AGROCHEMICALS
Pesticide facts & figures
The global pesticide market was worth $59bn in 2014 and is forecast to rise to $83bn by 2020, the equivalent in volume terms of a global market of over 3m t of pesticides, according to Kerry Hubbard, a solutions architect at US consultancy Agdata. This growth represents a CAGR of 6% for the period 2014-2020. Massive population growth in Africa,
along with a growing agchems market in South America, are earmarked as the major drivers. In terms of crops, the US and China are
the largest producers of corn (maize), rice, wheat and soya beans; however, the top crop exporters are the US, at $149.1bn; the Netherlands, 92.8bn, as a result of its flower exports; Germany, $86.8bn, down to hops and beer; and Brazil, $78.8bn. The US has 2.1m farms, with 3.2m farmers,
less than 1% of the total population, according to Agdata. US farms account for 992m acres, representing just over 40% of total US land; however, crop land accounts for only 389.7m acres, with more than 50% of US farmland being used for raising animals. The average US farm size is 418 acres. In addition, Hubbard noted that 65% of US farmers do not work on farms. China, by comparison, has a similar farmland area to the US and accounts for only 10% of total world arable land, but employs more than 300m farmers, or over 20% of the total population. In terms of individual agrochemicals, herbicides represent the largest product category, said Hubbard. They account for over 50% of the global pesticide market in terms of value, and will reach $35bn by 2020, due to a CAGR in excess of 5%. The key drivers for this growth, he reported, are
herbicide tolerant crops, herbicide resistant weeds, the balance between selective and non-selective products, as well as organic and biological products. Hubbard pointed, for example, to a huge resurgence in the use of dicamba (3,6-dichloro-2-methoxybenzoic acid) to treat glyphosate resistance. The next largest market segment is insecticides, with over one-third of the market, and expected to reach $20bn by 2020 as a result of more than 4% CAGR. Here the market drivers are resistance management, the impact of beneficial insects, like bees and butterflies, and biological products. Fungicides represent the smallest segment of the market, but as Hubbard pointed out, they are a growing category expected to reach $19bn by 2020 with a CAGR of over 6%. If fungicides have previously suffered from an ‘out of sight, out of mind’ attitude among farmers, Hubbard noted that more recently they are becoming more informed about their unseen impacts and beneficial effects. The key drivers are disease control, plant health, resistance management, seed treatments, soil applications and, once again, biologicals. In terms of product types, Hubbard said
seed treatments of all types are showing the fastest growth. The market is expected to reach $9.5bn by 2020, demonstrating a 9% CAGR, driven by the seed companies that are promoting them as ‘the best start for plants’. The coatings containing the treatments also have the benefit of making seeds the same size, an advantage for growers moving into precision agriculture. The fastest growth rate across the whole
industry will be for biologicals, Hubbard believes. Biologicals are forecast to grow into a $11.35bn market by 2020 as a result
of a CAGR of 12.76%, driven by desires for organic food, residue management and microbial seed treatments. Meanwhile, integrated pest management will also have an even more major role in the future, said Hubbard, who pointed out that estimates by Grand View Research put the market value at $151bn by 2015, up from $91.8bn in 2016, a CAGR of 5.8%. While North America and Europe have over a 56% share of this market at present, he estimates that Asia Pacific will experience the fastest growth: 6.4% CAGR to 2025. This trend towards integrated pest
management will have a major impact on agrochemical producers, said Hubbard, especially with the increasing role of biologicals, which will require different logistics, particularly regarding humidity and temperature.
In addition, with precision agriculture,
agrochemical application will need to keep pace with variable application rates driven by farming Big Data collected by drones, robots and smart tractors. According to a recent report from IDTechEx, robotics is ‘already qui- etly transforming many aspects of agriculture, and agrochemicals business is no excep- tion (See p36). Computer vision technology, for example, is already in commercial use, although at small scale and for specific crops, but evolving past a primitive stage. Imple- ments are being equipped with full computer systems, enabling them to image small areas, to detect the presence of plants, and to dis- tinguish between crop and weed. The system can then instruct the implement to take a site-specific precision action to, for example, eliminate the weed. In the future, the system has the potential to recognise different crop and weed types.’
US, however, has become extremely controversial, having been blamed for destroying crops as well as weeds. Glyphosate has seen its share of
controversy (See p41). Nevertheless, Green believes that sales will continue to grow due to its lower cost and that in the near future we will see its use in multiple herbicide and multiple herbicide-resistant crop systems. Green believes it could become the first $10bn pesticide. Meanwhile, the global agchems sector is in an unprecedented
situation, according to James Mann, a principal at the US agricultural consultancy, The Context Network. The current round of consolidation, in Mann’s view, is being driven not by profitability, but by factors such as future consumer demands and needs, driven by increasing populations and the growth in middle classes. All of these developments will require new methods to increase crop yields to maximise the production on current available land, which is actually reducing, and improve the efficiency
of resource especially water and commercial inputs like fertiliser and crop protection. ‘Innovation can influence and
change every aspect of this supply chain from how we farm through to how goods are distributed, and hence attracts targeted investment,’ Mann said. In 2016, agrochemicals investments – including $363m in farm management software and $1.29bn in food and e-commerce – reached $3.23bn with 580 deals and involving 670 unique investors.
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