PARSIPPANY, N.J. — Increased scrutiny of crop protection chemicals such as pesticides by the farm industry and various federal government agencies, and a decline in lower corn yields and commodity prices, has led to a 3.5 percent drop in those chemical sales this year, according to a study released this month by the Kline research firm.
Another study by the California-based Grand View Research group says as the industry shifts away from toxic pesticides to biopesticides, it may see slow-increasing market recovery and future growth.
"The 2015 crop protection industry began with challenging market conditions due to lower commodity prices and tight farmer economics," Kline expert Joe Prochaska said, "ultimately resulting in lower corn-planted acres, affecting crop protection sales for most manufacturers of crop protection products."
Prochaska, project manager for the research and consulting at Kline’s, is a specialist who heads agriculture/specialty pesticides practices. In the 30-page Kline report, Crop Protection In-Season Market Update: U.S. Market Analysis, he reported companies were forced to turn to consolidation during the year as a way to grow during the down market.
"With consolidation there is a need to improve efficiency and, as a result, managers must identify inefficiencies … and take actions to drive out the additional costs of the new entity," the report said.
Among those deals, Kline cited a merger between Land O’Lakes (Winfield) and United Suppliers in their crop input businesses; Wilbur-Ellis bought Lacey’s Farmacy; Triangle Chemical took over Cardinal Chemicals; and Pinnacle scooped up three agricultural retailers.
As part of its findings, Kline tracked sales at 20 distributors that account for 95 percent of crop protection chemicals sold in the United States.
A second report by the global market Grand View research and consulting group found stringent regulations by the U.S. EPA against the use of synthetic pesticides it says have an adverse environmental impact, are shifting attitudes and forcing consumers and the farm industry to use more biopesticides. This is a move that will slowly drive new market growth.
The demand for biopesticides is expected to increase, which may perk crop protection sales as distributors encourage the farm industry to follow consumer attitudes changing in light of food safety and environmental concerns, Grand View reported.
Biopesticides chemicals are primarily derived from plants, animals, bacteria and certain minerals and control pests by nontoxic mechanisms. Research has showed the volume of biopesticides required per acre of land is less and is more effective than their counterparts.
Grand View predicted biopesticides production will increase over the next seven years and will drive the current $53 billion global crop protection market to $90.1 billion by 2022. Contributing to the shift, crop protection companies are beginning to phase out certain pesticides, including glyphosate, atrazine and chlorpyrifos.
The U.S. agricultural market is the largest user of crop protection chemicals and the trend will only increase, Grand View said, as the industry adopts the new biopesticides. Currently the crop protection market is highly consolidated, with nine companies accounting for over 80 percent of market share – including American Vanguard, Bayer CropScience, Dow AgroSciences, Monsanto, DuPont and Syngenta AG.
As the United States shifts to biopesticides, Europe’s demand for new crop protection chemicals will follow and producers will witness a significant switch, with Germany leading the way, Grand View stated, stimulating new and extended market growth propelling increased sales.
