Farm Weekly sat down with Adrian Capogreco, the managing director at Nutrien Ag Solutions Australia. Video by Darren O'Dea.
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00:00We've hit right on the three-month mark now, so it's enough time to sort of start to take
00:05in a little bit of the parameters of the role and the landscape, both across the world in
00:11Australia and within agriculture, but not enough time yet to really form views on what
00:18comes next and how strategy might change or be refined.
00:22But I would say the first thing is I've really enjoyed it.
00:24One of the main things that I've done in that first two to three months is spent time with
00:29our network and our customers, and so I have been away from home just about every week,
00:34which has been difficult, but at the same time, there's nothing I love more actually than
00:37spending time out in the field, customers, with our network, with our branches, with our
00:42staff, and the stories and things that they're working on are just fantastic, right?
00:48And they've got good ideas as well.
00:49That's one of the other big things, like when you ask about what comes next, what can and
00:53should we be doing?
00:54The ideation that happens out at the front end of the business is terrific as well.
00:58So a lot of listening, as you would expect, and I think a little bit more of that to
01:02come still as well, but really enjoyed it.
01:06Nothing revolutionary that has surprised me because I have been around the business for
01:10a number of years already, so I had been out and about and knew a lot of people already,
01:14but certainly with a different lens, you listen in a different way, I think.
01:17The good thing about agriculture is I've entered it and just haven't looked back.
01:22It's sort of one of those sticky industries that draws you in for different reasons, but
01:27I've loved the journey.
01:28I love the cycles.
01:29I love the ethos of the industry.
01:34And New Farm was where I cut my teeth within agriculture, so I spent a number of years there
01:39before being drafted across into Nutrien, which again was the CFO of the company.
01:46That was the role, and before being tapped for the role I'm in now.
01:52Number one is really just understand the cycle that we're in and make sure that we're able
01:56to have a resilient business for our employees, for our customers.
01:59We want to make sure that we can trade through these cycles in a really sustainable and really
02:07sustainable way that provides surety of supply to our customers.
02:10There's a number of big picture priorities, whether it's building new assets, East Coast
02:16and West Coast, whether it's investing in digital, whether it's trying to get our arms around
02:21what sustainability is going to look like 10 years from now and how we position ourselves
02:24for it, whether it's bringing new products and innovation to market.
02:32They're all on the table, I guess.
02:34One of the big ones, I think, right now that's got real relevance domestically but globally
02:40is how supply chains are structured and organised, and that's probably got us thinking in largest
02:47measure, I think, at the moment.
02:49So what role can we play in that?
02:51We think we can play a really meaningful role in Australia and for agriculture.
02:55Where do we deploy capital?
02:56Where can we add value?
02:58And how can we influence beyond that to make sure that the supply chain functions properly?
03:02And we love the WA market.
03:04We've got a presence here that we're really proud of.
03:07We've got a long history here.
03:09But there's aspects of the Western Australian market that I think really stand out, particularly
03:16in cycles like we're in at the moment, a cycle where there's a bit of uncertainty.
03:20There's challenges in commodity prices, input prices, output prices, the way supply chains
03:26function and the way farmers need to be able to adapt to get the best out of their land,
03:32no matter how they're farming.
03:33And so the WA market stands out because it's particularly resilient.
03:37It's particularly innovative.
03:39It's particularly steady through those cycles.
03:42And if you're running a business and you're trying to decide where the next dollar of investment
03:45goes, you're going to look to those places that are resilient, innovative, give you good
03:51returns and give you an opportunity to add value as a company, value to the marketplace,
03:56value to the customer.
03:57So we really like that about the WA market.
04:00I think we're seeing that resilience probably now more than ever and just couldn't be prouder
04:08of our business and the way our staff over in Western Australia are operating.
04:12But equally customers.
04:13I've got to meet quite a lot of our Western Australian customers over the first two to
04:17three months in a row.
04:19And I love hearing their stories as well and how resilient they are.
04:22What they can do with two or three hundred mils of rain in a year, I am blown away.
04:27I'm blown away sometimes.
04:28So yeah, it's really, really interesting.
04:30We'll be at full scale by next year.
04:31We'll get our first shipments into the asset by November, December this year.
04:35And then we'll be up and running by next year.
04:38So yeah, I mean, in short, it's going to add capacity, right?
04:41So whether we're going to have around 80,000 tonnes capacity there once that's up and running.
04:51And so you combine that with our other fertiliser facilities in Esperance and Geraldton, etc.
04:58and Albany, it gives us an opportunity to grow in the marketplace.
05:05But, you know, probably 50% of our volume will go through that primary asset there in central Perth.
05:13And we'll be able to leverage that to serve our customers, hopefully, in a really confident way.
05:23But also have a great opportunity to grow as well.
05:26Yeah, well, I mean, that's the cut and thrust of agriculture, isn't it?
05:29There's going to be cycles and that you're going to have parts of your business that are firing and parts that are not.
05:35But I mean, that's very deliberately why we've organised the company the way we have.
05:39We've got cropping, we've got livestock, we've got real estate, we've got insurance, we've got financial services.
05:46You've got a range of offerings that give you a degree of resilience through the cycle.
05:49And that's important because our customers have those same breadth of earnings streams often that they rely upon to sustain themselves through the cycle.
06:00So we try to set ourselves up to service that and support them.
06:05And if we're doing that well, then we think we can do well as well.
06:09But by and large, that's the thing.
06:11We can't control the weather, but we can control the offering that we put to the market, the breadth of service and product that we provide.
06:20And hopefully we're doing that well.
06:21And if we are, then our customers are going to be in a good spot.
06:24Again, surety of supply and supply chains that function properly are probably the key thing.
06:31And we've seen a fair amount of disruption on a number of fronts, probably since COVID was really where it probably became more accentuated than any other time in living memory.
06:40And really, that was supply chains becoming really dysfunctional for a period.
06:44Then you had other geopolitical events that prompted a change in input price, a very substantial change in input price for fertilisers, which, again, changed behaviours, changed models,
06:56and was a real challenge to cope with as well, particularly for our customers and then everyone through the value chain like us.
07:04So how that's going to play out, we don't know.
07:06But one, there are a few things definitely at play.
07:09So obviously, you've got China that are making decisions around the way they supply the global market.
07:16And they're clearly prioritising their domestic market for fertiliser.
07:19And that's their prerogative.
07:21But that does have an impact on the way the rest of the supply chain operates.
07:25One of the big advantages we've got, of course, is that we have a degree of vertical integration back to our businesses through North America,
07:34particularly on potash, but also through the other aspects of fertiliser.
07:39We're able to produce and supply where we need to.
07:42So we feel like we're in as good a spot as anybody to supply the Australian market and provide that confidence.
07:47But even still, we are at the mercy of things like global supply chains moving and functioning properly,
07:53port congestion being managed adequately,
07:56and products being priced in a logical and stable way.
08:01They do, yeah.
08:02I mean, it's an interesting dynamic.
08:05And I think we spend as much time as any corporate would sitting around trying to wargame the different scenarios
08:10and how you organise your business to be able to respond or be resilient to what's going to happen.
08:15But I don't think any of the scenarios we've guessed have come true yet.
08:19So we might need some more practice.
08:22But, I mean, you know, the 10% on Australian exports into the US,
08:29I mean, that's the one that everyone's digesting at the moment.
08:32That's big for us.
08:33It's big for the industry.
08:34It's big for Australia.
08:35Is it going to fundamentally change the value that sits within the Australian market?
08:41At this stage, we think not and certainly hope not.
08:43But, I mean, you know, that value of Australian exports into,
08:50you're talking $4 billion almost of Australian red meat goes into that North American,
08:56that US, sorry, that US system.
09:00So does that change?
09:02Does it not change?
09:03Do we have an opportunity to supply to other markets?
09:07I think yes.
09:09And certainly the way the market has responded since the announcement would suggest that
09:12we're going to be resilient to that.
09:14But I guess we continue to monitor.
09:16I mean, in terms of supply of inputs, how do we compete?
09:20Look, the reality is Australia doesn't have a lot of sovereign capability left to manufacture
09:26too many of their own goods.
09:27We do have some.
09:28Certainly got some formulation capacity.
09:30And we've got some capacity to make fertilisers and other things.
09:33But we are truly embedded within the global supply chain model, right?
09:39And I think we operate in a really good way in that model because we operate in a transparent
09:44way.
09:45We're fair.
09:46We operate in accordance with global trade rules.
09:49And we're a fairly reliable supplier and buyer.
09:55So we're positioned as well as anyone.
09:58The tyranny of distance gives us some challenges.
10:01The freight costs, which we've seen them fluctuate over the past five years, can have a bearing
10:06on the economics of bringing stuff into Australia.
10:08Certainly having good, efficient port infrastructure around the country, I think, is a very important
10:16aspect as well.
10:18And having good optionality around sources of supply as well.
10:22So dependency on one particular geography over another.
10:26Fertiliser, for example, there was, you know, when there were some restrictions put on purchasing
10:31Russian fertiliser, the market had to adapt.
10:35And what's really interesting is how quickly and how nimble the market is able to adapt.
10:41So that's certainly been our experience.
10:44But having that optionality with different markets.
10:48So whether it's China and India increasingly providing some output, other parts of Southeast
10:53Asia, Europe.
10:55But yeah, having multiple options in geographic parts of the world, I think, are important.
11:01Yeah, so we've got our big livestock forum and muster happening this week.
11:07So I'm really looking forward to that.
11:09That'll be tomorrow.
11:10And it'll actually be the first time I've attended that.
11:13So spending a little bit of time, particularly with our livestock team from Western Australia.
11:18So that'll be terrific.
11:19And that's really the primary purpose.
11:22I am taking the opportunity to spend some time with some customers while I'm here.
11:25And I'll meet with a few of our branch network as well.
11:28But as I said earlier, I had a terrific opportunity to go both north and south of Perth on visits
11:34in the past month or so.
11:36So I've seen a bit of the network, but certainly looking forward to the time this week as well.
11:41I guess the key message is that we're here to support you.
11:44We always say to our customers, you know, we want to see them do well.
11:48If they're able to do well, then we're going to have an opportunity to do well as well.
11:52So that's at the forefront of our minds.
11:55How can we support them to be successful?
11:58And, you know, front of mind for us is making sure that they've got reliable supply of products
12:03at a good competitive price and that we put everything around that to make sure the experience
12:08is as productive as possible for them, whether it's agronomy advice or financing
12:13or other aspects that we're able to provide through our network.
12:17But, yeah, the message to them is really that we are there fighting for them in a very uncertain
12:23world, trying to provide certainty in a very volatile and uncertain world at the moment.
12:29Well, I'm going to make sure I set a good example around work-life balance.
12:33I've actually got three young children, age nine, six and three.
12:36So they're going to need me around here or there, I think.
12:40So, yeah, I think it's setting a good example for staff as well, right?
12:43We're in a very demanding industry.
12:45We all know that.
12:46It's a fun industry, terrific industry, an infectious industry, but there's a work ethic
12:52associated with it, which I love and I think we all love, and it draws people in.
12:57But you've got to maintain balance.
12:59And I want to make sure our staff feel that.
13:02And the best way to do that is actually to lead by example.
13:05I've probably got some work to do, I guess, based on the track record of the first three
13:09months in the role.
13:10But that's a very deliberate thing to make sure that there's a really good understanding
13:15and feel for the market at the moment and the business and our people.
13:19So I'm really committed to doing that.
13:22And I think I've got a bit more listening to do yet.
13:25But finding that balance is going to be a real focus and priority of mine as this year
13:31goes on.
13:31What's something interesting we don't know about you that we need to know?
13:36Well, I don't often quote this in Western Australia, but I'm a Collingwood supporter.
13:41Yeah.
13:41Yeah, yeah, yeah.
13:46No, so...
13:47I don't know going well.
13:48I don't know going well.
13:49No, no, so...
13:50I beat my team on the weekend.
13:52I'm a bomber.
13:53You're a bomber.
13:53The Anzac Day.
13:54Yeah, so the...
13:55Yeah, so no, I shouldn't go to football, should I?
13:58But that...
14:01So I will be going to the game next week.
14:03I'll come across and actually tag along and go and see Collingwood play against Fremantle,
14:08hopefully.
14:09But I would say, yeah, just look, the thing that people often don't know is, you know,
14:14young family and how busy my wife and I are.
14:17We actually built our brand new home as owner-builders some time ago.
14:23And we know nothing about building.
14:25And we're not in the building industry, but sometimes it's things like that that just
14:29take your mind off the very busy life you've got on a work front, just to say, hey, I want
14:34to challenge myself in a completely different industry with a completely different type of
14:39stakeholder and see if you can manage to create something wonderful out of it.
14:44And yeah, we had our moments, but I would say we're really proud of where we landed.
14:49So yeah, plenty to keep us busy beyond work, young family, and then trying to take on a
14:55project like that.
14:56So yeah, I've really enjoyed that.
14:57Excellent.