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Agrochemical industry

Nurturing the Growth Momentum in the Agrochemical Industry

Although agrochemical companies witnessed declining revenues in the past, the industry has bounced back over the past couple of years by consolidating their market share through strategic M&A, increasing their R&D spend, and including digital as a major component to boost their products. The rising market demand for crop protecting chemicals to prevent crop losses and increase the yield will greatly fuel the growth of the agrochemical industry. However, some key challenges including escalating material costs, longer product development cycles, farm subsidy reduction, and rising regulatory requirements continue to persist. To overcome these challenges, top agrochemical companies have begun performing some strategic maneuvers. Experts at Infiniti Research highlights these strategies and other critical approaches for companies in the agrochemical industry.

The future of agrochemical industry looks bright, but is your business ready to capitalize on the market opportunities? Our team of experts can help you analyze market trends well in advance and leverage the right opportunities to suit your business needs. Request a free proposal for insights.

M&A for strategic advantage

M&A has helped some of the biggest names in the agrochemical industry gain major portfolio optimization. Apart from this, a major benefit of M&A is that it allows companies in the agrochemical industry to increase the acquirer companies’ geographical presence. This is especially true for geographical regions where the company previously didn’t have a good distributor network.

Innovation and R&D

Product registrations today go through an extensive registration and screening process. While M&A can be a great platform for companies to expanding their existing product lines and enhancing their global reach, creating and scaling external partnerships for innovation and R&D to develop and commercialize new products in the agrochemicals market.

Currently, although growth in the agrochemical industry may seem a little daunting for established players on the surface, many changes underway are likely to transform the sector completely. Get in touch with an industry expert for more insights on the agrochemical industry.

Digital technologies to bolster product offerings

Today, companies in the agrochemical industry have transformed from being mere providers of farm inputs to complex providers of integrated products by using ‘digital’ as a major component. Acquiring or getting into partnerships with companies in the agrochemical industry with superior technology backup can help increase access to advanced technologies and incorporate them into business. Digital technologies can help companies in the agrochemical industry to launch digital platforms for data collection, visualization, modeling, and weed out major inefficiencies in operations.

Experts at Infiniti Research believe that creating differentiation through innovation, expanding geographical reach through M&A efforts, and capturing additional value by deepening farmer engagement will also likely be the key strategic themes going forward in the agrochemical industry. But the question remains around how companies in the agrochemical industry can tackle future disruptions and roadblocks that can potentially impact the current revenue streams and what changes in strategic positioning this might entail.

Want more insights on strategic growth in the agrochemical industry?

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Burning Challenges in the Agrochemical Industry

Agrochemicals have been extensively used in modern farming to enhance crop yield, increase plant growth, neutralize the soil, and protect crops against pests. Farmers use various kind of agrochemicals including herbicides, insecticides, fungicides, and seed treatment chemicals to optimize their agricultural output. The global consumption of agrochemical is on a rise as arable land is shrinking due to rapid industrialization and population expansion. Although the market is experiencing rapid growth, the agrochemical market has its own set of challenges. The use of certain agrochemicals has been associated with environmental and ecological damages. For instance, excessive use ofRequest Free Proposal fertilizers can contaminate the groundwater with nitrate, making it unfit for human or livestock consumption. So, what are others challenges in the agrochemical industry?

Regulations

The global agrochemical industry is governed by many national and international laws, which are increasing the cost of developing new products. Since manufacturers have to consider numerous regulations, there is a delay in the introduction of new products in the market. Additionally, different countries will have varying requirements. As a result, overseas companies need to submit technical grade registrations with the full dossier. Such processes further increase the complexities for overseas suppliers that have to conduct additional tests and studies to obtain approval for selling the agrochemical within the region.

Rising popularity of pest-resistant GM crops

The advances in genetic science have enabled crops to develop resistance to pests. These crops will be toxic to certain insects but safe for humans. As a result, such BT crops do not need agrochemicals and pesticides for it to grow. Pest-resistant GM-maize crops are widely used in the US and is further used in industrial-scale biofuel. The development and growth of such crops can pose a threat to the growth of the global agrochemicals market as they would not be required to be applied to BT crops.

Adverse agrochemicals affect

The prolonged use of agrochemicals is known to have adverse effects on human life, animal life, and general soil health. Some of the diseases such as autism, Alzheimer’s, asthma, and diabetes are known caused by the use of agrochemicals. In most cases, agrochemicals get collected in surface run-offs and groundwater and can move towards the non-targeted area. Such instances can negatively impact the health and safety of residents. Consequently, several regions have started imposing restrictions on the excessive use of agrochemicals and mandated stringent laws, thus, hindering the market growth

The growth of biological sector

Agrochemicals, from its inception, have been looked at with negativity by the general consumers. The harmful chemicals used in pesticides have been the biggest concern which might be dangerous for human consumption. As a result, consumers are switching to organic food, which is driving the growth of the biopesticides sector. The advent of microbial seed treatments on crops, such as corn, soybean, and cotton, are the major factors driving the growth of the biopesticides market. The growth of the biopesticides market will negatively affect the sales of agrochemicals.

High R&D costs

Developing a typical agrochemical molecule takes an average time of nine years with average spending of $180 million. During the same time, the market may witness newer innovations, or the competitors may come up with better chemicals. As a result, manufacturers in the agrochemical industry are struggling to cope with such high R&D costs.

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Infiniti’s Market Assessment Solution Helps a Leading Agrochemicals Manufacturer to Gain an Early and Sustainable Competitive Advantage

The demand for agricultural crops depends on several factors such as climatic conditions and soil fertility. The soil, if not suitable for farming, is made fertile using agrochemicals like fertilizers and pesticides. Agrochemicals are also used to increase the yield of the crop by improving soil quality. However, the overuse of agrochemicals may be harmful to the soil as well as farmers and should, therefore, be used in moderation. Based on the end-products, the global agrochemicals market is segmented into the following:

  • Pesticides
  • Fungicides
  • Herbicides
  • Synthetic fertilizers

In terms of growth prospects, the demand for agrochemicals will rise since many governments across economies have passed regulations for the use of agrochemicals through permits and license to buy and IR_RFPuse authorized agrochemicals.

The Business Challenge

  • The clientA leading player in the chemical industry, specializing in the manufacture of agrochemicals

The chemical industry client, specializing in the manufacture of agrochemicals, wanted to gain detailed insights into the current market scenario. The client was also looking at acquiring an early and sustainable competitive advantage before concept development and product build-out. They were also interested in estimating the overall market’s size to ascertain the earnings potential of their products.

Additionally, the agrochemicals manufacturer was looking at enhancing their marketing strategy to improve product reach. The chemical firm also wanted a detailed report of the entry barriers, new opportunities, risks, and competition in the agrochemicals market.

ResultsOffered detailed insights into the current market condition and performed a quick sizing of the proposed market.

Market Assessment

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The Journey

The market assessment experts at Infiniti carried out extensive research comprising of interviews and discussions with leading stakeholders across the agrochemicals manufacturing market space to help the client improve business efficiency. The experts at Infiniti further compiled information from a wide array of secondary sources such as paid industry databases, company presentations, and industry forums to help the client understand the competitive scenario prevalent in the agrochemicals market.


The Solution and the Business Impact

The market assessment solution offered was based on an analysis of market trends and some primary research into a propensity to purchase a product that fulfills specific requirements. The solution enabled the client to gain a better understanding of the market needs.

This engagement also enabled the agrochemicals manufacturer to identify the product’s market potential and develop products that meet the demands of its users. Moreover, the market assessment solution offered by our experts helped the chemical company in determining a scalable approach to discover new growth opportunities, assess market trends, and potential risks in the agrochemicals market.


The Future

With growing technological advancements, agrochemical manufacturers will no longer be able to ignore developments in the field of agricultural robotics. The use of such advanced systems will completely change the agricultural landscape. It will also impact the type and number of agrochemicals used in framing. The adoption of agricultural robots will also bring about a change in the business model of crop protection chemical suppliers. This is because a significant part of the overall value of protecting crops will shift towards robotics.

Consequently, chemical suppliers will have to consider re-inventing themselves as providers of crop protection. Moreover, the advent of ultra-precision farming will result in the optimized use of chemicals; thereby, reducing the overall consumption.

Trends in the agrochemicals market:

  • The emergence of precision farming techniquesPrecision farming is a farming technique that makes use of information technology to ensure that the crops receive what they need to maintain optimum health and productivity.
  • Rise in restructuring effortsThere is an increase in restructuring efforts in the global agrochemicals industry as leading players strive to expand their product portfolios. The rise in regulatory complexities, severe market conditions, and other similar factors support such efforts.
  • The demand for bio-agrochemicalsThere is a growth in demand for bio-agrochemicals derived from fungi, plants, and bacteria. They are eco-friendly and do not cause harm to the local flora and fauna.

A must-read case study for strategy specialists and decision makers looking to develop an understanding of the chemical industry.

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