The Rise Of Fungicides

In 2008, fungicides overtook insecticides in global market value for the first time, giving producers newfound opportunities. Two main reasons stand out: The increased use of insect and herbicide resistant or tolerant crops, and farmers’ desire to maximize yields.

GM Cuts Pesticide Use

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Planting of genetically modified (GM) crops increased 7% to 134 million hectares (ha) last year. Costa Rica joined the GM nations in 2009, while the EU approved cultivation of BASF’s Amflora potato in March.

GM cultivation is growing, and with 25 countries now planting biotech crops, insecticides have taken a hit. One of GM’s marketing points is that it reduces the need for chemical pesticides; therefore, the growing market segment of biotech crops has lessened sales of pesticides that perform the same duty as the insect-resistant crops. “Insecticides and herbicides can be affected by biotechnological solutions like Bt cotton or glyphosate-resistant crops. So far, no such program is noticed in fungicides,” says N.C. Rane, general manager, strategy and international business for Mumbai, India-based fungicide manufacturer Indofil.

Other industry sources agree. “There’s no direct impact on the fungicides market from GM crops, whereas insect resistance and herbicide-tolerant varieties have taken some value out of the herbicide and insecticide markets,” says Matthew Phillips of agriculture consulting firm Phillips McDougall. “This resulted in different market conditions.”

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The drop has not been drastic, though. “We have lost some value from the uptake of insect-resistant GM crops,” says Phillips. “The traits used for insect resistance predominantly affect some lepidopteran species and have not as yet moved specifically out of the lepidopteran area. There’s still a significant market for other pest species.”

Manufacturers counting on the continued need for insecticides are looking to innovation to compensate for market trends. “We have not backed off on our insecticides; in fact, we increased it a few years ago with our discovery program looking for new active ingredients, new modes of action,” says BASF’s Dr. Rick Chamblee, manager of technical services and pipeline expert. “We put a little more focus on the sucking insects — aphids, whiteflies, plant bugs, things like that. But if we had a good lepidopteran compound come along in our discovery efforts, we would certainly entertain bringing it to the marketplace.”

Rane also offers words of caution: “Value increase may not be a correct indicator of increase in usage,” he says, explaining that three basic fungicides — copper-based, sulphur-based, and EBDC — experienced a huge cost increase in 2009. “There was also a general increase in most other fungicides,” Rane says. “This cost increase had led to price increases in the fungicide market. We do not see a usage trend wherein fungicides outstripped all three classes of pesticides on a global level.” However, Rane added, “There was definitely some increase in fungicide usage in Europe due to climate.”

GM Crops By Country   
Country  Area
(million hectares) 
Crop 
USA  64  Soybean, corn, cotton, canola, squash, papaya, alfalfa 
Brazil  21.4  Soybean, corn, cotton 
Argentina  21.3  Soybean, corn, cotton
India  8.4  Cotton 
Canada  8.2  Canola, corn, soybean, sugarbeet 
China  3.7  Cotton, tomato, poplar, papaya, sweet pepper 
Paraguay  2.2  Soybean 
South Africa  2.1  Soybean, corn, cotton 
Uruguay  0.8  Soybean, corn 
Bolivia  0.8  Soybean 
Philippines  0.5  Corn 
Australia  0.2  Cotton, canola 
Source: ISAAA   

The following nations also grew GM crops in 2009: Burkina Faso, Chile, Colombia, Costa Rica, Czech Republic, Egypt, Honduras, Mexico, Poland, Portugal, Romania, Slovakia and Spain.

Farmers Adopt Fungicides

Longer-term, farmers are looking at fungicides to drive quality and yield. While the segment has been somewhat marginalized in the past, the more educated growers become, the more they realize the benefit fungicides can have on production. “What we’ve seen emerge is a grower segment, growing fairly rapidly, looking to maximize their yield profitably and have high-quality crops,” says Chamblee. “They want to have more efficient operations, and certainly manage their risk. We believe that’s a very big driver for this.”

This trend is expected to continue, because fungicides drive yield and quality, says Phillips. “In 2008, you had a very strong fungicide year in the US on maize and soybeans, and also in EU on cereals because of the drive to maximize yields,” he says. “The long-term trend is because of the advanced developing countries where the general economy is improving rapidly; people have more money to spend on food; they want more food, they want better quality food.”

Foliar fungicides have been shown to increase soybean yields by three bushels per acre when foliar diseases are present, according to research by Pioneer Hi-Bred, the seed business of DuPont.

Companies such as Indofil, which specializes in fungicides like mancozeb, are continuing to push these yield-increasers through the pipeline. “We have four generic fungicides under development,” says Rane, adding that the company is also investing in manufacturing and data development for EBDC and cymoxanil. “Going forward, Indofil will continue its development in fungicides for fruits and vegetables, potato, grapes and banana.”

Chamblee believes another reason the fungicide market is growing is the availability of better products. “As an example, Headline wasn’t available a few years back,” he says. “It’s a very broad-spectrum fungicide that gives excellent disease control and other plant health benefits such as stress relief on the crop and helps their product operate more efficiently.”

Insects Going On Strong

The value of the insecticide market in 2010 will mostly depend on one factor: the weather. In an El Niño year, much of the world sees wetter weather, whether it manifests in heavy rains and flooding or in massive amounts of snow, like the US eastern seaboard experienced this winter. “A lot of snow cover going on, which can impact insect survival,” says Chamblee. “Snow sometimes is an insulator.”

This year’s El Niño is “moderate to strong,” according to the Philippine Atmospheric, Geophysical and Astronomical Services Administration. South America will be warm; North America will be wet; and Southeast Asia and Australia can expect to see drought. The increase in insect pressure in warmer, wetter regions could improve sales of insecticides this year. China is also predicting a higher pest occurrence in 2010 compared to a mild insect presence last year.

Climate change in coming years will also increase insect life cycles; as the world gets warmer, insects have more chances to breed. The soybean aphid, for example, is becoming an annual pest, says Chamblee. “What we’ve seen over the last few years is that it used to be a predictable pest, every other year; now it seems like they want to come along every year. We’re seeing more and increased applications for soybean aphid.”

Herbicides Hold On

In 2010, the global branded net average selling price of glyphosate is predicted to be approximately US$10 to $12 per gallon, according to Monsanto. Supply should not be an issue; in March, Monsanto announced its glyphosate production expansion with a new facility outside of New Orleans, Louisiana, US, which will boost Roundup production capacity by 20%.

“The shift toward herbicide-tolerant crops and increasing usage of glyphosate has resulted in some value being lost in the marketplace in overall terms,” says Phillips. A key factor in the herbicide sector is the price of glyphosate, “Because that has a significant impact on the overall value of the herbicide market.”

However, glyphosate is only part of the herbicide market, and glyphosate resistance offers opportunities. “It wasn’t long ago people were saying that glyphosate would be the only herbicide that you’d need,” says Chamblee. “They weren’t worried about resistance issues with glyphosate. We looked at it from a different tact, and that’s the reason we’re able to bring on our Kixor product line in 2010. We’ll be launching that into four different products: Integrity, in corn; OpTill, in soybeans; Sharpen, in multiple crops for burn-down and residual; and Treevix, in tree crops.”

Where Is This Trend Going?

Despite this short-term reality, R&D pipelines are strong, according to basic producers. “We have 28 products that we’ll introduce over the next four years, 2010-13,” says Chamblee. BASF, which accounts for 40% of new active ingredients in the last seven years, will introduce 16 more. “Not only fungicides, herbicides, and insecticides, but split among the different crop groups, as well. There are things for row crop farmers, cereal farmers, and specialty crop farmers.”

Other companies appear to feel the same; there is no shortage of new herbicides or insecticides coming to market, and while fungicide sales are expected to grow, their increased volumes should not cut into the other segments too drastically.

“While GM acceptance is growing, it’s still a hot-button issue in many parts of the world,” says Phillips. “With many countries still opposed to the acceptance of GM food, herbicides and insecticides still have a definite place in crop protection.”

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