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Weed and bug buster: the fight to feed the world begins on the northwest side of Indianapolis.

Few Hoosiers could tell you that the front lines of the fight to feed humankind are located at a sprawling complex on the northwest side of Indianapolis.

The world headquarters of DowElanco--including the company's administrative offices and global research and development center--are the jumping-off point for the development of herbicides, insecticides and other chemicals that protect crops.

It's a never-ending battle waged by an army of chemists who come up with compounds that target specific weeds, insects and plant diseases, without harming the surrounding environment. The compounds that make it through the arduous round of tests that begin in Indianapolis today might well be used tomorrow to treat wheat rust in Saudi Arabia, corn-borers in Indiana or chamico weed in Argentine soybean fields.

"We usually have to kiss 20,000 frogs before we come across a prince," is the way that John Hagaman, DowElanco's president, describes the ongoing process of research and development. It's an apt description of the care that DowElanco takes in bringing a product to market.

DowElanco's products include herbicides, insecticides, fungicides, fumigants, nitrogen stabilizers and seeds. The company is particularly strong in insecticides for corn and in preplant herbicides for soybeans. Most farmers in the middle of the continent are quite familiar with DowElanco's Lorsban insecticide for corn and its Treflan herbicide for soybeans.

DowElanco is pinning its hopes for additional sales on its newest product, Broadstrike. A multipurpose herbicide, Broadstrike has been applied to more than 4 million acres of corn and soybeans in the Midwest for weed control. The company claims that Broadstrike provides season-long control of farmers' most troublesome grass and broadleaf weeds. Because of excellent crop tolerance, the company says, fields treated with Broadstrike can be rotated between soybeans, corn, alfalfa, wheat and other crops.

DowElanco is a 1989 joint venture that brought together the agricultural-chemicals divisions of Michigan-based Dow Chemical and Indianapolis-based Eli Lilly & Co. Dow owns 60 percent of the company and Lilly owns the remainder. In 1990, the partners decided to locate the joint venture's world headquarters in north-western Marion County.

Motorists passing along Zionsville Road might miss the significance of the campus-like setting. But inside the guard gate, the visitor is introduced to a state-of-the-art, $130 million facility that took nearly three years to build. Included in the 1.1 million-square-foot complex is DowElanco's Corporate Center, its Employee Development Center and its impressive Global Research and Development Center.

All told, some 1,050 employees report for work each day at DowElanco's world headquarters. Nearly half of the employees are scientists who work at the 600,000-square-foot Global Research and Development Center, conducting continuing research in nearly 100 laboratories outfitted with the latest in technology and equipment.

There are five sets of greenhouse buildings, comprising 30 individual bays and about 30,000 square feet. Inside the computer-controlled greenhouses, DowElanco scientists can replicate growing conditions for a worldwide variety of soil and climate conditions. Individual greenhouse bays can be set to simulate growing conditions for winter wheat on a 40-degree day on the high plains of South Dakota or a rice paddy on a 90-degree, high-humidity day on the island of Mindanao in the Philippines.

"Go back 15 or 20 years," says Hagaman, a Texas A&M agricultural-engineering graduate who has worked for DowElanco, Dow Chemical or subsidiaries for the past third of a century, "and the futurists were predicting mass starvation by the year 2000. Now, why hasn't that happened? The demand for agricultural commodities certainly hasn't slacked off. What futurists didn't put into their calculations was the increased production of agriculture on existing acreage. They didn't think of corn production of 170 bushels per acre."

Hagaman, who grew up on a combination ranch and farm in Texas, says humankind has a simple choice to make when it comes to food. "We can supply that demand through increased production," he explains, "or by plowing down rain forests. We can't pull it out of a hat."

That's where DowElanco comes in. The joint venture combined the plant-sciences expertise of Dow and Lilly into one of the 10 largest agricultural-chemical companies in the world.

Hagaman points out that in many ways, the partners had no choice. "The single-largest driving force behind the joint venture was the need to finance a competitive research-and-development organization," he says. "You must exceed $150 million a year in expenditures, which we do by a significant amount. Neither company could afford that expenditure as a stand-alone organization. Clearly, this is a research-driven business."

DowElanco's R&D expenditures are an estimated $180 million to $200 million per year, or more than 10 percent of annual sales. In 1993, DowElanco was the third-largest agricultural-chemical company in North America, reporting $1.6 billion in sales. The company has 3,100 employees at 18 manufacturing sites and 19 research sites in 38 nations.

The mission of the Global Research and Development Center is simple. DowElanco wants to have six products in predevelopment, three in development and one significant new launch somewhere in the world each year. That means testing literally thousands of chemical compounds annually at the Indianapolis facilities.

The company calls it the 6-3-1 strategy, and it involves a massive commitment. It takes an estimated eight years and $70 million to bring a chemical to market; at least 120 different tests must be conducted before the federal Environmental Protection Agency will certify an agricultural chemical for commercial use.

Globally, there are five major crop groups that humans use to feed and clothe themselves: corn, soybeans, wheat, cotton and rice. The costs to develop a product for the U.S. market are only incrementally less than developing an agricultural product for the global market. So, DowElanco tends to think global in its R&D and marketing focus.

N.D. "Nick" Hein, DowElanco's vice president for global agricultural products, points out that roughly one half of the company's business is outside North America. The world market for agricultural chemicals is about $25 billion a year. The U.S. accounts for approximately 25 percent of that.

Hein notes that there are only 10 major agricultural-chemical producers in the world today, and that the average market share for each of those companies--including Ciba-Geigy, Rhone-Poulenc, DuPont, American Cyanimid and Monsanto--is only 8.1 percent. "There are no 800-pound gorillas in this business," he says.

The relative equal market share of the world's agricultural-chemical companies doesn't mean that they are bit players on the global stage. Hein points out that if DowElanco were a public company, it would rank among Indiana's top 10 publicly-held companies in revenues and assets.

According to Gordon Brain, who does global market research for DowElanco, the market for agricultural chemicals is immense. In 1938, he says, there were 2 billion human beings on the planet. That number will triple by the turn of the century and will hit about 8 billion by the year 2025.

"All these people need to be fed," Brain says. "That means 24 billion square meals a day."

Brain says his task is to "try to understand where money is going to be made in that market in the future. Farmers only buy our products because they make more money by using our products."

DowElanco also keeps close tabs on shifts in the agricultural markets worldwide, and on what Brain calls "breakout economies," developing countries that have completed the infrastructure development they need to pull their economies out of Third World status. That breakout usually implies a switch to a high-protein diet from crops either grown locally or purchased abroad.

Shifts in agricultural production pose both opportunities and challenges for DowElanco. Brain predicts that the soybean agriculture of the U.S. Midwest will likely be displaced in the next 10 to 15 years, as cheaper South American production--primarily from Brazil and Argentina--kicks into high gear and floods world markets.

Both Hein and Brain believe that in the short term, the U.S. farm economy will benefit from an increase in exports. In the long run, however, more and more countries across the globe will grow their own grain. DowElanco is poised to exploit that growth in overseas food production. This year, for example, 27 percent of the company's sales are headed for Europe, Africa and the former Soviet Union; 13 percent to Latin America; and 10 percent to the Pacific Rim countries.

That doesn't mean DowElanco is ready to abandon its North American markets anytime soon. A. Charles "Charlie" Fischer, vice president for North America, says DowElanco "is a company that thinks fairly technologically and creatively about the efficiency of agriculture. We're not the only ones who do, but we're pretty good at it."

DowElanco also maintains a strong focus on customer service, especially in the important North American market. "I try to help this entire organization believe that customers are important to the day-to-day success of the company," Fischer says. "The philosophy we follow is that the farmer is our ultimate customer."

There's no question that farmers are sold on the need for agrichemicals. Still, the problem of public perception that natural is good and synthetic is bad plagues DowElanco in particular and the agricultural-chemical industry in general.

Hagaman says the public perception of agricultural chemicals "is a serious problem" that stems from two roots. Society in general is totally disconnected from production agriculture, and science has far outstretched the capability of the public to deal with data.

America likes to think of itself as a nation of small farmers, Hagaman says, but the reality is that most Americans have been disconnected from the nation's farm heritage for generations. "Ask people where milk comes from," he says. "They'll tell you, 'from the supermarket.'"

Disconnected from agriculture, the majority of Americans are unable to accurately weigh the benefits of agricultural chemicals against their perceived risks. Americans are particularly unaware of the risks posed by the "natural" perils with which agricultural chemicals do battle. The reality, Hagaman says, "is that the bacteria and fungi in food are a lot more dangerous than the pesticides used to treat that food. Botulism is natural, but it will kill the hell out of you."

The issue of public perception is important for DowElanco because it is reflected in the regulatory environment. The U.S., where DowElanco does half its business, has the most stringent regulatory environment in the world. DowElanco and other U.S.-based agricultural chemical manufacturers operate under a regulatory microscope.

Nobody at DowElanco will criticize the regulatory environment under which the country operates. But DowElanco executives feel strongly that the company is doing a responsible job in the all-important effort to feed the human race.

"We have the safest, the most abundant, highest quality and cheapest food supply in this country that the world has ever known," Hagaman says. "And you don't get that without a lot of scientific horsepower."

The trick for DowElanco in the next decade is figuring out how to marshal that scientific horsepower on the northwest side of Indianapolis to help feed 8 billion people around the world.

"Fifteen years ago, there were a lot of unsolved problems," Hagaman says. "Now, we're finding products that solve problems better."
COPYRIGHT 1994 Curtis Magazine Group, Inc.
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Copyright 1994 Gale, Cengage Learning. All rights reserved.

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Title Annotation:Indianapolis, Indiana
Author:Beck, Bill
Publication:Indiana Business Magazine
Article Type:Cover Story
Date:Aug 1, 1994
Words:1854
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