2023 Global Crop Protection Market Review and 2024 Outlook

Derek Oliphant

Partner & Senior Crop Protection Analyst, AgbioInvestor

Crop Protection Market 2023: Preliminary View

This report provides AgbioInvestor's preliminary assessment of the development of the global crop protection market in 2023. AgbioInvestor's preliminary analysis indicates that the global market for agrochemicals used in both crop and non-crop situations at the ex-manufacturer level increased by 0.1% in 2023 and by an average of 4.9% p.a. between 2018 and 2023. 

For the crop protection market, this represents estimated sales of products at the ex-manufacturer level, i.e. product moving from manufacturers into the first stage of distribution, but expressed at the ex-manufacturer value as used on the ground in the specific agricultural year. Unless otherwise specified, values are expressed in US dollars, with currency conversion using average year exchange rates.

As shown in the above table, our preliminary view of the global agrochemical market in 2023 reflects a year-on-year increase of 0.1% to $82,845 million, with this following vey strong growth in 2022.

The Global Crop Protection Market 2023

The most significant factors which affected the crop protection market performance in 2023 were:

• Recovery from adverse weather (e.g. US, Europe).

• Very dry conditions in southern South America; dryness in parts of Asia (e.g. Indonesia) but more favourable in other countries (e.g. Vietnam); dry in mid-west USA; favourable in EU

• Declining agrochemical prices, non-selectives and Asia Pacific worst affected.

• Commodity prices lower than 2022, but remain high by historical standards.

• Fertiliser and energy costs fell from peaks in 2022, but still high.

• High inventories driving a disconnect between ex-company sales and usage on the ground:

• Inventories built up due to high levels of pre-purchasing to alleviate supply concerns and unfavourable mid to late season weather on key regions (Western US, Europe).

• Retailer and on-farm stocks now being used, with usage on the ground sustained due to relatively high pest pressure and improved conditions in aforementioned regional markets.

• Company sales also impacted by overall reduction in agrochemical pricing, but worst effects of reduced prices expected to impact market on-the-ground in 2024.

Indications from available data suggest that the value of the herbicides market has been impacted by significant price reductions for key products. However, the full effects of these price declines are not expected to be felt until the 2023/24 season, with a significant amount of high-priced product currently estimated to still be present in the supply chain and southern hemisphere countries having made most product purchasing when prices remained relatively high.

For insecticides, hot and dry conditions in the US have led to increased insect pest pressure, notably for Mormon crickets and corn earworm. Insect pressure was also reported to be high in Brazil, particularly in southern regions, where African leafhopper being detected in Rio Grande do Sul for the first time. Insecticide sales are estimated to have declined in Japan, but high pest pressure was noted in China.

Dry conditions in North America are expected to have limited disease and pressure and subsequently fungicide use in the region, although concerns over Pantoea bacteria, which is linked to Stewart’s wilt and brown stalk rot, are increasing in maize in Texas. Although the Brazilian soybean area increased, this being a key fungicide market, Asian rust pressure was down from the prior year, although control still remains a priority. Very dry conditions on parts of South America, notably Argentina and southern Brazil, are expected to have also held back fungicide sales. Fungicide sales are estimated to have declined in Japan. In Europe, fungicide sales benefited from high levels of pest pressure, notably Septoria, which has driven growth of new product introductions in the region, to the benefit of market value. 

Crop Protection Overview and Outlook 2024

The crop protection market in 2023 was relatively flat in terms of value development, with the impacts of lower agrochemical prices and unfavourable weather conditions in certain regions holding back growth. However, this was offset by positive conditions leading to recovery in much of Europe; a strong ag economy and market in Brazil, where the impacts of price declines were not fully felt during crop protection product purchasing times; improved weather in the Western US; and high pest pressure in key country markets, notably Brazil and China.

However, the market in 2024 can be expected to decline as the full impacts of falling agrochemical prices are felt in Central & South America and the continuing impacts of the El Niño weather event are felt in much of Asia Pacific. In addition, expectations for lower areas of certain key crop and country markets (e.g. cereals in France and Argentina; maize in Brazil and the US; cereals and canola in Australia) can be expected to impact the market in 2024. 

It can be expected that company performance in 2024 will benefit from the stabilising inventory situation as we move into 2024, with sales in 2023 being hampered by high supplies in many regions, notably the US and Europe. However, the effects of reduced agrochemical pricing are expected to continue, particularly in southern hemisphere countries such as Brazil in 2023/24. 

The key factors behind the assumptions for decline in 2024 are:

• Low agrochemical prices.

• El Niño leading to dry conditions in much of Asia Pacific.

• Declining commodity prices.

• Logistical issues in certain key shipping locations (e.g. Panama Canal, Mississippi River, Rhine).

• Weather impacting Brazil (although rust pressure higher than previous year).

North America

• US maize areas are projected to be down slightly, but soybean up. 

• El Niño effects, which can provoke extreme weather phenomena such as wildfires, tropical cyclones and prolonged droughts, are forecast to continue through the Northern Hemisphere spring from March to May 2024.

• Dry conditions expected to continue hampering shipping of key commodities due to low river levels.

• Winter wheat in US benefiting from increased soil moisture, with crop development and condition ahead of average pace.

• Wheat area in US up by 8.3%.

• Canada key crop areas to increase in 2024:

• Wheat area up strongly for second consecutive year.

• Canola and soybean areas also up.

• Pules and special crop area to decline, although crop protection market for these crops is less commercially significant than for oilseeds and grains.

• However, production expected to be impacted by severe drought in key growing regions.

• Seven novel clubroot pathotypes, six of which were capable of infecting canola plants bred for clubroot resistance, have been detected in Canada.

Central & South America

• Brazil soybean area expected to be up by 2.8%, but maize down by 5.3%. Overall crop area expected to be up by 0.4%.

• For soybean, a number of factors are expected to impact crop development, including: 

• key regions impacted by hot and dry weather, with some areas requiring to be replanted and expectations for yield impacts.

• soybean planting commenced earlier than usual at request of cotton growers to provide larger window for Safrinha cotton planting, leading to concerns over increased rust and disease pressure.

• Sugarcane area and production expected to be up sharpy, benefiting from favourable weather and recent investments in the sector to support ethanol production. 

Asia Pacific

• Australian wheat and canola areas decline, and dry conditions expected to severely impact crop production. 

• Rice production across Asia affected by dry conditions, impacting planting and leading to reduced reservoir levels / irrigation prospects. 

• India restricting rice exports due to concerns over rising domestic prices.

• Indian growers expected to switch to less weather-intensive crops, such as chickpeas and sorghum, to expected detriment of crop input spending. Total Kharif crop production in India expected to be down from prior year.

• Wheat crop in China impacted by heavy snowstorms, disrupting harvesting operations, storage and logistics for crops in the country’s northeastern regions.

Europe

• Winter crops in France impacted by heavy rains: wheat area estimated to be down by 5.1%. 

• Conversely, very dry conditions in southern regions are affecting winter crops, with rapeseed yields in Romania anticipated to be down by 50% in the worst affected regions. 

• Ukraine undergoing some recovery from full affects of Russian invasion, with crop areas recovering somewhat and grain exports resuming, although still not at full capacity.

• Logistical issues causing concern in central Europe, where recent dry weather has resulted in low water levels in the River Rhine, a key shipping route in the region. 

This article will be published in AgroPages' upcoming 'Annual Review 2023' magazine.

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