Multinationals' Dynamics in Latin American Agchem Market

Editor's Note:

2014 saw climate drought, lower crop price, changed crop planting area and unfavorable exchange rate, which had resulted in the slow-down of the growth of the agrochemical market in Latin America. According to the statistics from Phillips McDougall at distributor level, the 2014 global crop-oriented pesticide market value reached US$56.65 billion being 4.5% up year on year. It is noted that Latin America generated a most robust sales of US$16.15 billion in 2014 being 15.1% up year on year. However the growth rate had slowed down compared with the growth rate of 22.3% in 2013. A relevant data prediction shows that the pesticide market of Latin America will continue to grow in 2015, but at a lower growth rate than that of 2013/2014.

Multinationals’ market performance 2014

Multinationals’ sales in 2014 in Latin American market were affected by the above mentioned reasons. Lots of companies’ performance growth rates saw decline in 2014, but some companies’ performance growth rates showed contrarian growth. Nevertheless each company performed different market highlights.

Nufarm’s performance was very impressive with a growth rate of 54% in the Latin American market in 2014, having reached sales of US$609.7 million. Its sales in Brazil increased by 60% (calculated at local currency), mainly attributable to Nufarm’s differentiated product – glyphosate formulation “Crucial”, as well as the introduction of a number of novel products. Furthermore, Nufarm achieved robust sales in Argentina, where its fast-growing sales of glyphosate-resistant weed control products greatly promoted sales in the region, arriving at a growth rate of over 70%.

Bayer CropScience maintained strong growth in Latin American regions in 2014 with the growth rate reaching 24% in Brazilian market. The company said that its fast-growing fungicide sales, increased sales of herbicide, satisfactory performance of SeedGrowth and insecticide contributed to the sales growth in Latin American market.

Syngenta achieved a growth of 7.7% in the region, which is slightly higher than last year, having reached US$3.77 billion. Since being released to the Brazilian market, its new fungicide Elatus™ (benzovindiflupyr +azoxystrobin) set a record of more than US$300 million sales, which was a considerable contribution to the overall increase of sales of the company.

Although some companies’ sales in Latin America dropped to certain degree, some products appeared to be appealing. BASF’s sales in Latin America grew slightly by 2.3% having reached EUR1.3 billion, but its fungicide Xemium® (fluxapyroxad) and the herbicide Kixor® (saflufenacil) demonstrated a good performance. Dow AgroSciences’ new product Spinetoram and the insecticide Isoclast™ (sulfoxaflor) contributed significantly to the increased sales of the company. DuPont’s strategic products Rynaxypyr (chlorantraniliprole) and Cyazypyr (cyantraniliprole) achieved a further growth in several locations of Latin American market.

Multinationals continued making investment in the region

Although the growth of Latin American market has slowed down to certain extent, it will remain to be the fastest growing market among the several prime regions of the world, where the great market space is attracting investment from multinationals, especially in the seed industry which has appeared to grow year by year.

Under its globalization strategy, Bayer CropScience continued to increase its investment in seed and primary crop sectors for capture of higher market share. In 2014 Bayer started to set up 5 seed research facilities respectively in 5 states in Brazil including Mato Grosso, Tocantins, Goias, Parana and Rio Grande do Sul.

In 2015 Bayer acquired the seed business of Brazilian Central Gaúcha Cooperative (CCGL), which aiming to build a global seed platform. Over the last several years Bayer also acquired a number of companies which are adapted to Brazilian and Argentine oil crop germplasm bank, including Melhoramento Agropastoril, Wehrtec, SoyTech, CVR (Brazil), FN Semillas S.A. (Argentina) and Granar S.A. (Paraguay).

Further to the opening of the first Seed Care Institute in Brazil, Syngenta opened its second Seed Care Institute in Argentina in 2014, and the company plans to open a third one in Mexico in 2015. The 3 institutes target at the 3 prime crops of Latin America – soybean, maize and rice for the purpose of increasing the sales of the 3 crops in Latin America.

In 2014 Dow AgroSciences started the operation of the Sorriso Research Center in MatoGrosso, which provides most advanced technologies for application to the worldwide maize improvement, as well as to carry out researches into soybean, grass family and sorghum. In 2015 Mycogen Seeds of Puerto Rico, which is affiliated to Dow AgroSciences, kicked off the new seed research facility in Salinas/Guayama for provision of best maize/soybean technology and trait to the farmers.

Besides the seed investment, some companies made investments in crop protection fields. In 2014 BASF spent € 50 million on the establishment of 2 agrochemical formulation plants in Brazil to increase its agrochemical formulation production capacity. FMC opened its innovation center in St. Paulo, Brazil, which is the fourth following the ones in North America, India and China. The innovation center in Brazil will design and develop more productive and sustainable solutions as well as innovative formulations for Brazilian agriculture. In 2014 India’s UPL announced an investment of US$30 million in an extension to the capacity of its plant in Ituverava, Sao Paulo state. The company also plans to set up a research center at same time in Campinas. The objective of UPL is to achieve business income of US$1 billion in Brazil by 2020.

Furthermore in 2014 Monsanto announced an investment of US$120 million in Argentina in the 3 years ahead in order to elevate the local production technology in Argentina. On the other hand, Nufarm appointed more business representatives to Brazil, Argentina and Peru, as well as having formulated a new distribution program in the market of Uruguay.

Multinationals’ registrations focusing on soybean disease control

Figure 1. Crop Protection Crop Split 2012/2013 in Latin America

A summary of multinationals’ registration of 2014-2015 in Latin America (Table 1) shows that most of the registered/launched products have focused on soybean and maize crops which are the main crops in the region. Statistics reveals 42.1% of the pesticide market share in Latin America in 2012/2013 being taken by soybean-oriented pesticide, followed by fruit plus vegetable (14.5%) and maize (10.4%), as shown in Figure 1.

Soybean rust disease and cotton bollworm are the most devastating pest diseases in Latin America, to which the mainstream products registered or launched by multinationals are closely related, as soybean rust disease could cause 90% soybean losses. According to the Anti-Rust Consortium, the cost of fungicide used for this disease each season reaches nearly US$2 billion. A recent report says that the disease has become multi-pesticide resistant due to repeated use of same product and prolonged planting season. At present fungicide for soybean rust disease control is losing effect in Brazil and new product is urgently needed. Damages caused by cotton bollworm should also not be underestimated, the loss resulting from cotton bollworm in Brazil over the last several years has reached R$10 billion.

Featured products for soybean

For insecticide, Dow AgroSciences introduced two new insecticides Exalt® SC and Delegate® WG in 2015 in Brazil based on active ingredient Spinetoram, for the control of caterpillars and other pests on soybean and fruit groves. Spinetoram, second generation of spinosad insecticide developed by Dow AgroSciences, reached sales of $190 million in 2013. Sales of new crop protection products in 2014 increased by 23 % versus the year-ago period, led by Spinetoram.

For herbicide, DuPont introduced Expression Pack® (carfentrazone-ethyl + chlorimuron-ethyl) in Argentina in 2014, which allows an efficient burn of emerged weeds, while it maintains the plot clean in the moment of planting soybeans. DuPont also launched Classic® herbicide (chlorimuron) in Brazil in 2014, which is among the most known herbicides to control broad leaves in conventional or transgenic soybeans crops–it is still used for the drying of soybeans.

For fungicide, BASF launched OrkestraTM SC fungicide (fluxapyroxad + pyraclostrobin) in Brazil in 2015. The product is the first fungicide released in the market for the control of major diseases of soybeans, which has the active ingredient fluxapyroxad, new molecule registered after 10 years of the emergence of Asian Soybean Rust in Brazil. Because it is a new active ingredient, the product acts actively in the respiratory system of fungi and aids in resistance management.