Page 4: Economic and political factors
Economic factors relate to changes such as costs and prices of goods, interest rates, wage rates, exchange rates and the rate of inflation. These all affect the ability of businesses to generate profits and need close monitoring.
A number of economic factors have an impact on Syngenta and its work, for example:
- the increasing wealth of parts of the population means changes in lifestyle and diet
- the rising cost of food and feedstocks causes hardship in developing countries
- oil price increases mean fuel input costs are higher
- farmers growing crops that are in demand and giving a good financial return brings wealth to rural communities
The demand for more crops means farmers need to use land more effectively. With these factors in mind, Syngenta has developed products to:
- ensure crops are healthy and free from disease. If farmers did not use crop protection technologies, 40% of food would be lost to pests, resulting in price increases to consumers
- give maximum return on the farmers' investment
Production of many agricultural crops for fuel has increased in Asia, South America and the USA. In other countries like Australia, drought has reduced crop yield. This puts the market price up. Many of these crops face a seasonal cycle. For example, 70% of sales of corn seed in the United States occur in the first half of the year.
Political factors affect all businesses. Agriculture is a global industry, important to all governments. Syngenta helps to support three major political themes:
- Food security: The United Nations defines food security as when all people, at all times, have access to sufficient, safe and nutritious food to meet their dietary needs and food preferences for an active and healthy life. The UN”s Special Programme for Food Security aims to achieve the goal of halving the number of hungry in the world by 2015. Currently there are 852 million food insecure people in the world. Syngenta supports drives to increase food security by improving access to technologies that are safe, reliable and affordable.
- Energy security. This refers to countries wanting to be less dependent for their fuel on other countries. By investing in biofuel technologies, Syngenta is helping them to provide alternatives to oil and coal.
- Climate change. Using biofuels helps to reduce greenhouse gas emissions. The European Union has a target of replacing over 5% of all transportation fuel with renewable fuels by 2010. Creating high yields on existing farmland reduces the drive to cut down forests for new agricultural land. Loss of forests has big impacts on wildlife and also on climate.
Syngenta also plays an important role in creating networks of groups working to resolve local and global issues related to fuel and food. For instance, Syngenta is partnering with the Royal Society of Chemistry to set up the Pan-Africa Chemistry Network. This brings together universities, schools, scientists, teachers and students in Africa to share ideas and resources in conferences and workshops.