Garry Mabon of Agbioinvestor takes a brief look at recent trends in the agrochemical industry
What is the agro outlook ?
Garry Mabon of Agbioinvestor takes a brief look at recent trends in the agrochemical industry
The global crop protection market at ex-manufacturer level based on usage on the ground for crops harvested in the calendar year by growers increased by 8.2 % in 2021 , followed by a further 13.7 % increase in 2022 . This marked a significant step up in growth , following several years of low single-digit increases since a decline in 2015-6 .
The more positive growth in the last two years has been driven primarily by price , as a result of a number of inflationary pressures , notably increased costs for energy . This included a spike in Europe as a result of a lack of Russian gas supply , as well as China ’ s ‘ double control ’ policy .
Volume has also been a key driver , explaining 2.4 % of growth in 2021 and 5.4 % of it in 2022 ( Figure 1 ).
Volumes have benefited from strong agricultural economics in major economies , driven primarily by inflation in crop commodity prices , increasing growers ’ buying power and product usage ; and more favourable weather conditions in markets like Australia and Southeast Asia .
Inventories
In late 2021 and the beginning of 2022 , a lack of supply from China led to fears over product availability for growers and retailers , as well as significant pre-purchasing in key crop protection markets like the US and Brazil .
As value chain inventories ( distributor , retailer , grower ) were loaded , crop protection companies experienced significantly more positive financial results , and more so than demand in terms of usage on the ground would support . This situation led to a switch in 2023 , with companies experiencing lower demand , since distributors and retailers are selling from inventory or growers are using product from on-farm stocks .
This build-up of inventory is shown in Figure 2 , which is based on monthly active volume imports into the US . It also shows a three-month moving average for three key groups : nonselectives ( glyphosate , glufosinate , paraquat and diquat ), off-patent ( molecules which have lost patent status and have significant generic competition ) and proprietary + proprietary off-patent ( patentprotected molecules , or off-patent molecules for which the proprietor retains a > 90 % share ).
Figure 1 – Volume , price & currency trends in agrochemicals , 2012-22
Note : Difference in the active volume compared to the mean value for the months between 2019 and 2023 ( e . g . Jan 2019Diff = Jan 2019AI Vol ) / (( Jan 2019AI Vol + Jan 2020AI Vol + Jan 2021AI Vol + Jan 2022AI Vol + Jan2023AI Vol +)/ 5 ))
18 SPECIALITY CHEMICALS MAGAZINE ESTABLISHED 1981