In 2016, unfavorable market conditions continued, and the global agricultural inputs companies experienced rapid merger & acquisitions (M&As) amid a sustained market downturn. Looking back at the past and looking to the future, we are seeing unceasing challenges confronted by the industry of traditional agrochemicals companies and new opportunities as new fields of application are being developed. As a result, continued development and innovation will take place in the industry with constant internal and external changes.
According to AgroPages' dynamic tracking analysis on global agrochemical companies in 2016, different companies demonstrated different market behaviors in merging enterprise and acquisitions, investment, expansion, cooperation, authorization and so on because of different market positioning, core competitiveness and development strategies. These companies are classified into four types, as shown in Figure below.
Enterprises based on M&As
From 2015 to 2016, the agrochemicals companies represented by Dow, DuPont, Bayer and ChemChina became involved in mergers and acquisitions due to various reasons. With the merger of Dow and DuPont, ChemChina's acquisition of Syngenta and Bayer's acquisition of Monsanto, the agrochemicals industry will be made up of three super-giants (DowDuPont, ChemChina- Syngenta and Bayer-Monsanto). This round of integration also indicates the formation of a market structure with a higher degree of concentration. According to an analysis by insiders, if the transactions are approved by the world's major regulatory authorities, a giant in the field of agrochemicals and seeds will be formed in the United States, Europe and China, respectively. As a result, the strategic structure of global agrochemicals and the seeds industry market will be reshaped.
In terms of changes in the agrochemicals industry structure, Bayer+Monsanto accounts for 27% of the global agrochemicals market share, ChemChina (including ADAMA) + Syngenta accounts for 23% of the market share, and ranks in the second position, followed by DowDuPont (16%) and BASF (13%). A new situation creating a confrontation among the four parties is forming.
In the global seeds market, the impact is equally enormous. The global seeds industry will operate under a duopoly, especially in the field of GM traits, which is basically being maintained under a complete monopoly. Monsanto + Bayer holds 22% of the global seeds market share, followed by DowDuPont (18%). China will occupy the third seat in the global seeds industry (6%), upon ChemChina's successful acquisition of Syngenta.
The multinational companies, after acquisition, will achieve higher market shares, have stronger technological innovations and richer product lines. With the continuous expansion of the size of giant enterprises and the high concentration of the agricultural market, the Matthew effect in the future agricultural materials market may continue to intensify, in which the industry structure will become more stable, but with more serious competition.
Enterprises based asset optimization
With the mergers and acquisitions among multinational giants, some assets or business units will be divested due to antitrust reasons or capital market pressure on profitability. In 2016, according to sources, DuPont intends to sell a herbicide production business to reduce the potential antitrust risks due to their merging with Dow; Bayer also said it would sell part of the company's cotton and rapeseed seed business, prior to anti-monopoly regulatory reviews and as part of the process of the acquisition of Monsanto; and Syngenta has sold a agrochemicals production base in India at a low price.
These divested assets, if appropriate to the business growth needs of some agrochemicals companies, will provide them with the possibility of optimization of their assets and upgrading. Companies targeting these assets in 2016 include agrochemical giants such as BASF and Nufarm, as well as some agrochemicals companies in emerging markets, such as Nutrichem.
BASF said it is actively monitoring the anti-monopoly problems arising from mergers and acquisitions in the global agrochemicals industry, and hoping to reinforce its agrochemicals business through the acquisition of divested business units. In addition, BASF added that it will continue to evaluate the possibility of acquisitions of other assets (non-divestitures), including the acquisition of other companies, active molecules business and businesses in specific areas. According to the analysis of BASF’s investment expansion in 2016, it was determined that that BASF has set out to optimize its assets and upgrade in different fields, such as biological solutions.
Coincidentally, Nufarm, the world's leading off-patent agrochemicals company, also expressed the intention of acquiring the divested business of multinational giants for the purpose of strengthening the link with these giants, and joining the agrochemicals’ giant alliance. In addition, FMC Corporation, Arsenal Capital Partners LP (a private equity firm) and other companies in the industry, are closely watching the opportunities to acquire assets in this round of integration of agrochemical companies.
By acquiring Dow AgroSciences' global oxyfluorfen business in 2015, and Dow’s global tebuthiuron business in 2016, Nutrichem aims to further expand its product portfolio and broaden its market share.
Enterprises based on steady expansion
Based on an accurate understanding of the development trend of the industry as well as precise identification of internal and external advantageous resources, Sumitomo Chemical has made a series of initiatives during 2015 and 2016 including business restructuring, mergers, acquisition integration, strategic cooperation and investment expansion to steadily advance its unique development strategy.
In 2016, Sumitomo Chemical reorganized its crop protection business operations, increased its investment and Research & Development efforts, focused on acquisition of small-sized enterprises with high returns, sought to establish overseas joint ventures with other companies and continuously strengthened cooperation with universities and multinational giants for the purpose of strengthening its advantages while trying to further its expand global market share.
Following the first phase of restructuring of its crop protection chemicals business operations in 2015, Sumitomo Chemical started the second phase of restructuring of operations in April 2016. Sumitomo Chemical’s Research and Regulatory Affairs functions was integrated into a global matrix structure that will enable greater leveraging of core strengths and capabilities while further enhancing synergies between its plant protection and Valent BioSciences Corporation (VBC) biorational businesses. Sumitomo Chemical also consolidated its three subsidiaries in Singapore to improve its management in sales, marketing, production and supply chain of agrochemicals in Asia so as to expand its market share in this region.
Sumitomo Chemical has a dominant position in product research and development. In addition to expanding the R&D facilities in the North American region and building a new synthetic chemical research facility in Japan, Sumitomo Chemical has opened a new R&D center in Brazil in 2016 to expand its strategic presence in Latin America to further enhance its global R&D capabilities.
In response to the fast-growing Indian agrochemical market, Sumitomo Chemical in 2016 acquired 44.98% share of Excel Crop Care, the fifth largest agrochemicals company in India, and acquired 14.69% of Nufarm's entire shareholding in Excel for the purpose of enhancing Sumitomo Chemical's market power in the Indian market and strengthening its agrochemical business outside of India on the strength of Excel Crop Care's strong product lines and sales channels.
The adverse agrochemical market environment in recent years has been aggravating the competition and seeking cooperation in competition seems to have become the consensus of the industry for development. "These top six companies are not our competitors but partners, and we look forward to building long-term relationships with them" said Masakazu Tokura, the chairman of Sumitomo Chemical when speaking of the powerful alliance of the six multinational giants. Sumitomo Chemical has established close R&D and channel cooperation with some multinational companies to make full use of their respective advantages to realize complementary advantages, mutual benefits and win-win cooperation, to commercialize products quickly and seize the market successfully.
Enterprises based on layout in leading-edge field
In recent years, the leading companies have been enthusiastic in investing in biological solutions (including biopesticides, biostimulants and biofertilizers) and precision agriculture, and bring them to company's development strategy. In 2016, these companies have been proceeding in these two leading-edge areas.
In 2016, BASF opened its seed solutions and biological research center in Limburgerhof, Germany, as well as expanding its Durban plant in South Africa to increase its production capacity of biopesticides and inoculants. It also plans to expand its production facilities in Australia and Canada to produce seed-applied inoculants and biocontrol products. Ms Alyson Emanue, Vice President, Business Management, Functional Crop Care Global Business Unit, BASF Crop Protection, told AgroPages in a recent interview that the company has taken the "Biologicals-based solutions beyond conventional crop protection " as the company's future strategic direction, in which the investment will be increased.
Monsanto has three well-known innovative business platforms, including The BioAg Alliance, BioDirect™ and The Climate Corporation, in which the first two platforms are relevant to biological solutions. This reflects the company's focus in this area, as well as its belief in its promising prospects of development. In 2016, The BioAg Alliance established a distribution partnership with Valent BioScience Inc. (VBC) for Actinovate® biofungicide, and recently introduced the world's first microbial corn seed coating.
One of the features that will advance and explore biological solutions in 2016 is the implementation of integrated 3B strategies (biostimulants, bio-fertilizers and bio-control). "In the years to come, we will make effort to shape our trinity business strategy (bio-stimulants, bio-fertilizers and bio-control). Through consolidated scientific method, we are prepared to develop innovative biosolutions; to optimize all steps of the technical solutions such as seed treatment, crop nutrient management, crop physiological regulation, crop yield improvement, crop diseases and insect pest control, as well as soil environment improvement," said Natale, CEO of Valagro.
Monsanto and DuPont, the pioneers in the field of precision agriculture, have made significant outputs from their investments in this field. Following the successful operation of the precision agriculture platform - Climate FieldView in the United States, Monsanto launched this platform in Brazil in 2016, and plans to introduce the product in Canada in 2017, marking the global expansion of Climate FieldView™. Also, DuPont Pioneer released its enhanced planting rate prediction tool - Planting Rate Estimator and Encirca Yield Nitrogen (a mobile application) in 2016 for tracking the status of the fields’ nitrogen levels, to continue its diversified agricultural information services.
Bayer's strategy for precision agriculture was further implemented through the acquisition of Monsanto, while continuing to increase its investment in this field. The company has committed to investing at least EUR 200 million in Digital Farming between 2015 and 2020 and is currently selling and testing Digital Farming products in 10 countries with the goal to rapidly expand further and develop a best in class crop protection digital support system. Additionally, the company is partnering with four “ForwardFarms” to demonstrate real life sustainable agriculture best practices, many of which rely on advances in Digital Farming. Bayer plans on implementing ForwardFarms in every key agricultural market by 2018. In addition to mergers, acquisitions and increased investment, Bayer has established strategic cooperation with Iteris (an agricultural information solutions company), and AGCO and Planetary Resources (a space technology company), to expand its presence in the field of digital agriculture.
In an effort to catch up, UPL, which has less involvement in precision agriculture, recently acquired a 26% stake in Weather Risk Management Services Pvt Ltd (WRMS) for Rs 10 crore, enabling UPL to provide growers with farming services and precision agriculture solutions, along with other value-added services.
Meanwhile, the development and application of agricultural robots is expected to lead the field of precision agriculture to new heights. Early in 2016, Adama formed a development project jointly with SwarmFarm Robotics, a young and innovative Australian technology company, aiming to introduce automatic robot technologies into crop protection. They recently said that this project will be expanded to the global market.
2016 Big Events of Agrochem Industry – M&A
● DuPont and Dow announced merger
● ChemChina to acquire syngenta for over US$ 43 billion
● Bayer to acquire Monsanto for $ 66 billion
● Chinese agchem company Sanonda to acquire ADAMA for $2.8 bn
● Lanxess plans to acquire Chemtura Corporation
● Sumitomo Chemical to acquire 44.98% stake in Excel Crop Care
● Nufarm sells its 14.69% stake in Excel Crop Care
● Mitsui Chemicals Agro acquires 20% shares of Cuulong
● Mitsui Chemicals Agro acquires additional shares of Sotus International in Thailand
● Mitsui acquires DuPont's Kocide® and ManKocide® copper fungicide business
● Albaugh subsidiary completed the acquisition of FMC’s Consagro in Brazil
● Crystal Crop acquires BASF's fungicide brand Bavistin
● LG Chem to acquire Dongbu Farm Hannong
● Best Agro Group acquires an agrochemicals manufacturing facility from Chemtura Chemicals India
● Zaad acquires 49% stake in Farm-Ag Group
● Lallemand acquires Lage y Cía to Expand Its Plant Care Business
● Advent International to acquire chemicals producer Viakem
● Staphyt to acquire 100% equity of Peracto
● Belchim Crop Protection NV to take stake in Canadian company Engage Agro Corp
● SBM Développement acquires Bayer Garden and Bayer Advanced businesses
● Sinochem International to acquire Pesticide Research of Shenyang Chemical Research Institute
● Brandt acquires Spanish company Tratamientos Guadalquivir S.A.
● SynTech Research acquires Syngenta’s field and laboratory facility in Czech Republic
● SynTech acquires Syngenta’s residue study field and laboratory operations in Brazil
● Rallis to buy 26.37% more stake in Zero Waste Agro- Organics
● Kumiai Chemical to merge with Ihara Chemical
● Sumitomo Corporation acquires 20% share of Cosan Biomassa in Brazil
● Agrium to acquire Cargill's U.S. Ag-retail business
● Eurofins Agroscience Services acquires NDSM
● Novozymes acquires Organobalance GmbH to strengthen position in microbial solutions
● Biobest NV to acquire Real IPM Kenya
● Bioline AgroSciences acquires Certirol from Certis Europe
● Lallemand acquires Brazilian Laboratorio Farroupilha
● Bayer acquires software provider Proplant
● The Climate Corporation acquires VitalFields to expand digital agriculture innovation for European farmers
● UPL acquires 26% stake in Weather Risk Management
2016 Big Events of Agrochem Industry – Investment
● Sumitomo Chemical to strengthen R&D capabilities for its Health & Crop Sciences Business in North America
● Sumitomo Chemical to build new agrochem research facility in Japan
● Sumitomo Chemical opens its first R&D base in Brazil
● Sumitomo Corporation Group, Nippon Soda establish crop protection distribution company in Vietnam
● BASF opens its plant for professional seed treatment
● BASF invests in new fungicide formulation plant in Spain
● Rotam formed emerging areas to sustain the global fastest evolving
● UPL to invest R$1 billion in agrochemicals factory in Brazil
● AMVAC establishes new subsidiary in Singapore
● Bayer launches production ornamentals business
● Albaugh announces investment of US$300 million to expand in Brazil
● United Phosphorus, Inc. plans new plant in South Carolina, USA
● Syngenta completes the capacity expansion projects in Brazil and Switzerland
● ADAMA’s 60,000 tons/year pesticide formulation project begins construction
● Gowan crop protection opens UK office at Rothamsted Research
● Syngenta builds factory to produce Elatus with Pepite formulation in Brazil
● Adama invests R$ 14.4 million to expand factory of fungicides in Southern Brazil
● BASF stepping up agrochemical R&D in Asia
● Valent USA Corporation expands agricultural discovery and development program in North America
● Insecticides India builds new manufacturing facility in India
● Bayer Inaugurates a global formulation technology lab in India
● Monsanto to build $400 million expansion of its St. Louis R&D facility
● Monsanto invests in local Spanish high-tech jobs
● Bayer group builds a new formulation plant in India with €30 million
● BASF spends $1m on biological crop protection push in Australia
● Bayer continues to extend capacity for biologicals in Germany
● Monsanto is investing big in bacteria, fungi and other organisms that benefit crops
● BASF opens new R&D center for biological crop protection and seed solutions
● IKEA GreenTech invests Terramera for biopesticide
● AgTech Accelerator formed by Bayer, Syngenta, other investors
● Syngenta Ventures/Mitsui & Co invest in Phytech
● Bayer and Trendlines establish Ag innovation fund
● Farmers Edge closes $58M investment led by Mitsui and Kleiner Perkins
2016 Big Events of Agrochem Industry – Cooperation
● Willowood USA and Lariat Partners collaborate to expand their product portfolio and market expansion
● Adama licenses Starpharma’s dendrimer technology in 2,4-D product development
● Sumitomo Chemical and Purdue University expand joint research projects
● BASF, PAT reach collaboration for the discovery and development of novel biopesticides
● Insecticides India ties up with Momentive to introduce a pesticide adjuvant
● Gowan and Isagro enter license and supply agreement for Kiralaxyl fungicide
● Monsanto and Sumitomo Chemical enter new global crop protection collaboration
● Rotam North America and SipcamAdvan announce New Joint Venture
● AMVAC Netherlands, Huifeng Agrochemical establish Agro-Tech joint venture
● DuPont Pioneer/Hexima discovered new insect-active gene
● AkzoNobel and Atul planning Indian MCA joint venture
● Bayer and Hamburg University collaborate to develop new digital solutions for sustainable agriculture
● Monsanto and DuPont sign dicamba supply agreement
● Insecticides India ties up with Nihon Nohyaku to launch new products in India
● PI Industries and Mitsui Chemical Agro to establish a Joint Venture for Agrochemical registration in India
● Gowan appointed UK distributor for Chemical Company S.A.R.L.
● Sipcam, Bayer CropScience sign chlorothalonil distribution agreement
● Nagarjuna Agrichem enters into insecticide development agreement with Nippon Soda
● UC Davis and BASF enter collaboration on development of new microencapsulation technology
● BASF and FMC Corporation collaborate to bring next generation of crop care to the corn furrow
● BASF, ACE launch program to accelerate agricultural startups in Latin America
● Certis Europe and K&N Efthymiadis form JV in South Eastern Europe
● Insecticides India plans JVs with global agrochem firms
● Agform, Sussex University partner to develop novel fungicide
● Amira, UPL enter strategic alliance to build a productive rice value chain
● BASF, Nidera collaborate to fight against weeds in Argentina
● Gowan and Isagro enter license and supply agreement for Kiralaxyl fungicide
● Apple and Pear Australia partners with Adama Australia
● GroGenesis announces Vita-Agro S.A.S. as distributor for sustainable agriculture inputs in Colombia
● Arysta LifeScience, Beem Biologics reach agreement
● VBC signs collaboration agreement with LidoChem and Rizobacter to strengthen its biorational business
● Valent BioSciences, The BioAg Alliance reach distribution deal for Actinovate® brands
● Bion Tech and Bayer CropScience USA enter 2nd year R&D cooperation agreement
● MBI to distribute Isagro's biofungicide in U.S. West
● MBI and Albaugh sign exclusive agreement for a microbial biopesticide product
● Syngenta plans joint venture with DSM for R&D of biological solutions based on microorganisms
● Koppert and Lantmännen BioAgri partner to further develop biological seed treatment
● Dow AgroSciences, Radiant Genomics expand R&D collaboration
● Valent BioSciences Corporation and Rizobacter signed R&D Cooperation Agreement for Biorationals
● MBI and Groundwork BioAg sign seed treatment development agreement
● AgroFresh, RipeLocker partner on produce container system
● Ginkgo Bioworks and Amyris partner to accelerate commercialization of bio-based products
● 2G leads $10m venture round with Sumitomo for biopesticide application technology Terramera
● Dow AgroSciences, TeselaGen advance biodesign technologies for agriculture
● The Stockton Group and Yeda Research and Development Company sign an extension to their joint research agreement
● AgriMetis and Isomerase entered into collaboration
● FMC & Chemotécnica opens two new manufacturing plants for Crop Protection Products in Argentina
● AgroFresh, BotanoCap sign strategic global distribution agreement
● VBC, LidoChem reach global licensing agreement for new biocontrol technology to protect against nematodes
● WinField, Google to create data management system designed for agriculture
● Valent U.S.A. Corporation expands grower financing program with John DEERE Financial
● South African agchem companies Meridian Agritech and Intelichem reach collaboration
● Bayer, DuPont join ag-tech investment boom to ease grain pain
● Monsanto, Microsoft to invest in agricultural technology in Brazil
● Winfield US and The Climate Corporation join forces
● Bayer and Cefetra join forces to promote sustainable agricultural practices in Latin America
● Syngenta chooses Iteris ClearAg Mobile for biologicals research
● Bayer and Planetary Resources intend to collaborate to improve agriculture with space data
● Iteris signs ClearAg agreement with Bayer to support global digital farming platform
● Adama expands its collaboration with SwarmFarm globally to bring innovative robotics to crop protection worldwide
● AGCO announces development partnerships with Aglytix and Farmobile
● Bayer and FaunaPhotonics form research collaboration to develop sensor technology for improved monitoring of insect pests
● Farmers Edge, Trotter Fertilizer to partner on Variable Rate Technology
● MZB Technologies, The Climate Corporation reach data connectivity agreement