GERMAN chemical company BASF has announced it will sever its distribution arrangement with Nufarm, effective March 1, 2014.BASF told Nufarm last week, it will not extend the 10-year agreement signed in 2004 giving Nufarm the rights to distribute the German company's suite of agricultural chemicals.
Those chemicals include fungicide Opera and the new Kixor herbicide, Sharpen, used against broadleaf weeds.
President of BASF's crop protection division Markus Heldt said the company had reviewed its global strategy and decided to set up its own distribution network in Australia.
"We believe going with our own structure will be important for success in the future,'' Mr Heldt said.
"We also believe direct reach with farmers in Australia will help us better shape our (chemical product) portfolio, our offers and our solutions (to weed and disease problems)."
In a statement issued to the Australian Securities Exchange, Nufarm said it would supply products involving active ingredients that cover a majority of the uses currently targeted by BASF products.
"Nufarm will be a strong competitor across those chemistries and will use its significant product development, manufacturing and logistics presence in Australia to continue to service distribution customers with a wide range of existing and new products,'' it said.
Nufarm's share price dropped 9 per cent on release of its statement to $5.75 a share but the market appreared to react more to trading conditions.
The company said weather factors affecting trading conditions in Australia would impact on half and full-year trading results.
Mr Heldt said ever-evolving weed resistance to existing chemicals was a global challenge and an important issue in Australia.
He said BASF had a stream of new technologies to counter weeds and diseases which would progressively be launched on to the market from this year onwards.
Last year, it launched the Sharpen herbicide in Australia, which had an active ingredient registered as Kixor.
The Kixor chemical is an active ingredient in a number of herbicides marketed in the US since its registration in 2010.
Mr Heldt said Sharpen herbicide had a nice fit in the glyphosate system in Australia.
"This is a focus or our core research: to identify and develop new herbicide solutions to those rapidly growing weed resistance challenges,'' he said.