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New Ag International Interviews Chase Koch

You have a marketing and financial analyst background. Among the various Koch companies that you have worked for-including for summer jobs, what made you finally prefer the Agriculture side of this huge company and when did you become President of Koch Agronomic Services?
 
When I returned to Koch from Texas, like many recent college graduates, I didn’t really know what I wanted to do.  I brainstormed with my father and Koch Industries’ CFO, and developed a “hands-on” MBA program to learn the business.  I worked in accounting, tax, risk management, commodities trading and business development.  They really put me through the ringer, and I learned a lot.  During my stint with commodities trading in Houston, I discovered that I had a passion for markets.  Even though it was quite humbling at times, having a real-time performance scorecard on good and bad decisions was fulfilling.
 
After trading, I spent two years in Koch’s Equity Development Group learning market analysis, finance and working on acquisitions and divestitures. This role made me realize it was time to dive into one of Koch Industries’ commercial business units and learn it from the ground up.  Koch Fertilizer gave me the opportunity to do just that.  I took on sales responsibility for our Northern Plains region, from Iowa up to the Canadian border.  From there, I transitioned back to the trading side, with responsibility for our global urea and UAN product lines, and later leading the international business as we were growing our distribution footprint globally.
 
In 2011, Koch Agronomic Services, an affiliate of Koch Fertilizer, purchased the NITAMIN® slow-release nitrogen fertilizer and AGROTAIN® nitrogen stabilizer brands as a separate company focused on building a technology solutions portfolio focused on maximizing plant performance and minimizing environmental impact. From enhanced efficiency fertilizers, to biostimulants, to other value added technologies, this has been a real opportunity to drive innovation for both the agriculture and turf & ornamental markets.  I’m very excited to be part of a great team that will provide a growing value proposition to our customers.
 
Koch Agronomic Services was formed in 2010 and acquired the NITAMIN® slow-release nitrogen fertilizer brands from Georgia-Pacific Chemicals in early 2011.  Today Koch Agronomic Services is primarily a manufacturer and marketer of enhanced efficiency fertilizer products, including a full range of nitrogen stabilizer and slow-release nitrogen products for crop and turf applications. Most of these technologies have been developed through external growth: acquisitions of the AGROTAIN® technology and acquisitions from Agrium. Are you planning other acquisitions in this segment?
 
Koch Industries is excited about this space and the potential of Koch Agronomic Services. We intend to grow the business in a logical way, looking for a good fit where our current capabilities can add value. Being part of Koch Industries provides us with a big advantage in this area. Our shareholders strive to reinvest 90 percent of the earnings back into the business so we have access to the necessary capital when we find a good fit.  We are looking at everything from small minority investments to larger acquisitions, but all opportunities must fit with our vision and provide synergy with existing capabilities, so we can add more value to our customers compared to what they are already getting.
 
Micronutrients is another promising area and already a big market in the USA, with a huge potential in many other geographies. Any thoughts?
 
We agree there is sizable potential in that space and micronutrients is an area included in our strategic focus. One of our products, POLYON® NPK+ is actually a micronutrient product sold into the specialty agriculture market. As with any segment Koch Agronomic Services would consider, the question we ask ourselves is whether our capabilities allow us to add value in this space. If we’re able to say “yes,” then we will explore opportunities to enter that market.
 
Since its formation, your business has expanded its capabilities in research and development, sales and agronomy. Can you describe how it has expanded other than by external growth?
 
We formed Koch Agronomic Services shortly before acquiring the NITAMIN® slow-release nitrogen fertilizer business from another Koch company, Georgia-Pacific, in 2011.  That same year, we acquired Agrotain International’s portfolio of nitrogen stabilizer products. With that acquisition, we also entered the turf & ornamental segment, and substantially increased that position in 2014 with the acquisition of the turf & ornamental assets from Agrium, including the POLYON®, DURATION®, XCU®, NUTRALENE® and NITROFORM® brands of slow-release and controlled-release fertilizers.
 
In late 2014, we created a plant health biologicals platform with the acquisition of Mendel Biotechnology’s research and development assets. We followed that in 2015, with a minority investment and collaboration agreement with Pathway Biologic.  In June 2016, we expanded our biological portfolio by securing the exclusive rights from Marrone Bio Innovations, Inc. to sell REGALIA®RX biofungicide in the U.S. and REGALIA® MAXX biofungicide in Canada into broad acre agriculture.  
 
These acquisitions have really expanded our capabilities in R&D, marketing, agronomics and many other areas. Additionally, we’ve been able to hire talented individuals in these areas as we’ve expanded to service our customers in the agricultural, turf & ornamental and biological markets. 
 
In 2014, the addition of Mendel Biotechnology Inc. to your portfolio of companies marked your entry into the world of biologicals. What was the main driver of this move, quite far away from the Nitrogen business?
 
By 2050, we’re going to need to feed an estimated population of 9 billion people. And we’ll need to do it on roughly the same land we use today. So every incremental improvement in agricultural efficiency is crucial. We see the biologicals sector as a natural extension of our focus on nutrient efficiency to also include plant efficiency. The Mendel R&D platform provided us with a foundation for our biologicals business as it enables that targeted approach to discovery and development.
We look at everything through the lens of what Michael Polanyi calls a “Republic of Science.” Some of our other Koch companies, Flint Hills Resources, INVISTA, and Georgia-Pacific, are also investing in biological technology and capabilities for various uses in their industries.  We see huge potential in biologicals for agriculture and the turf & ornamental markets, and Koch Agronomic Services gets the added bonus of knowledge sharing and experimentation with other Koch companies looking to create value for society with biological products.
Biostimulants are the other branch of biologicals. Do you have any ambitions in this segment - it may actually seem more logical for a company having such plant nutrition profile than embarking into biopesticides, or do you prefer to first see whether a specific legislation will be passed in the US?
 
We see biostimulants as a major opportunity for Koch. In fact, our Mendel platform is specifically focused on the development and commercialization of foliar-applied biostimulants. REGALIA® RX and REGALIA® MAXX biofungicides are also products that we believe will add a lot of value for growers. These products optimize yields by eliciting plant health effects and activating the plant’s immune response, producing an induced systemic resistance to certain diseases. This can improve the performance of a conventional crop disease control program. Whether a biofungicide, biopesticide or biostimulant, we are constantly exploring new innovations to help our customers achieve their goals.
 
Is Precision Ag something that is ringing your bell and being seriously studied as a possible new field for investment by Koch?
 
Global protein demand is increasing, growers need to produce more with less environmental impact, and the traditional nutrient cycle is incredibly inefficient. So you can see why we continue to say agriculture is just ripe for innovation.  That is only going to come about with breakthroughs in a multitude of areas, from more efficient nutrients, to more efficient plants, to more efficient agricultural practices.
 
Koch is a huge proponent of the work being done by The Fertilizer Institute and the 4Rs of Nutrient Stewardship – “Right Source,” “Right Rate,” “Right Time” and “Right Place.”  That framework can really help growers achieve their production, profitability and environmental goals. But we as manufactures have a responsibility to continue to develop innovative tools that allow growers to keep meeting the challenges of feeding a growing population.
 
Again, I go back to our “Republic of Science” mind-set. As an example, Molex is a truly innovative Koch company with sensor and connector technology capabilities.  We are interested in creating partnerships with Koch companies like Molex and other third-parties on innovations around sensor technology, big data analytics and other precision technologies in the agriculture value chain that fit our vision and capabilities and will ultimately add value to our customers.
 
What opportunities does Koch Agronomic Services see in the international markets?
 
Our products are currently available in more than 55 countries, so we obviously see international markets as a huge opportunity for Koch Agronomic Services. Customers all over the globe are looking for more efficient products, and more transparency around the impact those products have on the environment. Our point of view is that every ton of fertilizer should eventually be more efficient than it is today, because an efficient use of resources benefits everyone up and down the value chain.
 
In fact, we recently announced the results of a study in Ireland in which replacing calcium ammonium nitrate, the most commonly used straight nitrogen fertilizer in the country, with an AGROTAIN®-stabilized nitrogen fertilizer lowered direct emissions of nitrous oxide from fertilizer on grassland by an average of 73 percent. The stabilized product also has 70 percent more nitrogen per ton, meaning farmers can apply fewer tons, reducing time and resources required for application. Again, growers are being tasked with producing more food, with less environmental impact. Our goal at Koch is to partner with our customers to help them achieve that objective as efficiently as possible. 

This article was originally published in New Ag International September 2016 and is republished here with the express written permission of NewAgInternational.com. All Rights Reserved. Reproduction Prohibited by Law. www.newaginternational.com