Fertilizers and Yara International<\/strong><\/p>\nOne of the key components of driving increased productivity is by applying more, better and more efficient fertilizers. The fertilizer industry is commoditized and thus historically companies have focused on obtaining good production facilities and ensuring efficient upstream operations, often not providing sufficient attention to downstream operations (i.e., distribution and sales to farmers). One of the key companies in this market is Yara International, a leading global producer of fertilizers, especially nitrogen fertilizers. Aware of the significant challenges ahead, Yara has recently been refocusing to address this productivity challenge. Namely the company has redesigned its product development and commercial organizations with a crop focused strategy, strengthened its R&D department and been a leader in establishing a global vision for agriculture.<\/p>\n
Business Model<\/strong><\/p>\nYara generates value internally in two main ways: 1) through highly efficient upstream production facilities that are capable of producing nitrates, a more efficient and environmentally friendly fertilizer and ensuring efficient supply chain and 2) tailoring its product offering to address local needs of crops and farmers to optimize application on the field. The company manages to capture this value obtaining a price premium over commodity competitors and higher brand loyalty from farmers. Externally, the company allows access to higher quality products that allow farmers to increase productivity (up to 300% for some farmers in Sub-Saharan Africa, but also to a smaller extent in developed markets) and improve their livelihoods, thus increasing food security.<\/p>\n
Operating model<\/strong><\/p>\nThe operating model manages to create and sustain value through three main initiatives. First, contrary to most competitors, Yara\u2019s commercial and marketing organization is crop focused. This allows the company to dedicate significant time to understanding the particular challenges faced by crop in different regions and work with farmers to determine the most efficient applications for these crops. The norm in the industry is being product focused and ignore crop specific needs. Second, the company invests significantly in R&D. The deep knowledge of local needs allows the company to identify hidden needs in the market and develop tailored fertilizers and applications to help farmers. For example, the company has developed sensors that allow farmers to identify his plant\u2019s fertilizer need through low-cost solutions that are easy to use. Lastly, the company is establishing itself as a leader in thinking about the challenges and solutions for agriculture globally. One example is that Yara played a key role in developing the 2009\u00a0 World Economic Forum\u2019s New Vision for Agriculture, which is currently co-chaired by a company executive, and subsequently the Grow Africa initiative, which it also co-chaired during its first two years. Another example is Yara\u2019s cooperation in establishing Agriculture Growth Corridors in Tanzania. The project is aimed at strengthening agricultural infrastructure and increasing supply chain efficiency through joint efforts with private institutions, the local government and farmers and farmer associations and has already benefited thousands of farmers.<\/p>\n
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