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The global market for conventional crop protection products
(excluding sales of herbicide tolerant and insect resistant seed,
as well as non-crop agrochemicals) is estimated to have increased
by 4.7% in 2021 to reach $65,206 million. A key influence on the
global market in 2021 has been the economic recovery following the
outbreak of coronavirus which was first identified during an
outbreak of pneumonia in Wuhan City, Hubei Province, China in
December 2019. Although many industries were significantly impacted
by the pandemic, agricultural economies have been largely sheltered
from the worst impacts given the essential nature of food
production. Agricultural input manufacturing and supply have
largely been excluded from lockdown restrictions. However, some
impacts to our industry have included reduced availability of
migrant farm labour, issues surrounding delays of shipments in
ports, availability of raw materials boosting product prices,
reduced demand for biofuels and fibrous crops such as cotton, and
there have also been some significant currency movements due to the
influence on the wider economy. Other key drivers have been a
return to favourable weather in key country markets such as
Australia, which has been plagued by drought in recent years, as
well as in Europe, a market where performance has been limited by
regulation, currency headwinds and unfavourable weather in recent
years.
Company Analysis
The crop protection industry in 2021 is led by the two largest
R&D companies, Bayer and Syngenta, each with sales in excess of
$10 billion. The next level of the market, companies with sales of
between $10 billion and $5 billion, consists of BASF, Corteva
Agriscience, UPL and FMC. The third tier, with sales between $5
billion and $1 billion is dominated by the leading generic
manufacturing companies with the exception to Sumitomo Chemical who
invests significant value into a strong research and development
pipeline. M&A activity of the last couple of years has had a
significant impact on the leading companies active in the
agrochemical industry. The most notable moves include Bayer which
has overtaken Syngenta as the leading company in the industry and
UPL jumping to 5th position following the acquisition of Arysta
Lifescience. In 2021, the combined sales of the leading players in
the industry achieved double digit growth, boosted by strong growth
in Latin America during the twelve-month period ending 31st of
December 2021. Other major influences on company sales were pricing
increased and strong volumes which were somewhat offset by currency
headwinds.
Product Analysis
The conglomerate Fruit and Vegetable segment has historically
been the most significant global crop sector, and this continued in
2021 with the market equating to around a quarter. Of this segment,
vine (table and wine grapes), pome fruit and potatoes are the most
significant crops; for these crops, fungicide sales are of greatest
significance. Looking to the major grains, the global situation for
cereals, corn and rice was positive in 2021 with some exceptions
being dryness in Brazil during 2020/21 limiting prospects for maize
as well as wheat in Russia where unfavourable conditions were also
experienced. In oilseeds, the situation was a mixed bag with
soybeans being essentially flat with a decline in Latin America in
2020/21 being offset by growth elsewhere, while canola/rapeseed and
sunflower experienced strong growth. These two crops were boosted
by strong areas, promoting pesticide demand. However, yields of
canola were poor, with reduced output in Canada and the USA as a
result of dry conditions impacting global production. The cotton
sector experienced a slight rebound following weakness in 2020 when
the pandemic limited demand for textiles.
Regional Market Analysis
Overall, the Asia Pacific market is estimated to have grown by
around 8 % to approximately $21 billion during the year boosted by
growth in the major markets of China, India, Japan and Australia
where favourable conditions boosted crop prospects. In recent
years, the European market has been in a trend of decline with the
region impacted by one of the strictest regulatory regimes and a
number of molecules being banned/phased out, as well as
unfavourable weather events. In 2021, however, the region bucked
this general trend, with particularly strong growth being achieved
- regional total increased by over 7% to approximately $14 billion.
Aside from expanded areas of key crops, the strength of the Euro
boosted dollar term growth. Drought in the Pacific Northwest was
offset by more favourable conditions elsewhere resulting in growth
in the North American market. In contrast to the other regional
markets, during 2021 we expect Latin America to show a notable
decline, falling by around 3.0% to $16,377 million with the 2020/21
season impacted by dry conditions and continued currency headwinds,
particularly so for Brazil.
Despite the decline experienced in 2020/21, Brazil remains the
leading market, followed by the USA, then the major Asia Pacific
nations of China, India and Japan. Strong growth in India has,
however, resulted in the country overtaking Japan as the 4th
largest market. The next biggest markets are those of Canada and
Argentina then a block featuring the major European players of
Russia, France and Germany. The return to favourable conditions in
Australia has resulted in the country overtaking Italy as the 11th
largest country market.
Posted 27 April 2022 by Darren Stobbart, Senior Analyst, Crop Science, S&P Global Commodity Insights
This article was published by S&P Global Commodity Insights and not by S&P Global Ratings, which is a separately managed division of S&P Global.
