Global Values Exceed $66 Billion in 2014
The global market for crop protection chemicals is worth more than $ 60.5 billion in Harvest Year 2014 as measured at ex-company level. This represents an increase of some 6% as compared to the value of $57.2 billion in Harvest Year 2013. While modest ― as compared to the close to double-digit growth registered in 2013 compared to 2012 ― 6% still represents a very enviable growth by many industry standards. Looking forward five years we will see this period as a boom time for crop protection companies. Add to the crop protection market a further estimated $5.5 billion of product used in the non-crop sector, then you have a total agrochemical market of in excess of $66 billion.
Kleffmann’s analysis is based on data collected from farmer surveys, interviews with distributors in emerging markets, proprietary market trend studies, subject matter experts and open source information. The farmer surveys continue to provide the bulk of the data for our analysis although our program of “trend studies” is becoming more significant. Trend studies allow for a comprehensive examination of many smaller but fast growing markets, particularly those on the African continent. Many “trend study countries” will become the next group of “farmer surveys countries” as companies better understand their growth potential.
When you consider that the cumulative sales of the top 10 companies increased by just under 8% in 2014 as compared to 2013, then a market growth of 6% is quite reasonable. It is not at all surprising the global market grew by less than the average of the leading companies, but it could lead us to various assumptions about the market in 2015 and going forward. It is also true that, in general, smaller companies outside the top 10 are growing at a much faster rate.
While 6% growth is modest and could be considered nothing to get too excited about, it is quite positive considering global macroeconomics. The weakening of many currencies against the U.S. dollar hides some fantastic local opportunities. Strong sales in local currency terms in the East European countries of Ukraine, Romania, Russia and Kazakhstan continued the run of good years in these markets. Latin America is very much in the same situation where a greater than 20% growth in local currency terms in Brazil translated to less than half of that value when converted to U.S. dollars. China and India grew significantly in local terms, thus maintaining close to double-digit growth when expressed in U.S. dollars. The Japanese market remains essentially flat, although once again, this translates into a decline in U.S. dollar terms, although moderated as compared to the previous year.
In Western Europe, the UK did better than most ― although Italy and Germany also performed well. France can best be described as flat. In North America, the United States saw close to double-digit growth, whereas Canada was flat and even in decline when transcribed into U.S. dollars.
Africa continues to be a continent with vast potential and under-reported sales at the retail level. South Africa remains the largest market by far, especially looking at demand for higher-value products. For many of the other African markets, however, where registration requirements are less robust, low-value products continue to dominate to the overall benefit of generic producers.
Drs. Bob Fairclough and Mirza Nomman Ahmed lead Kleffmann’s amis AgriGlobe database of farmer surveys and product use information, which drives much of the company’s top level analysis. Now in its second year and hosted on the company’s software platform Kleffmann4you, the database segments product use by geography, crop types, active ingredients and seed varieties. See Fairclough’s presentation at the FCI Trade Summit in Las Vegas, Aug. 5. He will cover global demand trends and key demand drivers for each region.