Is Chinese agricultural production increasing?
Chinese agriculture has been changing to an extraordinary degree over the last few years and I don’t think anybody appreciates the speed of change. For example, three years ago, China had 52m sows, but today it has 36m. Yet pigmeat production is more or less the same as productivity per sow has increased dramatically. The Chinese government is focused on consolidating farms and feed mills so they can better control food safety and pollution.
How focused is China on food quality and safety?
Food safety issues are critical to the Chinese Government but many Chinese believe they are overstated. The government’s current five-year plan has agriculture front and centre. The government is particularly focused on air and water quality. I think China has moved away from the challenges of food availability and food prices to focus much more on food safety issues.
Many say China is unique and that relationships are vital to doing business. Is this true?
I think the idea that there are some countries out there where you can just get by without building relationships just isn’t true. Yes, it’s more emphasised culturally in China but relationship-building is the same everywhere. If you think you can fly into China, get a deal and fly out again, I think you are sadly mistaken – you have to have people on the ground and people who can speak Chinese.
Why have agribusinesses focused on acquisitions recently?
A lot of the acquisitions have been about getting closer to the farmer and trying to understand more directly the farm needs. Over the past three years, Alltech has been on an acquisition pathway, which has trebled the size of the company. We expect more in the future, with the aim to grow sales to $5bn by 2018.
Alltech’s recent acquisitions such as Keenans and E-CO2, which help farmers with carbon footprinting, have helped us to get closer to farmers.
In what area do you see the greatest growth potential for Alltech?
Crop science has a lot of opportunities, but it is a different cycle to animals. When you feed an ingredient to an animal you get a response in anything from three to 30 days. With crops, the benefit may not be seen for six or nine months when you harvest the crop.
Currently, the crop side comprises less than 10% of turnover but shows the greatest opportunity for growth.
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