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Article: Global crop protection market down 1% in 2019
01 May 2020
This article is taken from our Agrow platform dated
22/04/20.
The global market for crop protection products dipped by 0.8% to
$59,827 million at the ex-manufacturer level in 2019, according to
figures from Phillips McDougall. In real terms (excluding the
impact of inflation and currency fluctuations), the market
experienced a more significant decrease, down by 5.8% on the
previous year. Currency conversions were calculated using 12-month
average exchange rates.
Preliminary figures at the start of the year indicated a flat
market, inching up 0.4% on 2018, but with lower sales for both
years. The consultancy has employed new market research data, and
re-evaluated some historic market values. That has produced
revisions, but general industry trends remain, it notes. The trend
has been generally down over the past four years, rising only once
in real terms over the period.
Sales of all pesticides, including non-crop products, dipped
0.3% at $67,629 million. Non-crop pesticide sales grew by 3.5% to
$7,802 million.
Global agrochemical market ($ million)
Market segment
2018
% change
2019
Crop protection
60,304
-0.8
59,827
Non-crop pesticides
7,538
+3.5
7,802
Total
67,842
-0.3
67,629
Source: Phillips McDougall.
In 2019, weather was the most significant influence on the
global crop protection market, the consultancy avers. It cites
extremes from severe flooding in North America to dry conditions
and drought across major areas of Europe and Asia Pacific, equally
detrimental to demand for crop protection products. The consultancy
cites tensions between the US and Chinese governments for shifts in
global trade patterns, with China replacing US produce,
particularly soybeans, with that from Latin American countries.
Increasing regulatory pressures in Europe leading to the ban of
"notable chemistries" and the strength of the US dollar, which
limited growth potential elsewhere, also weighed on the market.
Somewhat offsetting the impacts outlined above were: the
continued high prices for generic products, particularly those
emanating from Chinese manufacturers; further growth in Latin
America as inventory levels normalised; and an increasing adoption
of alternative genetically modified traits, shifting demand away
from glyphosate tolerance into newer and more expensive herbicides
such as glufosinate-ammonium, dicamba and 2,4-D.
As for non-crop pesticides, rising business was largely in line
with global gross domestic product growth. This market can continue
to grow in the coming years boosted by improving economies in
developing nations, Phillips McDougall says.
Crop protection market by category
In 2019, the herbicide market still dominated but saw the
largest falls. Sales dropped by 1.5% to an estimated $26,175
million, equating to 43.8% of the crop protection market.
Unfavourable weather in most regions and negative currency effects
impacted business. Positive trends for the sector included:
continued high prices for generic products, particularly those
emanating from Chinese manufacturers; strong market conditions in
Latin America; and increasing adoption of alternative and more
expensive GM traits.
Fungicide sales fell by 0.7% to $16,356 million, representing a
27.3% share of the crop protection market. Similar market drivers
to herbicides contributed to the decline in the sector, with hot,
dry conditions in key regions leading to reduced disease pressure
and lower demand for fungicides. Latin American business provided
relief for the sector. A shift in demand of Chinese imports away
from US produce due to the trade war led to increased soybean
acreages in Brazil and Argentina, and subsequently higher demand
for fungicides.
The insecticide market was flat, inching up 0.2% at $15,146
million. That represented a 25.3% share of the crop protection
market. Currency fluctuations hit dollar valuations, despite more
positive sales in various national currencies. Insecticide sales
also benefited from the improved soybean market in Latin America,
while expanding fall armyworm (Spodoptera frugiperda)
infestations in Asia Pacific contributing to demand for
products.
Regions
Asia Pacific remained the largest regional market. Sales
decreased by an estimated 2% to $18,323 million with unfavourable
currency effects and detrimental weather impacting key national
markets. This was especially true of Australia where persistent
drought prevailed throughout the year, significantly reducing
demand for agrochemicals. Elsewhere, increasing fall armyworm
infestations was a major factor, particularly in China and India.
In some situations, this is expected to drive insecticide usage.
However, it is likely that this is largely offset by the impact of
crop losses, resulting in reduced farmer income prospects. In
Japan, the rice market, which had been in a long-term decline due
to changing farmer demographics, fell further, largely impacted by
the withdrawal of minimum support payments via government
subsidies. Higher prices have partly offset the negative
factors.
For a second consecutive year, sales in Latin America are
estimated to have increased significantly, up by 7.6% in to reach
$15,915 million. The market rose by over 10% in 2018. Reduced
inventory levels in recent years and improved prices of products
from China have boosted demand, particularly so in Brazil. The
region, especially Argentina and Brazil, has also been a
beneficiary of the US/China trade war. Offsetting factors included
unfavourable foreign exchange effects, with weakness in the
Brazilian real and Argentine peso limiting dollar growth. Dry
weather was also experienced across much of the region,
particularly in Chile where continued drought has been
experienced.
The European crop protection market is estimated to have fallen
by 2.8% to $12,042 million. Major declines are estimated for
France, Germany and the UK where hot, dry weather reduced demand
for crop protection products for a second year, especially for
fungicides. Such conditions also hit eastern markets where growth
had been driven in recent years. In addition, farmer cash liquidity
remained a problem in Ukraine, limiting spending on crop inputs. An
increasingly strict regulatory environment with key products being
banned or phased out in recent years has weighed on the market, the
consultancy says. In addition, political uncertainty amid Brexit
impacted the UK market, bolstered by a weakening UK pound against
the dollar.
Crop protection sales in North America saw the severest decline.
The estimated fall of 7.1% resulted in an $11,160 million market.
The trade conflict between the US and China was the major factor
hitting the market. The imposition of tariffs on US soybeans by
China in 2018, resulting in lower US acreages and agrochemical
demand, led to excessive stock levels and suppressed prices.
Furthermore, detrimental weather in the US Mid-West during the
first quarter, with severe cold temperatures and snowstorms
followed by significant flooding, delayed pre-season crop
protection applications and spring planting. Offsetting factors
included a return to more favourable weather in the second half, a
continuation of high generic prices and increased adoption of
recently launched herbicide-tolerant GM technologies such as
Corteva Agriscience's Enlist (2,4-D and glyphosate tolerance) and
Bayer legacy company Monsanto's Xtend portfolio (dicamba,
glyphosate and glufosinate tolerance). Such traits are driving
demand for more expensive active ingredients than the long-term
blockbuster, glyphosate.
As for the Middle East and African region, Phillips McDougall
estimates that sales were 1% lower at $2,388 million. The
consultancy highlights continued severe drought in South Africa,
limiting demand for agrochemicals.
Crop protection product sales by region ($
million)
Region
2018
% change
2019
Asia/Pacific
18,697
-2.0
18,323
Latin America
14,787
+7.6
15,915
Europe
12,395
-2.8
12,042
North America
12,013
-7.1
11,160
Middle East/Africa
2,413
-1.0
2,388
Total3
60,304
-0.8
59,827
Source: Phillips McDougall.
Leading national markets
The ranking of the leading countries changed little in 2019.
Brazil remained the leading market, growing by 9.3% over the
previous year to $10,913 million. It was followed by the US, which
decreased by 8.4% to $8,181 million. The major Asia Pacific nations
of China, Japan and India occupied the next three positions.
Impacted by unfavourable weather and reduced use of pesticides
in response to the regulatory situation, France dropped from 6th
largest to 8th, overtaken by Argentina and Canada. Estimates show
that growth was strongest in Argentina among the leading 20 markets
with double-digit growth.
Romania was an entrant to the top 20 national markets,
overtaking Thailand. The latter was hit by drought, impacting
agrochemical demand. The Romanian market, in line with neighbouring
countries in eastern Europe, grew strongly in recent years, boosted
by funds available following its accession to the EU in 2007.