Jim Collins is looking forward to a better year for farmers, and his company and its investors.
After helping bring Corteva to life during the epic crop production problems of 2019, agriculture deserves a break.
“You can feel that folks are itching and ready to go. They want a good year. They want to put 2019 behind us,” said Collins, chief executive officer of Corteva Agriscience, in an interview in early March.
Corteva was created by separating the agriculture components once held by forebears Dow, DuPont and Pioneer and spinning them out as an independent company in mid-2019.
That has produced a global agriculture giant that is far more focused on farming, and much more susceptible to its cyclical nature.
In a year like 2019, that makes its results far more volatile, but also able to respond faster and more aggressively.
That has brought investors to it that specifically want to be exposed to agriculture’s ups and downs, rather that the previous collection of shareholders who wanted exposure to the less twitchy results of a conglomerate like DuPont or Dow.
“When we (were launched), our investor base turned over pretty dramatically,” said Collins.
“Even though 2019 was a horrible year, they stuck with us…. Investors that own us, they get it. When they owned DuPont, they didn’t.”
For Collins, being head of a “pure-play” agriculture company allows him to operate free of the competing needs of non-ag components of the parent companies. DuPont, his original company, had many competing needs.
“It was an electronics company…. It was a plastics company…. We had the ag piece. It was a building and construction company. So, when resources were available, we were all fighting for the same pool.” The company operates independent divisions in a number of countries, including Canada. It is a global brand but produces specific markets for specific countries.
It has taken a contrarian approach to meeting regulatory standards around the world. Instead of customizing its products to meet the standards of each market, and trying to lighten the regulatory burdens in onerous systems like that operated by the European Union, it has decided to try to meet the most stringent standards so that it won’t need to tweak each product for each place that it could be used. Generally that means meeting EU standards.
“Everywhere else should be easier,” said Collins.
“Then I don’t need to do two sets of standards internally…. It adds a little bit of time to the regulatory process… and it adds some cost… because you’re spending more time and money to develop a product.”
However, over the life cycle of a product, the impact is negligible, and it might even be a benefit.
“We did the math. It actually works out. It’s a better business proposition. You invest a little bit more up front for a much larger payoff on the back end.”
Another child of Corteva’s ag-only reality has been its increased commitment to public and government outreach. Agriculture is a uniquely sensitive area for governments, regulators and consumers, but inside DowDuPont that sensitivity was not generally recognized.
Now Corteva has dedicated staff committed to working with the EU.
“We undervalued, underinvested in the external affairs aspect of our business,” said Collins about the parent companies.
“For 30 years we didn’t have a person in Brussels, at all…. We just didn’t invest the time.” The company also requires its country and division leaders to develop relations with governments and regulators to understand their sensitivities, and so they can refine product development to fit what they will require.
With the EU, that has brought a rare situation between an agriculture company and regulators, Collins thinks: trust.
“We stopped battling. We stopped competing with them and started collaborating,” said Collins.
“I think it helps us in the regulatory process…. We’re viewed as a collaborator, and not a competitor.”
2020 won’t be an easy year in many ways, with COVID-19 ravaging the world’s economy and hurting many people. But farmers in the Northern Hemisphere will soon be growing another crop, and both they and Corteva will be hoping for fewer nasty surprises from the weather.