Strong Herbicide Use, Accelerating Fungicides Drive Growth in Russia

By Andras Marfi, Kleffmann Group

The global agriculture pesticide market saw serious decline after years of growth, in 2015, falling 10% in value, writes Andras Marfi on Russia, one of the world’s largest markets, is one of the few countries that managed to remain on a growth track, reaching approximately $1.2 billion.


Spurring that growth (and in some cases restricting it) are three major issues: the economical-political situation, the structural-industrial relationship, and the agricultural-technological connection.

Ruble Crisis
In late 2014, the value of the Russian currency lost approximately half of its value against with leading global currencies in just a few weeks’ time. The key reason was the drop in the value of oil prices, but politics had its role in the devaluation with sanctions introduced by the U.S. and the EU against Russia — the latter countered by Russian government, which added import sanctions on a number of agricultural goods. Although the currency exchange rate stabilized by spring 2015, it has yet to return to previous levels.

With the ruble crisis striking just a few months before 2015’s main crop protection sales season, and with no reliable forecasts about where the exchange rate was headed, producer companies had a difficult time creating the pricing and sales strategy, especially since local farmers think in rubles. As a result, list prices in rubles went up significantly (on average 60%).

On the other hand, governmental goals to make Russia self-sufficient gave a huge support to local growers. Subsidies triggered market changes, and the appearance of a vacuum created by the sanctions gave Russian companies an opportunity to enter several markets related to food production. It also helped rekindle old friendships with China, Iran, North Africa, and Turkey. Both export and import businesses benefited.

Local generic companies saw growth in market share as well. While 55% of crop protection market turnover came from international producers in 2014, this share dropped to 51% last year. Not all major international producers suffered. Those whose portfolios were comparable with large local enterprises, such as Avgust or Shchelkovo, had a more difficult time selling.

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