Yara International: Africa Strategy

Case: Yara International: Africa Strategy

Q1: How has Yara become the world leader infertilizer? What is the company’s strategy? Has Yara created shared value historically? How?

     Founded in 1905 to solve emerging fertilizers requirement in Europe, Yara company has become a worldwide leader and until now has a worldwide presence in the market with more than 12,000 employees and sales to more than 150 countries.  Yara pioneered new technology of nitrogen fertilizer and built several big plants. It never stopped developing and looking for more efficient methods. In 1930s and 40s it started growing into a more sophisticated and government supported organization. Yara owns its success to constant development and international activity. Yara has also been pursuing the issues of sustainable farming and the interconnectivity of food, climate, resource efficiency and environmental concerns in its business, through innovation and R&D, in the global market and its partnerships. Yara’s vision is to be an industry shaper, aiming to set industry standards and driving industry development through innovative performance and growth execution and playing a role in the consolidation of the nitrogen fertilizer sector. Yara has consistently implemented a strategy of profitable and sustainable growth. The strategy is a roadmap for industry-shaper performance and long-term value-creation. Yara has consistently expressed the need for further development of the nitrogen fertilizer industry and the company’s readiness to participate in the international partnership and joint ventures. Within the current business platform, the aim is to increase the market share globally, establishing optimal utilization of the company’s unique global marketing and distribution system. Constantly considering investment opportunities, Yara aims to integrate new acquisitions into its global logistical and marketing system to achieve synergies and create value. Being a leader in the market, Yara has also become a leader in its approach to society. First of all, it claimed to be “one of the leading industrial companies within the environment, corporate social responsibility and ethics”. For many years Yara has been a member of UN programs, supported it with numerous grants, established partnerships with many agricultural organizations to promote food security and sustainable agricultural approaches. The company has developed the Code about human rights, business ethics, and labor conditions. Yara has made public commitments to support UN, to support and develop Grow Africa Task Forces and made a huge difference in the agricultural industry and its cooperation with the society.

Q2: Is agriculture important to Africa? Why have traditional agricultural development efforts failed in Africa?

     In Africa, where population is undernourished or has water-borne illness due to inadequate sanitation and has to live on the lowest income of $1.25 per day, agriculture is recognized as a powerful force for development, poverty reduction and non-agricultural growth. In 2002 it produced over 80% of the food supply. Although the importance of agriculture is recognized, this sector faces many difficulties and cannot develop properly. For example, Tanzania has high quality soil and water resources, however manufacturing activities are limited, productivity is low due to low precipitation, low mechanization and very low usage of improved seeds and fertilizer that add very little value to agricultural production. While the land is irrigable, irrigation is limited because of complex or poorly documentation that limits access to affordable long-term financiation. Export restriction also limits private investment and cause in poor infrastructure. Many problems like historical corruption, transportation, poor infrastructure and farmers’ unavailability to purchase fertilizer or their belief that it is not necessary keep failing the agricultural strategy in Africa.