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Issue 542 > Contents > At a glance > Subscribe



May 2008 > Content > Subscribe

Agrow Reports

New Developments in Fungicides: 2004 Edition - DS245
Published 10 June 2004

Reports 2004

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CHAPTER 1 - INTRODUCTION

Chapter summary: This chapter introduces the global crop protection market, the various sectors and crop areas and highlights changes in recent years. It also reviews trends in the four regional markets worldwide – Europe, North America, Latin America and Asia. Trends in the major national markets are then described. Recent changes due to company mergers and take-overs are considered at the end of the chapter.

1.1 Global crop protection market

The global crop protection market was worth around $26 billion in 2002 and 2003, with estimates varying according to the source. The market has contracted by about 12% in real terms since 1998 (see Table 1.1).

In 2002, Wood McKenzie estimated sales to have fallen just below $27,000 million with all product categories recording sales declines with the exception of fungicides. Fungicides were estimated to have grown to $5,398 million in 2002 from $5,306 million the previous year; this figure represents 20% of the total agrochemical market.

They also estimated that the global market would be worth just over $28,000 million in 2006 with fungicides being the best-performing segment due to improved market conditions in Europe. The fungicide sector was predicted to grow by 2.2% to $5,927 million by 2006 – this figure represents 21% of the total market.

The German agrochemical industry association, the Industrieverband Agrar eV (IVA) estimated the market value at $25,100 million in 2002.

Allan Woodburn estimated that the 2002 global agrochemical market was worth $27,785 million and in 2003 this had grown in dollar terms to $29,390 million at the end user level. However, excluding inflation and currency factors sales were estimated to have fallen 0.3% in real terms.

Phillips MacDougall estimated that the global agrochemical market at distributor level was worth $25,150 million in 2002 and $ 26,636 million in 2003. After taking into account currency effects and inflation, they estimated that the global market fell by 1.6% in real terms.

Table 1.1 shows the main formulation types and their characteristics

Source	1999 ($ million)	2000 ($ million)	2001 ($ million)	2002 ($ million)	% change since 1999	2003 ($ million)
Wood Mackenzie	29,600	29,200	27,104	27,000	-8.8
IVA	27,200	27,500	25,600	25,100	-7.7
Allan Woodburn	30,070	29,880	27,780	27,785	-7.6	29,390
Phillips McDougall	28,090	28,540	25,600	25,150	-10.5	26,635

Source: Agrow Reports

. . . value of fungicides

World agrochemical sales by product sector in 2003 as estimated by Phillips McDougall are presented in Figure 1.1. Herbicides account for approximately half total sales, followed by insecticides and then fungicides just over one fifth of the market.

Figure 1.1: Global agrochemical sales estimates by product sector, 2003

Global agrochemical sales estimates by product sector, 2003

Source: adapted from Phillips McDougall Agriservice

. . . global crop areas

In 2003, crop areas generally increased worldwide. Wheat is the biggest crop in terms of area, followed by rice and maize. The top seven crops according to Phillips McDougall estimates are given in Table 1.2. Cotton, oilseed rape (Canola) and sunflower especially showed large increase in plantings in 2003 compared to 2002.

Table 1.2: Global crop areas, 2003

Crop	Area (million ha)	% change versus 2002
Wheat	208.1	-2.7
Rice	149.6	+2.7
Maize	139.2	+1.1
Soybean	85.2	+4.7
Cotton	33.0	+8.2
Oilseed rape (Canola)	24.5	+9.9
Sunflower	23.1	+13.3

Source: adapted from Phillips McDougall Agriservice

1.2 Regional agrochemical markets

In 2003, only Latin America saw any expansion in real terms in 2003. This was due to economic recovery and increased soybean plantings. Europe saw a 6.4% decline due to the widespread drought – fungicide sales in particular declined (Table 1.4). The North American market remained flat with falling glyphosate prices but improving cereal markets. Asian markets showed some improvement, particularly in Australia and India where there was recovery from drought problems the previous season.

Phillips McDougall gave appositive outlook for 2004, particularly in Europe where recovery from drought and a reduction in EU set aside should encourage market growth. However in the US, there will be the negative effect of a continuing fall in glyphosate pricing contrasted with rising commodity prices. Japan was predicted to continue depressed but some other Asian markets should recover. The outlook in Latin America was considered optimistic with improved economies, higher commodity prices and increased plantings.

Table 1.3: Global agrochemical market value estimates

Region	2002 ($ million)	2003 ($ million)	% change from 2002 to 2003	Real growth (%)	% of global market
North America	7,793	8,052	+3,3	+0.3	30.2
Western Europe	5,520	6,260	+13.4	-6.4	23.5
East Asia	5,507	5,770	+4.8	-2.3	21.7
Latin America	4,000	4,095	+2.4	+3.3	15.4
Eastern Europe	1,183	1,185	+0.2	-11.3	4.4
Rest of World	1,147	1,273	+11.0	Na	4.8

Source: adapted from Phillips McDougall Agriservice

1.3 National agrochemical markets

The top 25 agrochemical markets based on sales value in $ million are presented in Table 1.4 and Figure 1.2.

The US has by far the biggest agrochemical market in the world, followed by Japan, Brazil and France. Rankings of the top four countries have not changed from 1998 to 2002 but the value of sales have declined.

Values for China, South Korea and Thailand are rough estimates due to the difficulty in collecting reliable statistics – their markets appear to have grown significantly since 1998 according to the latest figures. Intensification in agriculture is certainly leading to increased demand in these countries.

However, other markets have fallen an average of 14.2% from 1998 to 2002 (if the values for China, South Korea and Thailand are included, this average fall is 11.8%).

The biggest falls in value from 1998 to 2002 were the markets of France, Australia, Italy and Argentina – all fell by between 22.3 and 25.9%. Indeed, all mature markets fell in this period.

Table 1.4: Top 25 national agrochemical markets in 1998 and 2002 by value

	1998 ($ million)	2002 ($ million)	% change
United States of America	8,326	7,613	-8.6
Japan	2,734	2,682	-1.9
Brazil	2,573	2,329	-9.4
France	2,307	1,768	-23.4
China	1,000	1,700	+70.0
Germany	1,192	1,072	-18.5
South Korea	603	910	+50.9
Canada	944	809	-14.3
India	760	na
Australia	995	737	-25.9
Italy	827	638	-22.9
United Kingdom	797	626	-15.4
Argentina	776	603	-22.3
Spain	645	602	-6.7
Mexico	500	480	-4
Colombia	360	303	-15.8
Poland	na	292
Netherlands	na	250
Thailand	212	240	+13.2
Russian Federation	na	209
Hungary	na	201
Pakistan	223	182	-18.4
Greece	na	160
Belgium-Luxembourg	147	139	-5.7
Czech Republic	na	138

Source: Various

Figure 1.2: Top 25 national agrochemical markets by value, 2002

Source: Various

1.4 Company consolidation and change

The number of leading players in the agrochemical market has continued to reduce significantly in recent years. This has been driven by increased competition, a relatively low rate of invention and development of new products, the high cost of R&D and the costs associated with product registration and defence.

The top 20 listing is quite different from a few years previously. An increasing number of generic manufacturers now figure in the list and the gap between the six leading players and the remainder has widened. Life science companies have shed their less profitable agrochemical businesses to concentrate on their core pharmaceuticals activities despite the perceived synergies between agrochemical and pharmaceutical research and development.

We now see the largest agrochemical operations standing alone in the market without the backing of larger pharmaceutical enterprises. These businesses are now judged by stock markets in their own right – they rise and fall on the strength of their own enterprise, not that of their bigger siblings.

However, these new companies are developing their new strategies and broadening their focus in order to be less dependent on agrochemicals alone. Biotechnology and seeds are considered attractive directions for the future. Pharmaceutical synergies also have not been forgotten. For example, Syngenta plans to increase its investment in plant-made pharmaceuticals and has six compounds under early development, including one product for treatment of psoriasis.

Source: Chemistry and Industry, 1 March 2004.

Syngenta is the world’s largest agrochemical company and third largest seed provider. It was formed in November 2000 when Novartis and AstraZeneca merged their agricultural divisions. Cost savings from synergies were predicted at the time of the merger at $525 million after three years and Syngenta now predicts cost savings of $625 million by 2005. The merger produced a portfolio of 120 active ingredients; the company’s aim is to reduce this figure significantly. In order to merge, its parent businesses had to divest a number of important products, including fungicides. The divestments included the global trifloxystrobin business, the European cyproconazole cereal business and the global flutriafol business.

In July 2000, BASF acquired the crop protection business of American Home Products (Cyanamid). Subsequently it acquired a number of fungicides and other products as a consequence of Bayer’s acquisition of Aventis (see below).

The merger of Hoechst and Rhône-Poulenc to form Aventis, completed at the end of 1999, at that time created the largest agrochemical division in the world, Aventis CropScience. However, in 2002, Bayer acquired Aventis CropScience following approval by European and US authorities to become the second largest agrochemical company based on 2002 sales. The cost of the acquisition was Euro 7,250 million. Many products were divested as a condition of the approval – this included the fungicides prochloraz, pyrimethanil, triticonazole and fluquinconazole.

Dow AgroSciences became a wholly owned subsidiary of Dow Chemical in 1997, having moved from being a joint venture between the agricultural products businesses of The Dow Chemical Company and Eli Lilly and Company. In June 2001, Dow Chemical acquired the agricultural business of Rohm and Haas for approximately $1,000 million. This significantly improved Dow’s position in fungicides – among the acquisitions were Dithane (mancozeb) and Zoxium (zoxamide).

DuPont bought out Griffin’s interests in their joint venture and became the sole owner in 2003. It had acquired the world’s leading seed company Pioneer Hi-Bred International in 1997. Its fungicide business accounts for 15% of its sales.

Monsanto dominates the market for GM crops and its glyphosate generates most of its agrochemical sales. It merged with Pharmacia & Upjohn in 1999/2000. Pharmacia was acquired by Pfizer in 2002 and Monsanto was spun off to become a wholly agricultural products company. Recent restructuring programmes aimed at cost savings have meant that they have exited their European cereal breeding business and discontinued research into plant-based pharmaceuticals.

Makhteshim-Agan Industries (MAI) is now the world’s largest manufacturer of generic crop protection products. It acquired 11 products from Bayer at the time of the Aventis acquisition and has seized the opportunity of manufacturing a number of compounds as soon as their patents expired. Nu-Farm has now grown to be the second largest generic producer through acquisition of other businesses. It acquired Crop Care Australasia in 2002/2003. Sumitomo Chemical and Takeda Chemical formed a 60:40 joint venture in 2002 that led to Sumitomo assuming seventh position in the top 20 in 2002.

Table 1.5: Top 10 agrochemical companies 2002–2003, ranked by full year sales in 2002

	2002 sales ($ million)	2003 sales ($ million)
Syngenta	5,260	5,507
Bayer	3,775	5,394
BASF	2,787	3,569
Monsanto	3,088	3,031
Dow	2,717	3,008
DuPont	1,793	2,000
Sumitomo Chemical	802	na
Makhteshim-Agan Industries	776	na
Arysta	662	na
FMC	615	na

Source: AGROW

In 2003, a recovery in some markets coupled with a weak dollar improved sales figures for all the majors, with the exception of Monsanto.

The rankings of the top six companies in 2003 are given in Table 1.5 based on Agrow estimates. Syngenta figures exclude their seed sales, Bayer figures exclude environmental and bioscience business sales, Dow’s figures include some animal health products but exclude seed and genomic sales and DuPont’s figures are approximate and include some seed sales. With these provisos, the figures indicate that Syngenta was still number one agrochemical company in 2003 but Bayer CropScience was in a close second position. Monsanto relinquished its third position in 2002 to BASF in 2003, assuming fourth ranking with Dow close behind at number five. DuPont occupied sixth place.

The weak dollar improved the sales figures of Syngenta by 5% but at a constant exchange rate sales were down 2%. Latin America was the most successful region for Syngenta, with sales increasing by 26%. However, sales in North America were flat and those in Asia declined. Europe was affected by drought but there was still a small improvement in dollar terms.

Bayer CropScience’s acquisition of Aventis CropScience resulted in a 20% increase in their sales in 2003 – expressed in dollars this was more than 40% increase. BASF’s sales grew by 10% in dollar terms but most of the growth was due to the weak dollar. DuPont’s business grew by 12% in dollar terms while Dow AgroSciences posted an 11% increase in sales in 2003. Monsanto suffered from the lowering of glyphosate pricing and lower volume in the US.

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