Crop Input Markets Booming

The crop protection industry is enjoying positive growth, and manufacturers and distributors are reaping favorable profits as high commodity prices push crop input use to new levels.

“We’re back in a situation where the farming economy is positive in many parts of the world and farmers are buying more products,” Dr. Matthew Phillips, analyst and consultant for Phillips McDougall, said during his keynote address during the FCI Trade Summit in Buenos Aires, Argentina.

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The FCI Trade Summit is a practical business meeting composed of leading companies that gather in private business settings. Plenary sessions are conducted over breakfast and include market-leading information analysis. Delegates dedicate the rest of the day to business meetings.

The Summit celebrated its fifth anniversary in Buenos Aires with more than 500 attendees, 65 exhibitors and 20 sponsors from 30 countries.

Phillips said during his speech that global population growth, economic growth and dietary changes will also shape the industry. Current economic conditions, if maintained, will cause the agrochemical industry to grow at a rate of 2.2% per year until 2015, Phillips says.

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India and China have driven growth in the Asian market. As Indian farm incomes increase, the use of crop inputs has become more widespread. However, recent drought in Southern China has depressed the country’s growth potential.

Currency fluctuation with the US dollar has benefitted the Australian grain market, Phillips says. Higher crop prices offset currency shifts for the grain market in the country.

In Sub-Saharan Africa, investors have been purchasing arable land for the purpose of growing cotton for export. Many specialty crops are grown for export in the country, specifically to provide countries in the EU with a year-round vegetable supply.

“Delayed planting in the US has raised concerns about what the harvest will actually be,” Phillips says.

As sales growth of crop protection products increases, companies are seeing the costs of bringing a new product to market increase as well.

The average rate of developing and bringing a new product to market has expanded to 9.8 years on average in 2005 from 8.3 years in 1995, giving companies a shorter term to recoup their investment before a patent expires.

Because of this, companies are turning to generic sales to keep revenue streams flowing. Generic market share has plateaued at around 30% in recent years, Phillips says.

“R&D companies are selling more products in the generic industry than they have been in many years,” he says.

In the next five years, commodity prices and farm incomes will continue to be the most significant market drivers shaping the agrochemical industry.

On day two, Dr. Nigel Uttley of Enigma Marketing Research discussed opportunities for post-patent agrochemical makers and distributors in South America. This talk outlined potential market share opportunities for active substances falling off patent in the coming years, as well as how to navigate the regulatory framework and intellectual property rights in various countries.

“There are 24 active ingredients coming off patent between 2011 and 2015, and if you want a piece of those markets, then now is the best time to start researching and identifying compounds,” Uttley told FCI Trade Summit attendees.

Uttley’s discussion outlined South American countries with emerging agricultural economies and demand drivers adding to the growth of crop protection.

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