FARMING FUTURES

Peru 2015 | INDUSTRY | INTERVIEW

TBY talks to Luis Fernando Martínez, General Manager of Peru BASF, on the strength of Peru's market, the size and importance of the agro-export business, and the company's development strategy for Latin America.

Luis Fernando Martínez
BIOGRAPHY
Luis Fernando Martínez graduated from the Universidad de La Salle in Bogotá in 1990 with a degree in veterinary medicine. He began working for BASF in 2006 as Manager of Fine Chemicals for Colombia, Ecuador, and Venezuela. In 2010, he moved to BASF Argentina to lead the Department of Performance Products. He later became manager of the Department of Crop Protection for Chile and Peru in 2013.

Why is Peru a strong market for BASF?

We have been in Peru for 59 years. It is an economy with strong growth opportunities. We are involved in pigments, homecare, cosmetics, mining, water treatment, construction, automotive coatings, and agrochemicals. We are involved in many different segments, but our main business is agricultural and construction chemicals, as it generates most of our sales.

This year has seen a slowdown for the Peruvian economy. How has this affected your business in Peru, particularly the fall in commodity prices?

Mineral and commodity prices have been falling internationally, and domestically, national elections and corruption issues have played a part in this slowdown. We are very optimistic about 2015, however, as sales are growing in our main businesses, and next year, especially in mining and in the economy overall, there will be likely be a rise in consumption. BASF expects to grow about two percentage points above Peruvian GDP growth forecasts for next year, so around 8%.

Agrobusiness is a new sector in Peru, and the government plans to diversify into niche products like avocado, cacao, and coffee. What products do you supply to the agricultural sector, and what do you expect to see in terms of growth there in 2015 and the coming years?

We provide agrochemicals, including fungicides, herbicides, and insecticides, as well as biological products, but we do not provide fertilizers. Today, the agro-export business is not more than 30% to 35% of the agrochemicals market, but it will become the most important business in the next two or three years due to new irrigation plans in Arequipa, Lambayeque, and Jequetepeque. We work very closely with traditional crops as well, because those account for a significant part of the economy and a large part of the work force. The traditional sector is very important for us. We work to efficiently and effectively transmit innovations in the production of traditional crops, and we work closely with the government and agro-export companies to promote the traditional crops, which are potato, quinoa, rice, and corn, mainly. What we can offer are the agrochemicals that can defend and protect these crops and keep yields high.

How does Peru figure in BASF's regional Latin American strategy?

Peru is a healthy and growing economy in South America, and we have a lot of opportunities here. The social structure is changing. As the economy and society develop and as living standards rise, people spend more on detergents, for example, and we can provide the right chemicals to make detergents more efficient, clean, and green. There are a lot of opportunities in homecare. On the construction side, major infrastructure projects are in progress in roads and transport, seaports and airports, logistics, and energy. In mining, Peru has the advantage of lower production costs, with a much lower break-even point. I think investments will start up again next year, and once those projects are in full production in a few years, there will be a lot of opportunities there too.

What is your outlook for 2015 and what projects will you be undertaking next year?

This year we want to concentrate on our distribution channels, focus on developing a new generation of talent, and to work more closely with growers. We will grow around 10% in agrochemical products next year. We will also launch three or four innovative products in the Peruvian market, and most of our new products are fungicides and herbicides. In homecare, we are introducing a new technology, which is an innovative new way to reduce energy costs as well in the cosmetics sector. We want to lead by example, encouraging countries and companies to reduce pollutants and contaminants, and to reduce energy and water use. This year we celebrate BASF's 150th anniversary worldwide with a new slogan, “We create chemistry." These are exciting times for BASF, and 2015 will be an important year in Peru and all over the world for us.