Global Pesticide Market Review
January 12, 1994
The last two years has seen a stagnation in the global
agrochemical market. The total value of end-user markets
declined in 1992 to US$25,200 million, a decrease of 6% on
1991 sales of US$26,900 million -- which in turn reflected a
decrease of 2% on the previous year. Agrochemical sales fell
heavily in Western Europe, due to weather conditions and
reform of the Common Agricultural Policy, while in Eastern
Europe pesticide use dropped by as much as 30% as a result of
the political upheavals.
However, the decline was not uniform across geographical
regions, and the pesticide markets in North America, Latin
America and East Asia have all continued to grow. In East
Asia, increased pesticide use occurred in a number of
countries regarded as mature markets -- Japan, Taiwan and
Australia -- as well as in developing countries, notably
Vietnam, China and Indonesia. The Indian market for
pesticides is expanding slowly. Pesticide sales in the
Middle East are stable. Africa remains the continent with
the lowest use of pesticides due to drought and poverty, and
industry expects no increase in sales.
In Latin America, Brazil remains the major consumer. Brazil
is the worldUs fourth largest pesticide user, after the U.S.,
Japan and France; however, its 1992 sales dropped by 5% to
$1,027 million. Sales are stable in Argentina, but show
growth in Colombia and Mexico.
It is noteworthy that Indonesia is considered by industry to
be a growing market for pesticides, given the governmentUs
commitment to promoting integrated pest management (IPM) in
rice production. This policy has been an acknowledged
success, not only in reducing pesticide use but also in
maintaining and, in some cases, increasing yields. The
government saved an estimated US$120 million annually since
1986 after introducing a ban on the import of 57 insecticides
used on rice.
The tightening up of the agrochemical market has resulted in
a number of companies reorganizing and introducing cost-
cutting exercises, while others have merged their interests.
Notable changes are the merger of the German companies
Hoechst and Schering, where Hoechst will become the senior
financial partner, and the takeover of the pesticide
interests of the Anglo/Dutch corporation Shell by the U.S.
company American Cyanamid. American Cyanamid has a strong
herbicide portfolio, and the acquisition of Shell will
bolster its fungicide products.
While always high, agrochemical research costs have increased
dramatically in recent years. The regulatory response to
concerns about health and environmental problems has been to
impose more rigorous testing requirements before registering
pesticides for use. Companies have had to develop new
products to counter problems of insect resistance and
resurgence. A recent survey by the U.S. National
Agricultural Chemicals Association of 22 of its members
indicated that global research expenditure had risen by 88%
since 1987 to $1,900 million in 1992. Expenditure on new
product research and registration amounted to $1,399 million
in 1992, compared with $740 million in 1987, and product
defense costs have risen from $263 million to $482 million
over the same period.
In spite of increased research costs, there is very little
likelihood of a surge in novel products. After nearly 50
years of research, most modern synthetic insecticides are
still derived from just three chemical classes --
organophosphates, carbamates and pyrethroids. According to
industry observers, most research will generate support for
existing products, aiming to maximize their potential and
introduce lower dose-rate formulations. Increasingly,
companies tailor their range of products to promote use as
part of IPM programs, encouraging the view that pesticides
are central to the agenda for sustainable agriculture. Older
products are relaunched in this manner, for example HoechstUs
endosulfan, an organochlorine with growing sales in
developing countries.
Biotechnology remains an area of interest to the major
research-oriented agrochemical corporations, but few
companies expect it to take the place of traditional chemical
research in the foreseeable future. The exception to this
may be Monsanto, in terms of bio-pesticides, and Zeneca, in
terms of seeds research.
The stagnant and stable market in the major pesticide
consuming regions and lack of novel chemicals, will increase
the tendency in the agrochemical industry to look to export
markets and sales in developing countries -- particularly
Latin America, Asia and the Middle East. Older active
ingredients are likely to remain a key part of their product
range, frequently in new formulations.
(See also "Agrochemical Sales," PANUPS, November 4, 1993, for
more information on top agrochemical companies.)
Sources: Pesticides News 22, December 1993; John McDougall
and Matthew Phillips, The World Agrochemical Market,
Chemistry & Industry, November 15, 1993; Michael Hansen,
Sustainable Agriculture and Rural Development: FAO at the
Crossroads, Consumer Policy Institute/Consumers Union and
PAN, 1993; AgrowUs Top 25, September 1993; Agrow, No. 188,
July 23, 1993.
Contact: Barbara Dinham, The Pesticides Trust, Eurolink
Centre, 49 Effra Road, London SW2 1BZ; phone (44 - 71) 274-
8895; fax (44-71) 274-9084; email pesttrust@gn.apc.org.
This PANUPS is excerpted from an article in Pesticides News,
the quarterly journal of The Pesticides Trust (address listed
above). This excellent journal offers an international
perspective on the health and environmental effects of
pesticides. Contact The Pesticides Trust for subscription
information.
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