50 FEED Business Worldwide / MAY 2015
Animal health and crop care product manufacturer Zagro is an emerging global company with Asian descent in an industry now dominated by Western giants. Founded more than 60 years ago, Zagro used to be a division under the Zuellig Group, which operates healthcare, agribusiness, and agricultural and materials handling equipment businesses in the Asia-Pacific region.
In 1996, Zagro was listed on the Singapore Stock Exchange and became a public company with around 2,000 shareholders, according to its CEO, Mr. Poh Beng Swee. Since going it alone, Zagro has been exploring more territories, he says. The company used to be in ten countries; now, it has presence in around 45 countries. And its product range has tripled since then. “We’ve acquired the representation of major brands in some countries such as Novartis, BASF, WSDA and Orion” and increased from two to six its production centres worldwide, Mr. Poh says, adding Zagro is now focused on further expanding in Africa, Australia, New Zealand and Latin America.
In an interview with FEED Business Worldwide, Mr. Poh, Zagro’s effervescent CEO, details how the company grew from being a small part of a big whole to what it is now, an Asian-headquartered business with far-reaching global reach.
FBW: With Singapore as its headquarters, Zagro can be described as a global company with an Asian descent. Has this proven to be a business advantage, especially in Asia?
Being a company of Asian descent has not been easy but Asian customers are maturing. They are moving towards product price value rather than the old concept of west is best. This is good for us as Zagro continues to strengthen our brand.
Your key markets are, of course, expected to be in Asia. Where in Asia? And where in the world have you gone so far?
In 2014, three-quarters of our turnover was generated in Asia, where our major customers are mainly from the Asean region, Sri Lanka, Taiwan, Bangladesh, India, and Pakistan. Outside Asia, we have operations in Germany, Uganda, Australia and New Zealand. They accounted for the remaining balance of our turnover in 2014.
Animal/crop nutrition and protection are Zagro’s core businesses. What is the share of each division in the company? In five years, what do you expect the sales growth to be for both divisions?
Five years ago, the share was 50/50 between crop and animal divisions. Five years from now, each would have the same share in terms of sales growth.
How do you strive to be different from the competition?
Weare trying to be different as we establish a stronger relationship with our key customers. We are more service-oriented and we’d like to give our customers value for money rather than the brand alone.
What are some of the biggest concerns your customers have with regards to animal nutrition? How do your products and solutions address these concerns?
The biggest animal nutrition concern comes from feed mills and larger farms that mix their own feeds. And it involves reliability and traceability. Keep in mind that mills cannot afford any failure in the supply of their ingredients. Animals must eat daily and all batches of feeds must consistently contain the full ingredients. We manage this by having a stringent protocol in place called Business Continuity Management.
In essence, should our plants be unable to supply, a back-up plant must be able to do it. This is possible as we have several premix plants in the region able to export. In terms of traceability, having the right accreditations and putting these in practice rather than only on paper is very important. We are accredited with ISO 22000 and fami-QS.
Sustainable agriculture and animal welfare are the order of the day. Feed mills and farms are increasingly under pressure to meet requirements promoting these ideals.
Do your customers make demands for your feed additive products to meet these requirements?
Animal welfare has certainly been part of good management practice. We equate animal well-being and health as part of animal welfare. It is true that emphasis has been given more to this over the years. It is based on facts that when animals are comfortable in their environment, they have better production parameters. In the last five years, we saw a spike in demand for antistress products in high-volume farms. In response, we have come up with products that are added to both feeds
Zagro aims to be a one-stop shop for farmers worldwide. How do you plan to accomplish this goal? What products do you have in mind that will help the company realise this goal?
As CEO, my job is to look at the landscape and determine what customers will need tomorrow. Our product development team and laboratory continuously work on new products to offer as part of our organic growth.
However, as we expanded our footprint, we have come across markets with different needs, leading to acquisitions that have helped expand our product portfolio. We are completing our basket of offerings with products for ruminants on top of our poultry, pork and aqua products. We’ve gained a portfolio of products including anthelmintics, pour-on applications, nutritional products and dips for sheep, cattle, goats and pigs.
The anthelmintics (orally applied medicines for sheep, cattle and goats) help treat internal parasites. Our ectoparasiticide range, manufactured by WSD Agribusiness, helps treat and prevent lice and fly strike – a solution that complements a number of products in Zagro’s international portfolio. WSD Agribusiness also produces Command, a solvent-based pour-on insect growth regulator (IGR) that prevents lice. Its flagship product FlockMaster MKII, an Australian Certified Organic product made only by WSD Agribusiness, treats lice and mycotic dermatitis.
All WSDA Agribusiness products are produced under the Australian Pesticides and Veterinary Medicines Authority (APVMA) Good Manufacturing Practices (GMP) guidelines, which ensure that end-users get only market-leading, Australian-made products that are consistently of the highest possible standards.
The trend worldwide, especially in the US and Western Europe, is towards antibiotics-free animal production.
This trend doesn’t seem to be catching up in Asia as fast as it should be. What in your opinion needs to be done to promote this antibiotics-free culture in this region?
For me, an antibiotic-free nation is a function of GDP. As countries progress, the importance of antibiotics lessens. The main reason for antibiotics-free animal rearing is to avoid residue which in turn could cause resistance in human beings. Antibiotics per se are not harmful. The way they are used is the problem.
Some practices allow residues to find their way to our dinner table. In Asia, antibiotic-free rearing of animals is not something that we can do at will due to a number of challenges involving management practices and disease situations. Second, we must not treat antibiotic as a growth promoter or an excuse for bad bio-security management, but rather as a specific treatment for a specific disease. We need to look at antibiotic as a tool– a specific tool to help farmers treat their flock.
This is where better regulation pushing for zero antibiotic residues in the meat comes into play. Zero residues in meat and proper use of antibiotics could co-exist.
What are Zagro’s plans for Southeast Asia, which is scheduled for economic integration from end of 2015?
What opportunities would this Asean integration bring to the feed and meat production industries?
Politicians have talked about this for years and we can just go with their pace. We follow closely the needs of each Asian country and somehow realise that any potential growth in the feed and meat production industries would be about the same in every country. Everyone will have the same chance and same challenges when economic integration happens.
Are there variations in demands and expectations from country to country among customers in Asia? What do you do to deliver the same level of support for your products everywhere in Asia?
Different culture, different market – that’s the way it goes. The only way to penetrate locally is by acting local. We recruit local staff, train them in Singapore to understand our portfolio and think global, and take back what they have learned to their home country.
Zagro recently announced a higher turnover of S$153.5 million in 2014 compared to S$138.1 million in 2013. But profit for the same year went down to S$7.2 million from S$10 million in 2013. What’s the reason behind the disparity? Has stronger competition in the market or higher raw material prices been a factor behind this drop?
Yes, the competition is definitely stronger but there’s also a currency fluctuation factor as we deal globally. However, this does not affect our investment in product development and people as our plans are based on long term growth.
What personal philosophy have you introduced into Zagro? How has this influenced the way things are done in the company?
Sustainability is important to us. This guides us in our decision-making processes, whether they have to do with acquisitions, people and processes, and/or products to have. This enables me to believe that in 10 years, no matter how aggressive mergers and turbulent acquisitions in the industry will be, the company will continue to operate under the Zagro brand name umbrella.