop management

36 - Plus, a one-stop shop Farm software / Benchmarking information Weather Stations / Decision Support Store and process information Agronomist interpretation FARMER Soilquest / Trials Information

37 Agrii Research and Development Keeping our R&D programme relevant 660 feet on the ground excellent avenue for R&D delivery / feedback Regular discussion with agronomists Agronomist Regular interaction with customers (6000 visitors / annum) Breeders Customers Good connectivity with Research eg colleges / institutes / universities Interactive relationships with breeders and suppliers Research Spray Operators Plus an R&D Priorities Survey...YIELD

38 Agrii Research and Development How can yield be increased? Either produce SAME from a greater land mass* Maximum 10-13%* Or produce MORE from the same land area..or both! 7.8 * Source: Spink et al (2009), by replacing 10-20% of temp grassland and increasing wheat in arable rotations

39 Agrii Research and Development Defining yield estimates and the gaps 25 Yield t/ha 20 Target 15 Technological gap = estimated yield potential versus trials Typical farmers Typical productivity Systems gap = farm / farmer limitations Source: Adapted from Berry et al (2011) Practitioner gap = trials versus actual Best farmers Practitioner technical frontier Research trials Existing technological boundary Bio-physical possibilities Technological potential Genetic potential Evolving technologies / GM

40 Agrii Research and Development Defining yield estimates and the gaps Lack of investment in genetics Resistant grass weeds Unpredictable disease Soil type / climate Precision ag 7.8 VC is an issue 2-4t/ha at risk Rates too low Wetter west will benefit Greater accuracy

41 Agrii Research and Development Contribution to the business model Innovation puts the customer first Technically led, customer yields increasing We refresh, and continually renew, the Service offer The agronomist s role has changed significantly Our involvement with Supply-only gives flexibility Accessibility to product and enables Manufacturer aspirations to be met Partnership approach with Manufacturers and Breeders Sustainable product life-cycles Opportunity for exclusivities Integrated approach to R&D Solutions, not products Early examination of chemistry and genetics

42 To conclude... For the future, risk management will be essential for our customers Key focus for our work Our USP is integration across all platforms of agronomy, and scale We believe this additional investment by our parent company Origin will be critical to generate the yields and profitability this country and our customer need To re-iterate, this is innovation not duplication The objective is not just to generate information, but to apply it Our agronomists are committed to delivering technology from wherever the source in order to take our customers forward Finally, we are creating real technology ownership and positioning ourselves to be the translators of choice and examining other value capture avenues

43 Agrii Research and Development Total Crop Management Agronomy plus Genetics plus Chemistry plus IT/ Decision Support

44 Seed Technology Role and Relevance Connecting agri science with farming

45 Why are Agrii addressing R & D in a different way? To differentiate Agrii in the market place To recognise that crop production is about maximising genetic potential through a range of technologies fungicides, nutrition etc To develop integrated crop productions capabilities field to fork

46 What has changed in the last ten years? Greater political awareness of food security issues and the political and economic consequences of shortages Concerns over diminishing resources genetic and chemical Constraints on chemical fertiliser usage through the influence of EU and environmental bodies Greater acceptance that genetics will play a more significant role in addressing these issues in a more sustainable way

47 Short term Avoid potential variety market failures or be aware of agronomic/ disease issues e.g. evolving races of key diseases Yellow rust, brown rust, Septoria tritici Access to all new data from HGCA Complemented by Agrii data In-depth detail of varieties in UK trials currently

48 Medium term Engage with the breeding community Engage with end users Work with the testing authorities to enhance knowledge and transfer to the farming community Enhance public-private partnerships through the Research councils (primarily BBSRC) and Universities where relevant R&D is being carried out

49 Longer term Connect with International developments in key areas such as Genetic Modification Hybrids all crops including wheat

50 Examples of the impact of recent genetic developments Development of VPM eyespot resistance integration with chemistry Wheat Orange Blossom Midge resistance strategic use of insecticides Enhanced Septoria resistance effect on utilisation of fungicides strategic as well as volume Ear fertility effect of nutrient deficiencies and weather events End use traits

51 Marketing Agrii s R&D Capability

52 Current emphasis To market our core R&D proposition: To provide our agronomists and customers with an innovative pipeline of new technologies and approaches to growing systems, that allows them to significantly outperform existing practices

53 Current emphasis Relationship-oriented - events-based programme 5 technology centres and 24 demonstration venues 3 x events annually c5000+ attendees Traditional marketing & communications mix Focus on developing relationships between farmers and agronomists Extending sales proposition to existing customers Introduction service for potential clients A typical programme Arrival and Registration Workshop Session: Soil Management Getting it Right Field visit: Variety Tours Event concludes

54 A Typical R&D site Field Day Communication in practice Never miss an opportunity for branding Last minute preparations! In field presentations on... Soil management & cultivations...variety choice / seed rate..and chemistry

55 A transition to a new emphasis Why? Strategic factors affecting our market place Consolidation of farms, more sophisticated management, ROI Drive demand for professional support and production systems Development of IT-based solutions Growth in seed based technology A new generation of farm business managers with new priorities What s behind the relationship? New customer segments, new delivery models A growing demand for agri-intelligence

56 Market segmentation (basic) Business Agronomy Full Agronomy TRADITIONAL SEGMENTS

57 Market segmentation (basic) Business Agronomy Full Agronomy Strategic Agronomy Knowledge Support TRADITIONAL SEGMENTS DEVELOPING SEGMENTS

58 Market segmentation (basic) Strengthen existing business Relevance to new segments Business Agronomy Full Agronomy Strategic Agronomy Knowledge Support TRADITIONAL SEGMENTS DEVELOPING SEGMENTS

59 Agri-intelligence the new emphasis To be the most respected knowledge and technology resource for profitable and sustainable agriculture

60 Agri-intelligence the new emphasis Technology Partners Agronomists Farmers & Growers To be the most respected knowledge and technology resource for profitable and sustainable agriculture

61 Positioning Agri-intelligence Authority status Recognised as a leader Communications Mode, regularity, visibility Internal & external Claim our space Owning a distinct look and feel Agronomist Connection Compelling internal story Platforms Utilising our venues & engaging Launch Announce the investment and commitment Farming Connection Beyond our customer base Customer Connection Compelling customer story

62 Positioning Agri-intelligence Claim our space Owning a distinct look and feel Authority status Recognised as a leader Communications Mode, regularity, visibility Internal & external Agronomist Connection Compelling internal story Digital Strategy Platforms Utilising our venues & engaging Customer Connection Compelling customer story Launch Announce the investment and commitment Farming Connection Beyond our customer base

63 In Summary A significant uplift in marketing activity to profile Agrii s R&D/technology capability Positioning of Agri-intelligence for a new era in farming Accessing new market segments Engaging with the wider market 12k growers to 20+k growers From hard copy to digital Greater visibility/connection of the company resource alongside agronomist

64 Thank You The future is ready