APK-Inform: Main trends of crop protection market of Ukraine and Russia

By Lana Synkovska, the Marketing Director of APK-Inform

Application of crop protection products (CPP) is the basis for further increasing of the yield level and qualitative characteristics of agricultural crops, and also allows somewhat neutralizing possible influence of weather and climatic factors. Below we would like to share some of the results of our annual studies “Market of crop protection in Russia and Ukraine. These are big panel multi-client studies we do every year for main players of the market, and the studies provide big pieces of market data based on the polling of farmers. We ask representative sample of farmers (1,800 farmers in Russia and 1,000 in Ukraine) about crop protection usage, applications, brands, etc. We conduct interviewing by phone calls (CATI-method), but nearly 10% interviews are made face-to-face. The samples include all 3 segments of farmers – small, large scale and big farms (agroholdings), the samples include farmers from all regions according to regional structure in overall production of exact crops. After the interviewing of farmers, we process the data, using statistics and modelling methods to build up the market structure (main players, market volume, regional differences, etc). The study structure includes: seeds info, seeds treatments, crop protection (herbicides, fungicides and insecticides). The study is divided into winter and spring crops parts. Wheat, barley, rye, corn, sunflower seed, rapeseed (canola), soybeans, potatoes and fruits-vegetables blocks are the main crops we cover in the study.

Lana Synkovska, the marketing director of APK Inform, shared her business practices in agrochemical applications in Russia and Ukraine at the 2017 China Pesticide Formulation Export Workshop held on August 30 in Qingdao, China, which was organized jointly by AgroPages and local pesticide industry associations. The details are as follow:
 
Russia: wheat is a leader

According to 2016 study, our agency estimated the Russian crop protection market value cost at the level of 1.22 bln USD. For the crops, wheat, barley and corn are traditionally main grain crops in Russia. For last 5 years, the planted areas under wheat in Russia slightly increased – from 25.1 mln ha in 2013, to 27.9 mln ha in 2017, and the main reason is the growth of exports due to good demand for Russian wheat on the global market. Russia is one of the global leaders in the exports of wheat, and export interests stimulated Russian farmers to invest more funds into wheat production (including, of course, crop protection). Overall, it’s a main trend in both Russia and Ukraine – the more interesting crop from the point of view of export demand, the more farmers invest into its production (as they are sure they will get profit, and make traders to pay good price).

So, it´s not a surprise that according to our study, in 2016 wheat took 53% of the Russian crop protection market value, other main grain crops - barley and corn – covered much smaller shares - 11 and 7%, respectively. I would like to highlight the increasing role of corn on the Russian market – last 5 years the country expanded the planted areas and production of the important crop and even from importer Russia has become an exporter of the grain.
 
Regarding oilseeds crops – sunflower seed is still the main oilseed crops for Russian farmers, the planted areas under this crop keep on increasing – from 7.3 mln ha in 2013, to nearly 8 mln ha in the current year. To date, Russia is #3 global exporter of sunflower oil, so good demand from crushers to sunflower seed stimulated farmers to increase the production of this profitable crop. So, in 2017 sunflower seed took 13% (155 mln USD) of Russian market of crop protection, second result after wheat.

In terms of type of crop protection – according to our study, in 2016 herbicides took the main share of the Russian market of agchem – 57%, fungicides took 20%, seeds treatments – 16%, and insecticides – 5% of the market value.

 
According to the main brands of crop protection (all data is our panel study results in 2017), Russian market has all key global players of crop protection market. But the main characteristics of Russian crop protection market (compering for example to Ukraine) is also the presence of not only global companies on the market, but also strong, powerful domestic players – like August, Schelkovo, etc.

Ukraine: sunflower is undoubted “king of fields”

Ukraine is so called “bread-basket of Europe”, one of the main agricultural countries in Europe. According to our study’s results, in 2016 Ukraine`s crop protection market value totaled 597 mln USD(6 main crops according to study). Regarding the structure of crops in Ukraine, the picture of main grain crops is similar to Russia – there are 3 main grain crops like wheat, barley and corn, but during last 5 years the planted areas of all this grain crops are more or less stable, with only sufficient decreasing in barley segment. Wheat takes quite big share of the Ukrainian crop protection market – 27% (or 201.7 mln USD), the share of corn is also important – 19%.
 

Regarding oilseeds crops, sunflower seed is the undoubted leader of the planted areas, so-called “king of fields”, most favorite crop of farmers due to it’s high profitability. The main reason – Ukraine is the major global producer and exporter of sunflower oil, to  date Ukraine exports the product to 102 countries, including China! Rising demand for Ukrainian oil on foreign markets makes oilseed crushers able to pay high prices to farmers for sunflower seed. So, farmers happily invest more money into production of sunflower – in seeds, crop protection and fertilizers, they are trying to increase yields and improve quality of produced sunflower. So, it’s obvious that sunflower seed takes rather big share of the crop protection market in Ukraine – 27% (or nearly 160 mln USD), it is much bigger than other oilseeds crops – soybeans and rapeseeds – they take only 11% and 2%, respectively.

As for the market structure depending upon the type of crop protection in Ukraine – according to our study, in 2016 herbicides took the main share of the market – 51%, the share of fungicides totaled nearly 23%, seeds treatments were only 11%, and the insecticides’ share - 3% of the general market value.
 

The picture of the main brands of crop protection in Ukraine looks different from Russian – no big local players, most companies in the list below are representatives of big global companies-producers, and suppliers of crop protection.

Also our study includes a big block about the Ukrainian potato crop protection market, according to our estimations in 2016 the value of this market totaled nearly 10 mln USD. As you could see, the potato market is not that huge as other crops (and the main reason that potatoes are mostly produced in households, not in industrial farms), but overall this market is also interesting. Syngenta, Buyer, BASF are the main suppliers of potato crop protection in Ukraine, but also top-10 includes some other players like Terra Vita, Peters&Burg etc.

In conclusion, we would like to invite Chinese companies to more actively enter the markets of Russia in Ukraine, as its huge agricultural producers with growing productions of all main crops. Generally, the prospects of the both markets look quite good, but some international players still consider this region risky, unpredictable, and as the markets with high entrance barriers. But choosing the wise market strategy (like selecting a big agricultural producer as the key client or focusing to some special crops) could help enter and get good share of the markets for any new companies.

About APK-Inform:

APK-Inform Agency is a private agricultural consulting company, founded in 1996. The company is a full-circle research agency, involved into gathering and processing of primary and secondary data of agricultural markets. The company has a head-office in Dnipro (Ukraine) and 2 representative offices in Kyiv (Ukraine) and Kursk (Russia), currently company’s staff is over 80 employees (including 25 persons of call-center and 10 analysts). APK-Inform covers the markets of Russia, Ukraine, as well as Kazakhstan, Belarus and other former Soviet Union countries. Every year the company produces big panel studies “Markets of crop protection and ag chem products” for Ukraine and Russia, covering all main grain, oilseeds and fruit-vegetable crops.

To get details of the full study and get any info regarding Russian and Ukrainian markets, please contact: agropages@vip.163.com