2014 Global Agrochemical Company's Activities Review & Future Prospects

Editor's Note: Looking back at 2014, merge and acquisition still maintained to be prevailing all the time in the agrochemical industry where agrochemical companies had plotted their business strategy either for the purpose of capturing a new business market or in order to take a first-presence in the full industrial chain. In 2014, the agrochemical company's cross-sector cooperation became more intensive and were moving toward diversified operations. Furthermore agrochemical companies continued to make investment to cover new emerging market of potentials in more diversified regions and sectors.

It is worthy of note that the year of 2014 saw a quiet change of companies behind important acquisitions, where second-tier agrochemical companies headed by FMC and specialty chemicals giants headed by Platform Specialty Products also stepped into the acquisition activities. 2014 was destined to be a turning year of agrochemical industry which reshuffled global agrochemical structure.

Seed & biotechnology remained to be hot subject of the integration of industry

There are statistics showing that the compound annual growth rate(CAGR) of seed/trait market from 2006 to 2013 reached as high as 13.2% (pesticide at 6.5%), the great potentials continued to attract the input from leading agrochemical companies into the sector.

Analysis of market positioning and future orientation of each of the prime agrochemical companies reveals that Syngenta and Bayer’s market position among the world top 6 agrochemical companies appeared to be more or less the similar, while the direction of development for BASF and Dow AgroSciences are similar, the other two, Monsanto and DuPont have implemented an identical strategy.

The world agrochemical No.5 and No.6 ranked Monsanto and DuPont (their seed business ranking respectively No.1 and No.2), while focusing on their core business of seed and biotechnology, have gradually turned to precision agriculture and have now become comprehensive crop protection solution providers. These 2 giants were not seen in any acquisition cases in 2014, since Monsanto contributed more funds into its strategic research and expansion of production capacity of corn and soybean while continuing its seed sales deployment; on the other side, DuPont opened its worldwide corn and soybean research centers and built colloborations with several companies or institutions in crop development, to further enhance the competitive edge of its strategic crops.

For the world agrochemical No.1 and No.2 ranked Syngenta and Bayer, their growth of agrochemical business has slowed down day by day. However they have both strengthened the consolidation of their seed/trait business. Syngenta’s acquisitions in 2014 were all involved in the seed business deployment and its seed research centers were extended worldwide; meanwhile research and marketing partnership with professional seed companies were established. Bayer’s acquisition was basically seed company targeted; as compared to Syngenta, Bayer’s extensions were mostly done via its own input in order to enhance its seed market position and influence. In 2014 Bayer CropScience invested $29.6 million in the expansion of its North American and global Seeds headquarters in Research Triangle Park (RTP), and actively expanded the breeding network of its strategic crops such as wheat, rapeseed and soybean as well as to continue the establishment of new SeedGrowth centers.

Dow AgroSciences and BASF did not appear to be so active in these 2 business sectors. In 2014 Dow AgroSciences carried out 2 acquisitions of seed companies while BASF increased investment in biotechnology in Brazil, and has already developed a soybean cultivar tolerant to herbicides for the 2015/2016 crop season in partnership with the Brazilian Company of Agricultural Research (Embrapa).

The acquisitions by second-tier players expected to change industry structure

Compared with 2013, the merge and acquisition in the 2014 agrochemical industry greatly increased in terms of both the number and amount including Monsanto’s offer of $40 billion for acquisition of Syngenta in May 2014, which was suspended; in September FMC spent $1.8 billion on the full acquisition of Cheminova; in October ADAMA announced acquisition of ChemChina businesses. These acquisitions have enhanced the competitiveness of involved companies, elevated the sales volume and enabled fast capture of new emerging market.

What has attracted the eyes of the industry is a series of acquisition by Platform Specialty Products(PSP) which includes the spending of EUR300 million in acquiring the top European agrochemical group Agriphar (2013 sales of $170 million), the spending of $1 billion in acquiring Chemtura's agrochemicals business (2013 sales of $450 million) and the spending of a huge $3.5 billion in acquiring Arysta LifeScience (2013 sales of $1.5 billion), this one is so far the largest acquisition by PSP which will enable the market value of PSP to be doubled, also enables the chemicals company PSP to quickly step into agrochemical industry.

The past acquisition very often only involved the top 6 global agrochemical companies. However in 2014 more other companies were seen to have participated in the merge and acquisition, which will shake the market place of the conventional top 6 global agrochemical companies and will bring about a revolutionary change to the agrochemical industry structure.

New emerging market to become a hot spot of investment by agrochemical companies

When the growth of conventional agrochemical market slowed down, the new emerging market in China, India, Brazil and Africa grew rapidly and significantly with great potentials. Africa has the largest uncultivated land in the world, which is expected to soon become a large market with business volume reaching over $10 billion, being widely recognized to be the next major agricultural region for development.

In Africa agrochemical companies paid attentions to the agricultural yield and made positive deployment of seed business. Back in 2012 Syngenta decided to expand African market and in 2013 Syngenta acquired the local seed company MRI, followed by establishment of Africa’s first seed research institution (Seed Care). DuPont set up a seed R & D center in Africa. Bayer and Dow AgroSciences both announced increased input into African market. Additionally Sumitomo Chemical established a subsidiary in Tanzania and set up a fertilizer plant in Kenya. The factory of Chinese Wynca in Ghana already started to operate with good performance in west Africa.

In China and Brazil, agrochemical companies increased local capacity to fulfil the growing demand. In 2014 Syngenta made additional investment of $52.40 million in an extension to China Nantong’s formulations capacity. BASF established its first formulations plant in China and launched 2 agrochemical formulations plants in Brazil.

In India, agrochemical companies made investment in more diversified manners covering research, production and marketing of agrochemical and biotechnology. With these investments from the top 6 global agrochemical companies and Japanese agrochemical companies as well as world advanced biotechnology and precision agriculture oriented companies, the actual strength of Indian agricultural industry has been much increased and highly regarded by the world industry players.

Integrated solutions promoted maximization of agricultural incomes

The business summary of the 2014 top 6 agrochemical companies shows their business activities being moved toward agricultural upstream and downstream chains as demanded by the modern agricultural development, all of them committed themselves to provision of more comprehensive solutions for growers.

One of the orientations of comprehensive solution is to apply information technology to agriculture, including weather information, pest disease information, precision spraying/ fertilization/irrigation, soil testing and etc. Via the establishment of precision agriculture information system, growers are provided with more scientific and efficient decision-making mechanism so as to maximize the incomes of plantation. The Climate Corporation acquired by Monsanto developed the weather information software Climate Basic and Climate Pro. DuPont Pioneer launched the Encirca^SM Yield platform focusing on nitrogen-based service. In Canada BASF promoted the world first farm management network toolkit Compass Grower Advanced. All these are good representations of applications of information technology in the industry.

Bayer launched the newest food chain partnership projects in 2014, representing the future tendency of the downstream foodstuff solutions. With nearly 240 projects in 30 countries around the world, spanning 40 crops, the Food Chain Partnership approach unites growers, traders, processors and retailers to develop integrated crop solutions that adhere to sustainable agricultural principles with the common goal of producing large quantities of high-quality, affordable and nutritious food.

Seed serves as an upstream business. In 2014 agrochemical company maintained high degree of attention and input into the seed treatment, which was included as part of comprehensive crop protection solutions. In 2014 Syngenta continued its establishment of seed care centers in Africa and Mexico; its African seed care center is a part of Syngenta’s “The Good Growth Plan” which would benefit more than 5 million growers in Africa. In 2014 Bayer further extended its US SeedGrowth Center, and set up a new SeedGrowth Center in Vietnam, which became Bayer’s first research center focusing on elevation of rice treatment technology. Up to date, Bayer has 11 SeedGrowth Centers. DuPont has decided to set up 2 seed treatment research centers in the US, which upon completion would greatly enhance DuPont’s seed treatment research capability. According to the future needs, DuPont may also establish new facilities outside the US to support the development of the world seed treatment market.

Syngenta

Acquisitions:
• acquires the German and Polish winter wheat and winter oilseed rape (WOSR) breeding and business operations from the Swedish group, Lantmännen
• acquires Italian durum wheat seed company Società Produttori Sementi(PSB)
• acquired lettuce germplasm from US lettuce breeding company Eagle Research and Development

Cooperations:
• Syngenta Canada partners with the Canadian Wheat Alliance, KWS and the Western Grains Research Foundation on double-haploid technology
• and IITA collaborate to boost food production in Nigeria
• and Anheuser-Busch InBev enter malting barley collaboration
• partners with BT to support global growth
• and Nexgen Plants enter research and development collaboration on virus resistance technology
• CEEDS and NEF signed a technology use agreement on treatment of material used for vegetative propagation
• and Cellulosic Ethanol Technologies collaborate to increase ethanol plant productivity
• and UNCCD partner to address the soil conservation challenge globally
• Unilever and Infineum collaborate in high performance computing (HPC) to drive a radical reduction in speed-to-market for their new product
• Syngenta seed and Gavilon sign Agrisure Duracade marketing agreement
• and Cellulosic Ethanol Technologies collaborate to produce first cellulosic ethanol
• Syngenta Biotechnology and AgBiome collaborate on product development for protection of specific crops
• and Precision BioSciences expand genome engineering partnership

Investments:
• reopened Clinton corn and soybean R&D facility
• establishes Africa's first seed care facility
• opens seed care institute in Mexico
• re-opens seed corn production facility in US
• opens seeds treatment center in Argentina
• Syngenta China opens new formulation facility in Nantong

Bayer CropScience

Acquisitions:
• acquires the seed business of Granar S.A.
• acquired seed treatment company Biagro Group
• acquired certain DuPont Crop Protection Land Management assets in the United States,Canada， Mexico, Australia and New Zealand

Collaborations:
• and Plant Impact signed agreement on Veritas® technology
• and Kaiima partner to improve rice productivity
• joins John Deere in developing digital tools
• and Targenomix enter into research collaboration agreement for the exploration of metabolic and regulatory networks in plants
• and GreenLight Biosciences form partnership to explore applications of GreenLight’s proprietary cell-free technologies
• and Cellectis extend gene editing partnership
• and Texas Tech announce breakthrough in the structure of the cotton A-genome
• and Beijing Yoloo signed collaboration agreement on insecticide
• Ceres licenses DNA Browser Software to Bayer CropScience

Investments:
• invests $6.5M in agrochem plant expansion in Canada
• opens Weed Resistance Competence Center in Frankfurt，Germany
• plans to construct wheat facility in Canada
• opened $14 million wheat and oilseed breeding centre in Australia
• expands activities in Africa to help raise agricultural productivity
• invested $29.6 million in North American and global seeds headquarters
• opens new SeedGrowth Center in Vietnam
• unveils new field technology station in US
• expands SeedGrowth Centers in US
• opens new seed breeding research facility at Memphis， US
• starts building wheat breeding centre in Canada

BASF

Collaborations:
• and Unicamp collaborate to develop technologies for the agricultural segment on crops of soybeans， sugarcane， corn， fruits and vegetables
• and Rothamsted collaborate to control beetle pests of peas and beans
• and the Rio Grande do Sul Institute of Rice signed technical agreement related to rice production
• and John Deere co-develop precision farming tools
• and Swiss Re Corporate Solutions launch farm insurance in Brazil
• and Mitsui develop new insecticide in Brazil

Investments:
• opened its first formulation and packaging plant in China
• expands its Innovation Campus Asia Pacific centre in Shanghai，China
• invests in biotechnology in Brazil
• plans to operate two new agrochem formulation plants in Brazil
• announces investments and new products for North American agriculture
• builds new specialty amines plant in Germany
• opens global R&D center in India
• builds new innovation campus in India

Dow AgroSciences

Acquisitions:
• acquired Australian Advantage Wheats
• purchases Brazilian Coodetec's seeds business

Collaborations:
• and The Royal Barenbrug Group collaborate on hybrid grass
• and Sigma-Aldrich sign manufacturing and supply agreement
• expands relationship with DEPI and AVS

Investments:
• invests heavily in Africa
• opens crop research center in Sorriso, Brazil
• expands Field R&D Site in US

Monsanto

Collaborations:
• and East-West Seed collaborate to sell high quality sub-tropical and temperate vegetable varieties
• and The Climate Corporation cooperate to advance  research on climate change and farming
• and Agrium signed an agreement to provide Climate Pro Technology
• and MIT professors form Preceres to market AG biological
• and Tekmira sign agreement on delivery technology
• and Sumitomo Chemical expand their weed management collaboration to South America
• Sumitomo Chemical and Valent extend their strategic partnership in Crop Management Solutions platform for soybeans and cotton in the United States
• FMC Extend Relationship to Include Hero Insecticide

Investments:
• expands seed production capacity in France
• opens P134-million BT corn seed facility in Philippines
• plans $75M expansion at US Iowa Roundup plant
• launches Mexico center for developing GMO corn
• invests $120 million to increase technological development in Argentina

DuPont

Collaborations:
• and The University of Missouri，USDA-ARS collaborates to pool soil mapping resources，predictive technologies and expertise
• and Weyerhaeuser enter a Technology License Agreement to advance seed technologies
• and Advanta partner with non-GMO sorghum trait
• and the Sorghum Checkoff collaborate to improve sorghum genetics
• and Hexima collaborate on protecting crops and improving yields
• and Two Blades Foundation to collaborate on Asian soybean rust
• collaborates with eight universities to enhance grower productivity, sustainability
• and AGCO collaborate on wireless data transfer solution
• and Raven Industries Enable Wireless Data Transfer
• and Cargill signed agreement on soybean
• and DTN/The Progressive Farmer collaborate to bring instant weather and market information， as well as grain trading capabilities to growers

Investments:
• constructs two seed treatment centers in US
• sets up a corn research facility in Canada
• opens soybean research center in US
• opens South Africa R&D center
• opens its business operations in Myanmar
• opens multi-crop research centre in India
• expands two new seed processing towers in Canada

Generic Agrochemical Leaders

Acquisitions:
• FMC Corporation acquires Cheminova for $1.8 Billion
• Adama acquires $850m ChemChina businesses
• Arysta LifeScience Acquires French-Based Company Goëmar
• Platform Specialty Products acquires Arysta LifeScience for about $3.51 billion
• Platform Specialty Products Corporation acquires Chemtura's agrochemicals business
• Platform Specialty Products acquires European agrochemicals group Agriphar for €300 million
• Sumitomo Corporation acquired fungicide Metominostrobin from Bayer CropScience Japan
• Sumitomo Chemical Acquires DuPont™ Asana® Insecticide Business

Collaborations:
• FMC and Actagro enter agreement to market Actagro Organic Acid® based soil and plant health nutritional products in Asia-Pacific
• FMC partners with FLM+ to include the complete portfolio of tree， fruit， vegetable and potato products
• FMC expands its partnership with FLM+ on a large amount of products
• FMC and Arysta LifeScience signed agreement to develop， market and sell turf and ornamental products
• Arysta and Plant Health Care signed development &distribution agreement on protein technology
• Arysta LifeScience and Goёmar set up a new organization for biostimulant, biocontrol and innovation nutriment products in French
• Isagro and Rotam enter into development, distribution and supply agreement
• Nufarm partners with Phytech to develop new plant monitoring technology
• Nufarm partners with Verdesian Life Science to market Bloomtime product in U.S. and Canada
• Gowan and Azul Natural signed development, registration, marketing and distribution agreement
• Gowan USA announces exclusive distribution of Domark fungicide from Isagro

Investments:
• FMC Corporation opens new Asia Innovation Center in Shanghai
• FMC opens new innovation center‏ in Latin America
• Nissan Chemical established an affiliate company Nissan Chemical Products (Shanghai)
• Sumitomo Chemical plans to set up fertilizer plant in Kenya
• Sumitomo Chemical Establishes a Subsidiary in Tanzania, Africa to conduct market surveys and research and development on agricultural chemicals