2016 Analysis of New Patterns and Future Trends in Global Agriculture
By Grace Yuan, editor of AgroPages, firstname.lastname@example.org
Looking back at 2016, it is obvious that the agri-input industry has experienced a lot of integration. In the future, the indispensable technical resources for future global food production are expected to be dominated by 15 to 20 companies worldwide. Looking into the future, the traditional agri-input market is expected to enter a period of low growth, but, promoted by sustainable agricultural development in the world, some emerging fields for green and environmental protection are expected to enter the high growth period. As part of this process, the policies and regulations issued by countries worldwide and the recurring agricultural problems will lead to some opportunities and challenges to the global agricultural development.
Global growth of agri-input can be expected
As far as short-term and medium to long-term development trend are concerned, the global agri-input industry has entered a period of slight decline and low growth due to the influence of internal and external market factors, especially in the segments of traditional crop protection and fertilizers. The compound annual growth rate (CAGR) in their case will remain low in the next five years. However, the emerging biopesticide and precision farming segments are expected to enter a period of rapid growth in the coming five years (as shown in figure 1).
Figure 1. Market forecasts global crop protection market and related sectors, 2016–21
According to the report published by MarketsandMarkets, the market for crop protection chemicals is estimated at $54.88 billion in 2016 & projected to grow at a CAGR of 5.15 percent from 2016 and reach $70.57 billion by 2021, with herbicides occupying the largest market share (44.2%), followed by insecticides and fungicides. The biopesticide is expected to become the fastest growing category of products. In the coming five years, the global seed, fertilizer and precision farming segments will also maintain varying degrees of growth. In particular, though the overall growth of the fertilizers segment is not optimistic, the novel special fertilizers are expected to become the flavor of the future market and experience thriving development due to their special functions such as disease resistance, drought resistance and stress resistance and also because these are in line with the mainstream direction of development in a green, ecological, environmentally friendly way.
The industrial concentration is getting increasingly high
The global agri-input sector, including seeds and agrochemicals, fertilizers and farm machinery segments, is undergoing rapid and high-level mergers and acquisitions, and the indispensable technical resources for global food production will be under the control of 15 to 20 companies. In particular, the global market structure of pesticides and seeds segments has undergone a subversive change, and the current three super giants (DowDuPont, ChemChina-Syngenta and Bayer-Monsanto) control 79% and 46% of the global pesticide and seed market shares, respectively, while the second-tier companies have completed the acquisition of related companies(as shown in figure 2&3).
Figure 2. Global Agchem Pattern
In comparison, the size of mergers and acquisitions in the fertilizers segment was not great but progressed in an orderly manner. In 2016, PotashCorp, the world's largest potassium fertilizer producer, announced a merger with its rival fertilizer giant, Agrium Inc, worth $36 billion. In 2015, CF Industries combined with OCI’s European and North American businesses for $8 billion to build the world's largest nitrogen fertilizer company.
Figure 3. Main M&As cases during 2015/2016
The mergers and acquisitions in the farm machinery segment have just appeared. In 2015, John Deere, the market leader in farm machinery, acquired the Precision Planting LLC equipment business under Monsanto. The agreements represent the industry’s first and only near real-time in-cab wireless connection to John Deere equipment by a third party. This may also be the beginning of a similar trading trend.
It is foreseeable that for a long time in the future, the global agrochemicals pattern will remain relatively concentrated and stable, but in the new pattern and competitive situation, it is bound to lead to more new opportunities. Whether multinational giants or small and medium enterprises, having a footprint in new frontier areas in combination with a focus on their own advantages and making appropriate adjustments is the key to win.
Laws and regulations continue to affect the industrial pattern
• In January 2016, EFSA announced to update neonicotinoid assessments at the beginning of 2017.
• In March 2016, UK announced to ban the sales and use of chlorpyrifos from April.
• In April 2016, EFSA announced to review fipronil data collected for risk assessment for bees
• In June 2016, the European Commission decided to extend glyphosate licence for 18 months towards the end of 2017.
• In June 2016, the European Commission issued proposed criteria for endocrine disruptors
• In June 2016, France announced to ban neonicotinoid insecticides in 2018.
• In June 2016, Brexit vote was approved.
• In June 2016, Switzerland announced to extend the current moratorium on GMOs in agriculture from 2017 to 2021.
• In July 2016, Malta announced to ban glyphosate.
• In July 2016, France withdrew 132 authorisations for POE-tallowamine based glyphosate products.
• In August 2016, Italy placed important restrictions on the use of glyphosate.
• In November 2016, German cabinet approved draft law banning GMO crops.
• In December 2016, EFSA and ECHA announced to jointly develop scientific guidance to enable identification of endocrine disruptors
• In February 2016, Canada planned to cancel some uses of fungicide chlorothalonil.
• In March 2016, U.S. EPA moved to cancel the insecticide flubendiamide.
• In March 2016, Canada planned to ban iprodione fungicide.
• In May 2016, Canada planned to stop issuing new conditional registrations for pesticides since June 1st, 2016.
• In July 2016, Canada proposed to carry out new Pesticides Fees Regulations
• In July 2016, U.S. Senate passed GMO labeling bill
• In November 2016, Canada proposed to phase out most uses of neonicotinoid insecticide imidacloprid
• In December 2016, the U.S. EPA started to assess glyphosate’s link to cancer
• In December 2016, the U.S. EPA prohibited 72 inert ingredients from use in pesticides
South America, Asia-Pacific, and Africa
• In January 2016, Uganda close to passing GMO law
• In February 2016, Brazil prohibited use of prochloraz fungicide
• In March 2016, Philippines approved new GMO rules.
• In March 2016, Chile's Agriculture Ministry launched plan to reduce use of agrochemicals
• In May 2016, India planned to phase out 18 pesticides before 2021
• In May 2016, Chinese Ministry of Agriculture announced to ban or restrict 8 pesticides
• In June 2016, Tanzania planned to approve GM crops.
• In September 2016, Sri Lanka announced to relax glyphosate ban.
• In October 2016, Argentina determined that the imports of several agrochemicals will not have “automatic licenses” anymore.
As we all know, the European Union (EU) is one of the world's most advanced economies and its plant protection laws and regulations are very stringent and play a lead role globally. All policies and regulations enacted by the EU are likely to affect the global agrochemicals industry. The renewal of glyphosate, the development of new standards of endocrine disruptors and the upcoming review of neonicotinoids in 2017 in the EU will have some impact on the other countries’ policy making process for the concerned products. In addition, Brexit may also influence the global agricultural market to some extent.
In North America, the outlook for glyphosate and neonicotinoids was equally bleak. The US Environmental Protection Agency (EPA) recently announced a plan to reassess the carcinogenic risk of glyphosate and the Health Canada planned to phase out most uses of neonicotinoid insecticide imidacloprid. In both South America and the Asian-Pacific region, some old products with high risk will also exit the market.
In addition, the global controversy over GM technology has not come to an end but become even more intense, especially in GM crop growing and seed promotion, which leads to different national policies. The United States is the world's most mature GM crop growing country. Brazil, India and other countries are accelerating the commercialization of GM crops, benefiting from national policies. In the EU, uncertainty exists when it comes to growing GM crops in the future because of considerable internal disagreement. At the beginning of 2015, the European Parliament passed a decree allowing EU member states to approve, ban or restrict the growing of GM crops in their own countries. In 2016, the US House of Representatives passed a bill on the labeling of GM foods while the Chinese government delivered a clear message to promote the industrialization of insect-resistant corns in its "13th Five-Year Plan" period. Besides, the game around the application of GM technology ushered in a historic scene in 2016, where 110 Nobel laureates signed an open letter which attacked Greenpeace for campaigning against genetically modified crops.
Big data promotes the rapid development of precision farming
With the rapid development of modern technology and the scarcity of agricultural resources, agricultural technology revolution is ongoing around the world. Such new agriculture types as precision farming, stereoscopic agriculture, ecological agriculture and white agriculture appears one after another to meet the needs of the times. Among them, precision farming with a substantial optimization of agricultural productivity is expected to enter a rapid development period (the main structure as shown in the figure 4).
Figure 4. Main components of precision farming
The United States is the birthplace of precision farming where this technology is very mature and a sound modern agricultural management system has been formed. With this technology, the United States is now able to maintain a large agricultural production system with one percent agricultural population to meet domestic needs and still have a large amount of exports.
The developing countries, such as China, have a fairly low degree of precision but high development potential, with a projected CAGR of 25.6 percent in the coming five years. In addition, this industry has also attracted a lot of non-agricultural entities, such as high-tech companies in Silicon Valley. Besides, the introduction of investment capital is bound to boost the rapid development of precision farming.
Presently, the precision farming participants are exploring the potentials of efficiency, profitability, management and so on that the precision technology products and practices may usher in. However, this process also encountered various problems. According to industry analysis, the lack of equipment and software compatibility is the largest single factor limiting the application of precision technologies. This problem has gained increasing attention from within and outside the industry. Other adverse factors include value creation lagging far behind technology development, wireless access inconsistency or homogeneity, lack of professional and technical personnel and so on.
Bio-solutions create new growth points for the industry
As governmental regulatory authorities around the world attach more importance to environmental protection, growers are in urgent need of new ways to obtain higher yields. At the same time, global consumers are raising a strong demand for healthy and safe agricultural products. Amidst all of these, agricultural biologicals (including biopesticides, biofertilizers and biostimulants) are expected to become the new profit drivers of the agri-input industry.
In biological products, biopesticides are the future development strategy of major companies and even countries around the world because of features such as safety, environmental protection, low residue, etc., representing the future development direction of pesticide products. According to MarketsandMarkets’ data, the compound annual growth rate of bio-pesticides is expected to reach 17.4%, amounting to $6.4 billion in 2020. The United States is the world's largest bio-pesticide market and the number of bio-pesticides newly approved by the US EPA is far more than that of conventional pesticides. Europe is the fastest growing market, maintaining a high growth rate of 15% while in Brazil, the biopesticide production increased from 50 million tons to 200 million tons in the last 30 years. Clearly, bio pesticides have been growing at a remarkable pace.
Biofertilizer is one of the special fertilizers widely adopted in the world in recent years. Thanks to a demand for plants and soil for environmentally friendly solutions, the global market for biofertilizers will reach $1.88 billion in 2020.
Biostimulants have been newly introduced to the global agricultural market in recent years and highly recognized by the market because of their unique plant action mechanism. It is estimated the global market for biostimulants will reach $20 billion by 2020.
It can be seen that the development trend points towards providing safer and more efficient biostimulants, biofertilizers, biopesticides and other similar products to fully meet the nutrient requirements of soil and crops and decreasing the use of chemical hormones, fertilizers and pesticides to reduce the adverse impact of chemical products on the environment (as shown in figure 5).
Figure 5. Main development trend of biologicals
Industry problems boost product upgrades
Herbicide resistance and solutions
• According to the census of International Survey of Herbicide Resistant Weeds conducted by Herbicide Resistance Action Committee, as of 6 December 2016, herbicide- resistant weeds are found on 90 crops in 66 countries and regions in the world, and the species amount to1000.
• There are currently 477 unique cases (species x site of action) of herbicide resistant weeds globally, with 251 species (146 dicots and 105 monocots). Weeds have evolved resistance to 23 of the 26 known herbicide sites of action and to 161 different herbicides.
• The United States is the country with the highest number of herbicide-resistant weeds in the world with 156 species, followed by Australia (84), Canada (64), France (48), Brazil (42) and China (41).
The herbicide-resistant weeds have become one of the important problems in global agricultural production (the current development trend as shown in the figure below). When herbicides are repeatedly used to control weeds, the herbicide-resistant weeds will grow and spread rapidly, resulting in reduced pesticide efficacy.
The outbreak of herbicide-resistant weeds will lead to a series of severe problems. For example, a direct reduction of efficacy would require an increased dosage, resulting in excessive pesticide residues which will increase the pesticide related cost of farmers while posing a serious threat to the quality and safety of agricultural products. For pesticide production companies, rising weed resistance means gradual loss of efficacy of pesticides and even the end of the life cycle, and they have to develop new alternatives.
For the time being, a mixture formulation with a different mode of action is still the most critical response to herbicide-resistant weeds. In 2016, major companies launched new multiple mixture products such as Syngenta's Acuron® Flexi corn herbicide, BASF's Zidua® PRO soybean field herbicide, Nufarm's Zetha Maxx herbicide and so on.
Moreover, major companies have introduced other preventive measures. In Brazil, UPL has set up an expert team for herbicide resistant weed solutions. Monsanto launched 2016 Roundup Ready PLUS ® crop management solutions and added a new, first-of-the-kind tool to fight tough-to-control and herbicide-resistant agents. Syngenta launched the glyphosate-resistant weed management solution website and the "Clean Crop" program in Brazil. Besides, the US EPA has strengthened the management of pesticide resistance and issued a series of regulatory documents for the purpose of controlling pesticide resistance and extending the service life of pesticides.
Development and application of new formulations
As it becomes increasingly difficult to develop new pesticide molecules and the development costs much more money, companies have increasingly turned their attention to the development of new formulations based on existing products and extending the market life of the chemical compositions not under patent protection by introducing new formulations. So far, new environment-friendly formulations such as water-based formulations and water dispersible granules, which are highly compatible with the environment, will define the future direction while pesticide and fertilizer integration and nano-pesticides are expected to take the development and application of pesticide formulation to a higher level.
For example, the unique LFR technology of FMC Agricultural Solutions is able to mix readily with liquid fertilizers, provides consistent active ingredient distribution, and stays in suspension for uniform application from the first acre to the last. Allosperse™, a patented formulation technology developed by Vive Crop Protection, uses polymer nanoparticle shuttles to control how and when crop protection products are delivered to the plant after being applied, which improves the targeting and performance of pesticide active ingredients. Crop protection products typically fail to mix thoroughly with liquid fertilizer. However, with Allosperse, this problem is no longer an issue. As a result, multiple products can be conveniently applied in a single pass across the field. Entostat® launched by the UK company Exosect, is an electrostatic, dry micro-powder, based on natural and/or synthetic waxes which readily adhere to the seed surface. Entostat® is an effective delivery platform for a wide range of active ingredients including synthetic chemicals, bio-pesticides and biostimulants. Monsanto recently announced that the US EPA has approved XtendiMax™ herbicide with VaporGrip™ Technology, a low-volatility dicamba herbicide, for in-crop use with Roundup Ready 2 Xtend® soybeans and Bollgard II® XtendFlex® cotton.
Original link: http://news.agropages.com/News/NewsDetail---21111.htm
Come and get latest news in Agro industries on Global Crops & Chemicals Summit scheduled on June 15 – 16, 2017 in Berlin, Germany.