Discussion: Harvesting Risk

Read the case of Amvac beginning on page 503 of the text (attached) and consider the following questions in your post:

Does Amvac have a sustainable business strategy? Why or why not?
Should the law prohibit Amvac and others from exporting pesticides barred from use in the United States? Why or why not?
If economic and market conditions remain favorable for Amvac’s strategy, would you buy its stock? Why or why not?

Respond to the two posts below using the following instructions:

In response to your peers, state whether you agree with their conclusions regarding the sustainability of Amvac business strategy and whether or not the law should prohibit companies such as Amvac from exporting chemicals that have been barred for use in the United States. Be sure to state specific reasons for your agreement or disagreement and support your conclusions with scholarly sources.

Post 1: Becca
I believe that Amvac does have a sustainable strategy. While I do not believe it is an ethical strategy, it is sustainable. Larger organizations like AstraZeneca and Dow have huge budgets for research and development and work to provide multiple types of products to fit the needs and budgets of their consumers. When a product ages out or no longer fits a need, it is easy for them to go back to research and development and work on a new product. Also, they can acquire other smaller organizations and use their product again, with their large budgets. Amvac utilizes a significant amount of their budget on working through the legal issues involved in registration of products under the Amvac name and focuses on re-marketing these products under their own lines and taking advantage of foreign laws as well as consumers already using the products that are unable to switch products (Steiner, 2011). There will always be producers and consumers that are looking to save money or do not have the budget to spend on more expensive chemicals, and there will always be consumers looking to save money and will purchase the cheaper produce that was produced using the pesticides from Amvac (Straube, 1972). As our text suggests, Amvac is a scavenger company, they are willing to invest and prioritize their business strategy to pick up discarded products by other companies. While the larger companies are focused on making products that meet EPA standards and are not harmful to humans or animals, Amvac is focused on profit (Steiner, 2011).
          While I do think there should be a global law and position on what types of pesticides should be used globally, the reality is that it feels virtually impossible now. Culturally, there are so many differences between countries and Amvac virtually prays on countries that are having financial difficulties and are looking for cheaper ways to produce crops. Developing countries are constantly looking for ways to cut costs and increase profit and typically have lower environmental standards. This makes them easy targets for companies like Amvac who can distribute to these countries without having to consider EPA regulations in the United States (Colopy, 1995). It would be difficult to get these developing countries on board with a global law/regulation to ban these chemicals as they are so dependent on agriculture and the ability to produce cheaply.
          For ethical reasons I would not buy stock in Amvac. I do not believe in the type of business they conduct by purchasing products they know are harmful and then using aggressive techniques through financing and stalling to keep these products in use. I also do not agree that they exploit the financial distress of other countries by continuing to supply them with products. In a field marked by the extensive use of science, it does not make sense that this company resists the urge to move forward and manufacture better products that help the global economy and the health of people. Instead, their business practices limit the ability to move forward with improved products since they continue to offer a lower cost option that many producers will take advantage of.

Post 2: Myron
I was honestly torn on answering this question. The ethical voice within wishes to see companies like Amvac fail. However, I regrettable feel that Amvac has a sustainable strategy. My thought process is largely analogy driven. When reading the case study, I internally referred to a past read which highlighted strategies of smaller organizations utilizing undervalued, yet marketable resources to compete at a high level. Essentially Amvac is performing an unethical version of this strategy, by virtue of obtaining sole production rights, at a discount, of marketable products (Miller, 2007). Amvac circumvents the high costs of R&D, which generally drive up the cost of new products as firms seek to recoup the expense.
Amvac also inherits a market with amicable demand (Steiner & Steiner, 2012). Undeveloped markets, and even advanced markets are observed to skirt both human rights and environmental concerns in the wake of what is deemed greater concerns, such as food scarcity. For example, in 2020, despite regulation to cease coal use by 2024, the UK temporarily reintroduced Coal as a power to alleviate energy shortages (BBC, 2020). Similarly, Amvac exploits nations that lack the resources to effectively regulate such chemicals, or simply don’t care (Steiner & Steiner, 2012).
Should the law prohibit Amvac and others from exporting pesticides barred from use in the United States? Why or why not?
            Should the law prohibit? Yes. But realistically it would not be practical for U.S. regulation to regulate commerce outside of the country despite precedence in some areas and industries. American laws related to ethics, such as bribery, transfer to international settings. Firms are required to restrain from ethical entanglements and adhere to American policy (Weiss, 2015). The EPA, the organization within the U.S. Government that regulates the use of such chemicals, does not have the jurisdiction to do so. With U.S. law not applying internationally, it avoids unintentional conflict with nations whom may deem the U.S. involvement an encroachment on their sovereignty.
Honestly, I am not sure the EPA wishes to. The export of these chemicals provides economic benefit to American based industry in the form of jobs, GDP, taxes, etc.. The export also effectively keeps the products out of the country. The chemicals are used in crop production, which keeps the cost of food down for American citizens.
If economic and market conditions remain favorable for Amvac’s strategy, would you buy its stock? Why or why not?
            Personally, I would not. Ethically I couldn’t not bring myself to support the company despite any financial gain that I see. In an idealistic world, investors of Amvac could dictate behavior if Amvac observes significant investor pushback from their strategies.
Part of me views Amvac’s success with each pesticide as a bubble despite the sustainable strategy. In each instance, the sale of these chemicals to Amvac, was instigated when their original producer deemed them as too great a risk to the organization (Miller, 2007). Many of the initial EPA regulars were a result of citizen action (Steiner & Steiner, 2012). With increasing access to social media, it seems only a matter of time before citizens of the countries where these chemicals are utilized themselves lobby to have their local governments impose regulation (Weiss, 2015).