AGROCHEMICALS

Moving East

Many hundreds of small companies in India and China now started offering competing contract research and manufacturing services at very low prices that proved irresistible to outsourcing managers . This led to reduced demand for fine chemical services from European companies , who were also contending with heavy investments to cope with ever more stringent regulatory costs . Building large AI plants to make older , trusted products became increasingly financially viable . Detailed information on mature technologies was passed around and implemented where market demand was high . Major multinational generic producers emerged , who often sourced their extensive needs for relatively modest volumes of many active AIs from China or India . In this way , manufacturing plants in India and , particularly , China , have been able to expand their business . More recently , even the major agrochemical companies have begun to reduce their self-reliance and outsource advanced intermediates , and even AIs , from China and India . Often this has begun with the award of a small share of supply as a hedge against loss of capacity through accident or other unforeseen events . Unsurprisingly , innovative companies have usually preferred to invest in new products , rather than in older plants , where catching up with changing regulations became increasingly expensive . The major campaign by the European regulators against the use of any chemical crop treatments in the EU has to be mentioned in this context , since it has certainly driven a great deal of manufacture away from Europe . Over the past ten years , some crops in Europe have become

Nematicide options are missing for several crops in Europe

so vulnerable to pests , due to the absence of suitable control methods , that farmers have stopped producing them and even exited the industry . Examples include the current lack of nematode treatments in several crops , insecticide treatments in oilseed rape and sugar beet and , more recently , desiccants for potatoes and pulses . Importing Europe ’ s food needs is not an option , especially when many countries depend upon Europe ( and North America ) for their supplies of basic food crops .

Are we overdependent on China ?

China ’ s growing share of the production of the basic raw materials and intermediates for the agrochemical industry is a real concern . It makes no sense that one , maybe two , companies can stop the production of downstream products across the planet . However , the returns of producing these basic intermediates are too modest for European and US companies , unless they have developed a significant scale of production . The fact is that China has taken advantage of the situation that the US ’ s and Europe ’ s major innovative agrochemical companies have created . The European agrochemical industry and its suppliers will continue to reduce investment in their domestic markets unless the social and political environment changes . The prospect of Europe returning to a science-based regulatory system for agrochemicals ( and indeed chemicals in general ), which balances costs and benefits in a more rational manner , remains only a remote prospect . Until this changes , investment in new products and manufacturing resources in Europe will continue to be unprofitable . The unhealthy concentration of the major global agrochemical companies is not good for the continued dynamism of the industry . ⁴ Perhaps , as a kind reviewer of this article suggested , the industry needs some disrupters like Elon Musk ! The regulatory agencies unwittingly assist the big companies in preventing new entrants from securing a foothold and thus disrupting the status quo . In this sense , China has become a threat to Europe and the US by acquiring control of both the world ’ s biggest innovator company and its biggest generics company . These two companies ’ combined sales account for one quarter of the global agrochemical market . That is concentration on an epic scale . The COVID-19 pandemic has revealed that some major economies do not have the resilience to keep their poorer citizens properly nourished . Perhaps this natural disaster will act as a wake-up call , resulting in sounder national policies . What is eminently clear to me is that a major rethink on sourcing by the big European and US agrochemical players would not only be affordable but would improve their security of supply . One can but hope . •

MAR / APR 2021 SPECCHEMONLINE . COM

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