Non-Crop Markets Stay Strong
13 October 2011 For the past 24 months, most industries have been languishing as the global recession persists. Likewise, one would expect the global non-crop market to follow the same trend. On one hand, the underlying drivers of growth and change were suggesting solid long-term prospects once the recession ebbed, but meanwhile, common sense would suggest that the overall section would contract in line with the general economy.
However, remarkably enough, there is evidence that the market across the world as a whole has not retracted. Certain countries, such as the US and the UK, have slipped a bit, but in almost all other major non-crop pesticide using countries, the opposite is true. And overall we are looking at around 10% dollar growth from 2006-07 to 2009 and a world market that is worth well over $20 billion at end user level.
Let’s recap
Until the early 1990s non-crop was hardly on the radar of most pesticide companies, not least because there was little market research available to measure its size and scope. Then, driven by strong economic growth, more accessible information on product availability, and greater awareness among ordinary people that they could make a material improvement to the health and quality of their home environments through insecticides to control crawling and flying pests, the consumer market began to expand. In parallel, other markets from turf to farm hygiene, from PCOs to ornamentals, public health, forestry, industrial vegetation control and timber treatment all began to record steady increases.
Initially there was scepticism among the active ingredient manufacturers about this talk of a “new and dynamic business”; hardly surprising since still to this day participation for most of these companies is limited to what leaves their factory gates. Few take part in any value addition downstream — thereby also losing a great opportunity to evaluate what their end-users like and don’t like about their products. Since the ‘big six’ had not focused much attention on developing products specifically for the non-crop market, it is no surprise that well over 90% of all active substances in use were — and still are — generic or off-patent. However, some generic companies — notably Makhteshim, Nufarm and Cheminova — have seen the opportunities that non-crop offers and have invested accordingly. Indian and especially Chinese companies are not far behind.
Somewhat to the surprise of a few old hands in the industry, the business recorded growth in value of around 5% per year through the 1990s and up to 2006, avoiding various economic downturns with little impact on overall performance. It was beginning to look as if this emerging sector was flourishing, and it showed signs of becoming a lot more serious as a user of pesticides … one day maybe even matching its older brother, the long-established crop pesticide business, lately showing signs of age from the twin afflictions of regulation and consumer resistance.
Continued Prosperity
Fast forward to the recent — and continuing — economic recession that has dented confidence in many parts of the global economy. But not all. Surely non-crop usage would fall victim to the need to rein in both government expenditure and private consumption.
After all, so much of it is based on discretionary expenditure. How many people really must use that aerosol to kill the flies that are bothering them? And those weeds in the flower bed — they could surely be pulled out by hand, after all that’s how it was until a few years ago.
Well, GfK Kynetec has just completed the 7th in its series of global non-crop pesticide use studies which began back in 1992. So this latest update has been added to this long record of historical use in the major 25 or so non-crop consuming countries for the year 2009, right in the middle of the recession.
Major Findings
■ Global non-crop market 2006-07 to 2009: Up 1% in local currencies; Up 10% in US dollars
■ Major expansions in Brazil, Canada, Germany, India, South Africa, Turkey
■ Contraction in the USA and UK
■ Consumer — home & garden — increasing its dominance
■ Gains in other divisions — forestry, public health, ornamentals
What can be concluded?
Arguably the most significant feature of all is the robustness of demand right across the non-crop market. Once end users have started to apply products, the habit seems to become entrenched and they show resistance to dropping it even when disposable income is under pressure. This resilience is all the more remarkable since it flies in the face of continuing pressure from governments to reduce all pesticide use, ever tougher regulatory hurdles to gaining registration, and generally hostile media.
The Outlook
Average expenditure on non-crop pesticides across the world works out at around $3.00-$3.50 per head. Over the past 10 years developing countries with low per capita expenditures on non-crop, e.g. China with $1.30, Brazil $2.60 and India $0.50, have seen some of the fastest growth. But even countries at the other end of the spectrum, for instance Canada at $26 per head, has experienced continuing expansion. Provided economic performance remains positive, it is reasonable to anticipate that demand will continue to expand in all countries, developing and developed. In turn this should attract further investment from companies which see this as a profitable business.
Rod Parker directs GfK Kynetec’s sigmaNC program, which provides a comprehensive database on all parts of the non-crop market, including molecule originators, formulators, distributors and others with a serious commitment to this truly dynamic business. SigmaNC supplies detailed data on product use as well as analysis and consultancy on developments and strategies for individual companies to penetrate new markets or improve their existing businesses.
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