Samir A. Al-Abdrabbuh, EVP, Agri-Nutrients, SABIC, speaks to GPCA Insight Express about the recent consolidation of SABIC’s agri-nutrients assets under a new entity; he explains what the move will mean for the company’s future plans and expansion into new markets, and how he sees the regional sector develop in the coming years considering ongoing market shifts
What were the drivers for the consolidation of your agri-nutrients assets under SABIC “Agri-Nutrients Company”?
We see a tremendous advantage in this move to consolidate all our agri-nutrients nitrogen assets. The new entity will focus 100% on the agri-nutrients space by leveraging shared services and synergies with SABIC. We expect unified resources to exploit future growth opportunities and further operational improvement opportunities. However, the main driver is accelerating our growth strategy and streamlining our path to be the national champion and a global leader in agri-nutrients. The move builds on the already established SABIC brand, thus positioning us not only as a focused agri-nutrients entity, but also as a strong leader in the agricultural community. SABIC brand is very valuable and customers associate it with quality, integrity and reliability. These are some very important attributes in the agri-nutrients industry.
With the formation of the new entity, which agri-nutrients markets will you be looking to expand into?
SABIC Agri-Nutrients business already has a strong market position in the Middle East and South and East Asia. We will maintain our position in these markets and at the same time focus our growth in South America and Africa, which are regions with tremendous growth opportunities in crop production due to untapped arable land and lower fertilizers use intensity. Additionally, we would broaden our offering to farmers by adding enhanced efficiency fertilizers, which will increase crop yields and at the same time will be sustainable in nature.
What role do you expect innovation and advanced technologies to play in the agri-nutrients business in the coming year?Innovation and advanced technologies will play a pivotal role in the future of the agriculture industries. Governments and regulators are increasingly enforcing regulatory requirements, especially in the advanced regions to provide more sustainable solutions. Therefore, we are always focusing on innovation and enhanced efficiency fertilizers development.
Artificial Intelligence and digitalization will change the way we do our businesses. Satellite imaging, on-line soil analysis, weather data, plant analysis are already available and have to be combined in a smart way for the benefit of customers.
In our National Research and Development Center for Sustainable Agriculture (Estidamah), which operates the most technically advanced greenhouses in the Middle East, we are already using Artificial Intelligence and digitalization with very good results in yield increase and vegetable quality.
How much of a priority will be product diversification for SABIC “Agri-Nutrients Company” in the near future?Our ambition is to offer complete solutions to our customers. To achieve this, we will supplement our current portfolio of nitrogen and phosphate fertilizers with compounded fertilizers (NPKs), which are tailor-made for certain regions, crops and soil combinations. We are also launching products with additional micronutrients and bio-stimulants, water-soluble fertilizers and products with better nutrient release properties.
How has the COVID-19 pandemic affected SABIC’s agri-nutrients business and the market in general? What are your plans in the post-COVID reality?
Our business and our industry were not affected by COVID-19 to the same extent as other industries. Food security is one of the top priorities for any government and that includes the supply of agri nutrients to ensure no production gaps. For major crops, the harvest was in line with the previous years and we experienced a solid demand for our products. The COVID-19 pandemic has shown that our strategy of product and regional diversification will increase our resilience to future crisis.
What future organic and inorganic growth plans do you have under the new entity?
We will push innovation, move closer to our customers by further downstream integration and work to improve our cost position in our existing production assets. Manufacturing assets outside KSA are an integral part of our growth strategy. We want to be closer to our customers and ideally have a strong local presence in agricultural growth markets. We are continuously evaluating opportunities to build assets in growth regions, especially those with competitive feedstock advantages and evolving agri-industry.
With food security becoming an ever-greater priority for the region, how can the new entity play a role in achieving it?
By 2050, we need 30% more food to feed the growing global population. Arable land will only grow by approx. 1% p.a. The challenge is to grow more food on less available land and with increasing water scarcity. This can only be accomplished with improved crop yields, better crop protection, higher efficient fertilizers and a better education of farmers. In the last 50 years, we have doubled the crop output per hectare. We have to achieve almost the same with more sustainable solutions. Agri-nutrients will be a major driver for achieving higher yields by suppling high efficiency fertilizers like control release fertilizers and water soluble fertilizers.
Finally, how do you see the agri-nutrients industry in the region developing in the future and how important will the sector be for the region’s development? Also, what are the key priorities that the regional industry should focus on, in your view, in order to maintain its competitive advantage?
The success of the agri-nutrients industry is dependent on access to key raw materials like natural gas for nitrogen fertilizers and mineral deposits for phosphate and potash. The Middle East region is rich in these resources, which will continue to be the source of competitive advantage for the regional players. Additionally, key agricultural regions like Africa and India are in close proximity to GCC countries. However, the agri-nutrients industry should not rely solely on the existing “commodity-focused” business model. Customer requirements for differentiated products and solutions, increasing emphasis from governments and regulators for more sustainable agri-nutrients and new emerging technologies will require significant efforts in innovation and inorganic growth.