BASF presents solutions for sustainable farming

Ludwigshafen, Germany – September 17, 2009 – BASF’s Agricultural Solutions segment is well positioned to help farmers to become more sustainable. “The long-term outlook for farming is strong,” said Dr. Stefan Marcinowski, member of the Board of Executive Directors of BASF SE at a press conference. “But growing complexity means that farmers will need more tools than ever to be able to profit from rising in demand.” BASF has reacted by expanding its toolkit of agricultural solutions. In a few years, farmers in many parts of the world will be planting the first seeds with traits from BASF Plant Science. Those crops will be treated with products from BASF’s Crop Protection division’s rich portfolio of herbicides,fungicides and insecticides. To reduce fuel, water and pesticide use while increasing profitability, growers may chose to use one of the many precision farming tools co-developed with BASF; and in some parts of the world they may pay for these products and services with a share of their harvests, while BASF hedges the currency and commodity price risk. “Nowadays, farm profitability doesn’t only depend on the right agronomic practices”, explained Dr. Marcinowski. Farmers also need to make assumptions about commodity prices and exchange rates. They must keep abreast of policy decisions, subsidy payments and export regulations. And they need to be one step ahead of changing consumer requirements, all while keeping the impact of farming on the environment to an absolute minimum. BASF’s Sustainability Center applies a unique tool – the eco-efficiency analysis – to help benchmark various production methods and products across industries in terms of profitability and impact on the environment. BASF is applying this benchmarking and business development tool to be able to model farming operations along the food value chain. Crop Protection Turning to the Crop Protection division, Group President Markus Heldt said business had been strong in the first half. “Agriculture tends to hold up well during economic downturns,” said Heldt. And the same holds true during the current economic crisis. “Of course, the dip in commodity prices is showing up in farm incomes, which are below their 2008 high levels. As a consequence, farmers are more conservative when it comes to investing incrop protection,” he added. “Still, we expect the Crop Protection division to have another very good year and to exceed our EBITDA margin target of 25%.” In South America, where farmers can be especially hard hit by volatile exchange rates and currency fluctuations, BASF has expanded its portfolio of innovative financing tools such as bartering and vendor transactions. In 2008, just three years after introducing them, these tools account for 53% of overall sales in the region, up from 23% in 2005. BASF is now extending these services to farmers in Eastern Europe. This is just one example of how BASF thinks in terms of farming systems, taking into consideration all of the factors that can impact a farm’s sustainability: farming methods, farm financing, global trade, precision farming as well as the competitive and political environment. By focusing on farming systems, BASF is able to better assess how technology can best be deployed and what technologies need to be developed or improved upon to lift on-farm performance. “For farming operations, there is no silver bullet to improving sustainability. Farmers need to find the right combination of available tools,” Heldt said. “BASF’s new breakthrough herbicide Kixor (R) is one such tool.” Kixor can be used against difficult-to-control weeds, including those that have developed resistance to the herbicide glyphosate. “This will help farmers increase yields, while continuing to use conservation tillage”, he explained. In Northand Latin America more than a quarter of farmland is not tilled before planting. Pioneered in the 1970s, conservation tillage reduces soil erosion and protects valuable soil organisms. Our launch plans for Kixor are on schedule. The U.S. authorities greenlighted Kixor this month, and registrations in key markets in Latin America were granted earlier this year. Farming’s carbon footprint Modern food production requires large amounts of fossil fuel and water. BASF’s pioneering plant health products significantly reduce the amount of fuel required to produce the same amount. By boosting yields per hectare in key crops such as corn and soybeans by more than 10%, these products improve land-use efficiency. They also help crops make better use of available water, stand up better to frost, and can improve harvestability. CO2 savings are also at the center of a new precision agriculture tool, AgSync, for areal applicators in the United States. Using GPS, online maps and a smart work order software, areal applicators can cover the same farm area in 25% less time, using 40% less aviation fuel. That’s just one of dozens of local precision farming tools BASF offers to growers. In addition to reducing fuel consumption, these tools help boost yields and reduce the cost of crop protection products. BASF used its eco-efficiency analysis to choose the best new packaging system for its crop protection products. Since the new packaging contains less raw materials, less greenhouse gases are emitted during the production and recycling process. BASF is introducing the new system this year. After full implementation in 2014 over 2,000 metric tons per year CO2-equivalent greenhouse gases will be saved each year. That’s as much CO2 as 200,000 trees can convert into oxygen in the same time. First results from an eco-efficiency analysis of organic and conventional farming systems were also presented. The analysis compared 1000 kilograms of organically grown German apples with the same amount of apples grown using mineral fertilizers and chemical crop protection products. As most people would have expected, the production cost of organic apples was significantly higher than for conventionally grown ones. But it takes more land and more trips with the tractor over the field to grow the same 1,000 kilograms of organic apples. The result: On balance, conventional produce actually has a slightly better environmental footprint than organic, and yield is key to the equation. A comparison of overseas apples and local apples done for REWE revealed that the energy required to cool local apples for several months after harvest actually exceeds the energy required to transport apples from places such as New Zealand and Chile. “As these examples show, intuition is not always the best measure when it comes to determining the more sustainable production method,” said Klaus Welsch, the head of BASF’s European Crop Protection business. “A robust benchmark would not only inform and empower famers and the food value chain to make the right decisions. It would also provide more transparency for consumers in understanding the real “green” profile of the food they purchase.“ “As we continue to apply this analysis method, we welcome an open discussion with farmers, policy makers and other stakeholders,” said Welsch. “The method is already certified by Germany’s TÜV and the U.S. NSF International. But we continue to learn as we share our findings in stakeholder dialogue sessions.” Welsch also presented BASF’s engagement in biofungicides. BASF has long served conventional and organic farmers with biological crop protection. “Farmers and retailers are under pressure to offer fresh produce with residues below legally permitted levels. After three years of testing and field trials with our new biofungicide Serenade®, we are about to launch spray programs combining the best of both worlds to help farmers and food retailers meet consumer demand.” Plant biotechnology Last year, 13 million farmers planted genetically modified seeds on around 125 million hectares in 25 countries. This includes mainly traits that confer herbicide tolerance and insect resistance to such key crops as corn, soybeans, cotton and canola. “While BASF has a limited stake in these segments, our main goal with plant biotechnology centers around improving growth performance and stress tolerance and thus yields. Our focus is more yield with less,” said Peter Eckes, President and CEO of BASF Plant Science. From 2012 onward, pending regulatory approvals, farmers would be able to plant the first genetically modified drought-tolerant seed traits from BASF’s joint pipeline with Monsanto. The launch country for these seeds will be the US.“ Of course, we would love to offer these traits to European farmers as well,” Eckes said. “We have analyzed European corn farming and the need for irrigation,” he continued. “More than 5 million hectares of corn are affected by drought. In addition to saving valuable water resources, our drought tolerant varieties would increase farm profitability significantly. This is a great opportunity for sustainable agriculture.” For European farmers, however, consumer sentiment is a key concern when it comes to deploying genetically modified seed varieties. Fears about the potential health and environmental impact of genetically modified crops have prompted policymakers to effectively prohibit the planting of GM seeds. In addition to yield and stress tolerance, BASF’s pipeline of biotech traits includes enhanced nutrition, herbicide tolerance and fungal resistance, “As the trait technology partner, we work with seed companies across the globe to bring our value-adding traits to growers,” said Eckes. “In Africa, we will be providing – royalty-free – the best drought-tolerant genes from our collaboration with Monsanto to public research institutions with the aim of developing African corn varieties for small-scale farmers,” he added. Summarizing BASF’s approach to sustainable farming, Eckes said: “Since the beginning of agriculture, farmers have looked to develop and adopt tools to improve yields and quality. We believe that science and technology have an important role to play in continuing this rich history of agricultural innovation. Today, you have seen some examples of how BASF can contribute to this effort.” About the Crop Protection division With sales of € 3.4 billion in 2008, BASF’s Crop Protection division is a leader in crop protection and a strong partner to the farming industry providing well-established and innovative fungicides, insecticides and herbicides. Farmers use these products and services to improve crop yields and crop quality. Other uses include public health, structural/urban pest control, turf and ornamental plants, vegetation management, and forestry. BASF aims to turn knowledge rapidly into market success. The vision of BASF’s Crop Protection division is to be the world’s leading innovator, optimizing agricultural production, improving nutrition, and thus enhancing the quality of life for a growing world population. Further information can be found on the web at www.agro.basf.com. About BASF BASF is the world’s leading chemical company: The Chemical Company. Its portfolio ranges from chemicals, plastics and performance products to agricultural products, fine chemicals as well as oil and gas. As a reliable partner BASF helps its customers in virtually all industries to be more successful. With its high-value products and intelligent solutions, BASF plays an important role in finding answers to global challenges such as climate protection, energy efficiency, nutrition and mobility. BASF posted sales of more than €62 billion in 2008 and had approximately 97,000 employees as of the end of the year. BASF shares are traded on the stock exchanges in Frankfurt (BAS), London (BFA) and Zurich (AN). Further information on BASF is available on the Internet at www.basf.com. About BASF Plant Science BASF – the Chemical Company – consolidated its plant biotechnology activities in BASF Plant Science. Today, about 700 employees are working to optimize crops for more efficient agriculture, renewable raw materials and healthier nutrition. Projects include yield increase in staple crops, higher content of Omega-3s in oil crops for preventing cardiovascular diseases, and potatoes with optimized starch composition for industrial use. To find out more about BASF Plant Science, please visit www.basf.com/plantscience. Press photographs are available for download at: www.basf.de/pressphotos, Key word: crop protection Search term: sustainable agriculture Elise Kissling Phone: +49 621 60-27450 Fax: +49 621 60-6627450 elise.kissling@basf.com BASF SE Crop Protection division Global Communications 67117 Limburgerhof Phone: +49-621-60-0 Fax +49-621-60-28470