Global Crop Protection Product Supply, Demand and Use Trends – India

As presented at the Agribusiness Global Summit in Phoenix, Arizona in the first week of August 2018; the Global Crop Protection market in 2017 increased at a rate of 1.9 % in nominal terms over that of 2016. As such the market for Crop Protection Products in 2017 when measured at ex-manufacture level and using average year exchange rates throughout comes in at US$ 54.15 billion. That the market had in-fact seen positive growth in 2017 of close to 2 % was predicted back in January 2018 here but at that time we were waiting on a few outstanding country market results; before publishing the final figures.

A 2 % growth rate whilst not earth-shattering is an important milestone in that it does bring to an end, quite abruptly, the period of decline seen in 2015 & 2016. This fact, rather than the absolute size of the growth, is important in a sector that has seen so much merger and acquisition activity; in that it provides confidence to the wider investment community. That “confidence” is needed was all too apparent in the week of 10th August 2018 when share prices for companies across the board collapsed on the back of negative court rulings regarding glyphosate out of California. Share prices are now slowly recovering but it does illustrate all too clearly the importance of “a unified strong and positive message” on the benefits of crop protection to the global economy. 

 Figure 1: Real GDP growth of India vs. Global over time

Source: OECD Economic Outlook: Statistics and Projections

In looking for a first positive message for the global crop protection industry one need to look no further than India. India is often reported as the fastest growing “world” economy. According to the World Bank the Indian economy will see a robust GDP growth of 7.3 % in this financial year and 7.5 % for the next two years as “factors holding back growth in India fade”. These figures allow India to retain the tag as the world’s fastest growing major emerging economy and one that has consistently been a good couple of points over and above the global GDP growth rates since the financial crash of 2009 (Fig. 1).

The same can be said to be true for the Crop Protection market. Whilst India is not the fast-growing market over the last five years (that particular tag goes to Costa-Rica) India can be said to be the fastest growing market of significance. This can best be visualised with reference to Fig 2. & Fig 3.

Figure 2: The 5-year CAGR 2012-2017 in % terms - India positioned as 8th in the top ten leading countries

Figure 3: Sales of crop protection products in 2017 split by leading markets (US$ m)

Figure 4: Sales (US$m) of crop protection products over time in India (ex-manufacturer level)

Whilst position No. 8 out of 10 is not in the “top flight” when the sheer size of the Indian Market (as fifth largest globally) is taken into account (Fig. 3) it is clear that as with the macro-economics of GDP India can be considered as the fastest growing world agrochemical market of significance; with only Russia coming close.

India, like most markets, suffered a decline in 2009 (as a result of the financial crisis) and then once again in 2015; when among other factors a marked decline in commodity prices took place. India, however, suffered less than most markets and came out of this 2015 decline in 2016 rather than 2017; a testament to the resilience of the Indian market (Fig. 4).

That the Indian market is growing is of little doubt when looking at Figure 4. However, how much the market is developing is a more “mute” question. If we look at the splits between the sectors between the 2008 base year as compared to 2017 the market is largely of the same structure (Figs. 5 & 6).

Figure 5: CP Sales (2008) - split by sectors (%)

Figure 6: CP Sales (2017) - split by sectors (%)

A simple comparison of Figures 5 & 6 shows that the market has over the last 10 years or so remained insecticide dominated with essentially no additional penetration from the other sectors including fungicides. If we also take into account the impact of Bt cotton in this market; it could reasonably be argued that insecticides had in fact significantly strengthened their position at the expense of the other sectors.  

The same is true if we compare the relative significance of the different crop groups in terms of pesticide spend as in Figures 7 & 8.

Essentially the market in 2017 is the same as it was in 2008 with in-fact an appreciation in the relative importance of rice. Whilst not necessarily an issue the lack of market penetration by crops other than rice in India needs to be put into context with other developing markets (so for example the rise in soybeans in Brazil over this time period) and the success of other Asian markets in “rice reduction programmes”. As one final measure of market development; if we look at the share of imported foreign formulated pesticides in value terms that proportion has stayed persistently under 1/3 of the total market value despite the launch of many new molecules specifically targeting the rice sector in this time period.

Figure 7: CP Sales (2008) - split by crop group (%)

Figure 8: CP Sales (2017) - split by crop group (%)

Kleffmann’s analysis is based on data collected from farmer surveys, interviews with distributors in emerging markets, proprietary market trend studies, subject matter experts and open source information. The farmer surveys continue to provide the bulk of the data for our analysis although our program of “trend studies” is becoming more significant. Trend studies allow for a comprehensive examination of many smaller but fast growing markets, particularly those on the African continent. Many “trend study countries” will become the next group of “farmer surveys countries” as companies better understand their growth potential.

Source: AgriGlobe®



Dr. Bob Fairclough, Principal consultant - AgriGlobe®

Dr. Puran Mal, Team Manager & Senior Analyst - amis® AgriGlobe®