VOL. 12 Issue 3
October-December 2011
Mirror to GLOBAL AGRICULTURE
Company Half Year Sales 2011 and Market Outlook
T
Dr. Matthew Phillips, Phillips McDougall, UK
he following table outlines the sales results for the majority of the leading agrochemical companies in the first half of the current year. In order to make a direct comparison of the relative performance of the agrochemical businesses of each company we have, where possible, eliminated the sales of seeds, biotechnology, intermediates and animal health products from the company sales results.
Half Year Agrochemical Sales 2010 and 2011
Unlike 2010, currency exchange rates in the first half of 2011 had a more noticeableimpact on those companies who report their sales in Euro terms, with the US dollar weakening somewhat against the Euro.
in 2010, the market for conventional agrochemical products grew by the rate of 1.2% over the full twelve-month period. The US Dollar is on average 5.6% weaker against the Euro in the first half of 2011 in comparison with the same period of last year. As a result, if the average company half year sales growth is presented in Euro terms, then the increase equates to 9.0%.
For the companies listed above, total overall sales in the first half of 2011 increased by 15.4%, an improvement on the 0.9% increase recorded by these companies in the first half of 2010. For reference,
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Following the peak levels attained in mid 2008, crop prices declined in 2009 andearly 2010 to a level broadly in line with, or slightly above, those of early 2007. However in the latter part of 2010 the prices of several crop commodities started to rise strongly. This trend continued into this current season with future prices indicating that they could reach a new plateau above that of 2007.
Average Price Changes first half 2011 over first half 2010 Wheat Growth +60.8 %
During 2010 the US dollar weakened against the Euro and the ÂŁ, with this trend continuing into the first half of 2011. In the case of the Chinese Yuan, the US dollar has weakened slightly over the last eighteen months. The US dollar also weakenedagainst both the Yen and Real in 2010, with this continuing into 2011.
Maize
Rice Soybean Rapeseed
+84.9 +14.6 +42.7
+69.6
In average terms, the prices of all the major commodities in the first half of 2011 are significantly higher than in the corresponding period of 2010. The most significant increase in price over this time period was in maize followed by oilseed rape and wheat.
Crop Trends in 2011
Crop Commodity Prices (January 2007 to June 2011)
The rise in crop commodity prices that began in late 2010 and continued into 2011 was a major contributory factor in the increase observed in the global planted area of wheat, maize, rice, soybean, oilseed rape and cotton in 2011 versus 2010.
Crop Planted Areas 2011
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for these commodities; however the soybean area declined for the second consecutive year as growers switched to these other crops. Crop development in the USA, particularly that of maize, was delayed as a result of the wet weather with the result that crop quality is currently below that of 2010. In Texas cotton production has been depressed by hot dry conditions. In Canada, the planted areas of both wheat and canola rose significantly and while some areas were impacted by flooding, crop production is forecast to be significantly
In Latin America there was an increase in the planted area of a number of key crops, with declines observed in some others. The Argentine soybean area in the 2010/11 season was up by 1.7% however production was down by 4.3% as a result of dry weather during part of the growing season. Over 95% of the crop is planted with glyphosate tolerant varieties however glyphosate prices in the region remained low by historical standards. In Brazil the soybean area increased by 3.0% with the area planted with glyphosate tolerant varieties rising to just over 70%. Overall soybean production in Brazil increased broadly in line with the rise in planted area as yields were maintained at the previous seasons’ level. After soybean, the most important crop is that of maize whose planted area increased by 1.5% with production up by 4.7% reflecting improved yields. Agrochemical use in the Latin American region gained from these higher planted areas as well as the agro economic situation which improved as a result of the higher crop prices.
up on 2010 as growers adopt measures to maximise yields. In the NAFTA region, the proportion of maize, canola, soybean and cotton planted with GM varieties is high, generally in excess of 80% and in some cases 90%, however agrochemical use in the region is believed to have increased reflecting higher planted areas and the improved economic prospects for gowers. Although the price of rice in the latter part of 2010 and the first half of 2011 increased, the rise was much less than observed in other grain commodities. In the developed markets of Japan and Korea, according to USDA data the rice area declined. For exporting countries like Vietnam and Indonesia, the overall planted area of rice also declined; however, in contrast, the area in Thailand is estimated to have increased. In India and China the planted area of rice rose modestly while maize production in China increased. The Indian monsoon season was favourable while in Northern China agrochemical demand was negatively affected by dry weather. In Australia the planted area of wheat declined however production was significantly up reflecting improved rainfall in the Eastern part of the country.
During 2011, the area planted with cereals in the EU 27 countries declined by a modest 0.4%, however the planted area of soft wheat and barley both increased with the area of several other small grain cereals falling. In contrast to the cereal situation, the overall area of grain maize in the EU 27 rose by 7.5% aided by the improved crop price. There was only a very modest increase in the overall planted area of oilseed crops in the EU 27, with a reduction in the oilseed rape area being largely offset by a rise in the planted area of sunflower in Spain, France, Hungary and Romania. Crop cultivation in the EU got off to a good start with an early end to the winter, but was negatively affected by dry conditions with limited rainfall throughout much of the growing season particularly in France, Germany, the Netherlands and parts of the UK. Elsewhere in Europe, grain production in Russia gained from more favourable rainfall compared to 2010, however the overall wheat area fell by 2.3% affected by continuing dryness in the autumn 2010 planting season.
While crop prices rose significantly during the last twelve month period, the same trend was not observed in agrochemical prices with significantly more limited rises reported by companies in their half yearly results. While volume demand increased for glyphosate, prices remained low limiting value growth. For the major companies, one of the factors contributing to value growth was the successful development in the sales of new products, aided in part by the withdrawal of several older products as
In the USA crop planting was influenced by wet weather in a number of states which delayed planting in some areas. The planted areas of maize, wheat and cotton all increased, reflecting favourable prices
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a result of regulatory action in some markets.
analysis in 2010. As a result the expectation for the global crop protection market performance in 2011 is for a significant increase, with much of this growth due to volume rises as well as the success of new products, particularly as agrochemical price movements to date have been limited.
At the regional level the Latin American market was buoyant reflecting higher crop areas and prices. Agrochemical demand in Eastern Europe rose reflecting increased planted areas and improved weather which offset the impact of dry weather in many Western and Northern countries. The Asian agrochemical market in US dollar value also expanded with good growth in the Indian market as well as in Japan where sales increased despite the damage caused by the earthquake and tsunami this year.
Based on the company reports, market growth in the first half has been high in the European region, despite the impact of very dry weather on cereal maturation, with above average growth in East European countries. Similarly Asia has benefited from market development in India, Japan and a number of other countries. While the Latin American 2010/11 season finished strongly, assuming crop prices remain high in the rest of 2011 and early 2012, the Latin American market is expected to increase significantly, tempered by the introduction of glyphosate tolerant maize in Brazil and the expectation of further increase in the GM crop area.
Market Outlook Currently market indicators for the agrochemical market in the first half of 2011 are significantly more positive than that of the same period in 2010. The outlook for the remainder of 2011 is positive, with crop prices being sustained at a relatively high level leading to the expectation of increased crop planting in Latin America in the forthcoming 2011/2012 agricultural season. Weather effects affecting production have resulted in crop prices being sustained leading to expectations of a stronger global agricultural economy in 2012.
In this current year, the planted area of GM crops has again increased leading to a further rise in the value of the sector. Growth of the GM crop market will also have been generated by increased adoption of premium priced stacked maize varieties.The sum of the leading Seed Company sales in the first half of 2011 registered a 13.3% increase over the same period of 2010. The outlook for 2012 is also positive, mainly as a result of the favourable prevailing agroeconomic situation.
Agrochemical sales at the company level have expanded by 15.4% in the first half of this year versus the outcome for the same period in 2010, compared to a 0.9% increase derived from the same
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COMPANY NEWS BASF Expects Plant Protection Sales of EURO 6 Billion by 2020
Note: Details are available in the financial schedules attached to this press release
Chemicals giant BASF SE (BAS.XE) aims to increase sales at its crop protection unit to EUR6 billion by 2020 from EUR4 billion last year, as it expects strong growth in Asia and Latin America, it said Tuesday.
Eric Wintemute, Chairman and CEO of American Vanguard, stated: “We are pleased to report another strong performance for the third quarter that reflects the excellent positioning of our product portfolio, especially our broad range of insecticides. In granular soil insecticides, we continue to expand our international sales penetration with Mocap® and Nemacur®, and we have successfully captured additional business with Thimet® in peanuts and sugarcane replacing a competing product that has been withdrawn from the U.S. market.”
In Asia alone, the German company aims to increase crop protection sales to EUR1 billion by 2020 from EUR400 million in 2010. For 2011, crop protection sales are expected to outpace the market, while earnings before interest and taxes at the unit will likely beat last year's level.
Mr. Wintemute continued: “Recently, we have been seeing considerable interest in our many products for the domestic corn market. In June we announced a significant agreement with Monsanto for the comarketing of our post-emergent corn herbicide Impact® in conjunction with their Roundup® Ready glyphosate program. We are also seeing corn growers show greater interest in the yield enhancement benefits of corn soil insecticides for protection of their crops in areas where pest pressure is not adequately handled by the use of genetic defenses alone. As the supplier with the most complete line of soil insecticide products as well as the closed delivery systems best equipped to dispense them, we are poised to satisfy this growing demand.”
(Source : Dow Jones Newswires)
AMERICAN VANGUARD REPORTS THIRD QUARTER and 9-MONTH 2011 RESULTS Strong Demand for Insecticides Drives Continued Business Growth American Vanguard Corporation (NYSE:AVD), today announced financial results for the third quarter and nine month period ended September 30, 2011. Fiscal 2011 Third Quarter Financial Highlights – versus Fiscal 2010 Third Quarter Performance Net sales improved from $68.3 million to $73.8 million, an increase of 8%
Mr. Wintemute concluded: “Our focus on profitability can be seen in the improvement of our third quarter gross profit margins, from 37% in 2010 to 42% in 2011. Overall our manufacturing operations have experienced higher utilization rates this year resulting in improved coverage of facility fixed costs. We continue to explore the acquisition of appropriately-priced, branded products and our new potato sprout inhibitor SmartBlock® is scheduled to be commercialized during the next 90 days. We are gearing up to take full advantage of the abundant opportunities emerging in domestic corn as well as in other crop markets that favor our extensive offering of granular soil insecticides. Despite the need to overcome some supply constraints in Mocap, and some regulatory constraints with our PCNB fungicide, we are confident that American Vanguard will finish 2011 with a strong financial performance.”
Net income improved from $3.6 million to $4.6 million, an increase of 28% Earnings per diluted share increased from $0.13 to $0.16 Fiscal 2011 Nine Month Financial Highlights – versus Fiscal 2010 Nine Month Performance Net sales improved from $167.1 million to $221.6 million, an increase of 33% Net income improved from $7.1 million to $15.6 million, an increase of 120% Earnings per diluted increased from $0.26 to $0.56 AGROLOOK
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(Source : Press release)
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WORLD NEWS every year. In Q1-Q3 2011, China has accumulatively exported 594,200 tonnes of pesticides, consisting of 158,100 tonnes of insecticides, 377,200 tonnes of fungicides and 58,900 tonnes of herbicides.
CHINA Domestic Pesticide Industry Continues Downturn The recovery of domestic pesticide industry has not been realized yet. Overcapacity is still the main reason to drag domestic pesticide industry in downturn.
Adding up the pesticide amount consumed by domestic market and the export volume, a large amount of pesticides remain in dull sale condition. Aiming to maximize interests and further seize the market share, most of domestic pesticide companies still have the competitive ability to expand the capacity of their products. So far, some pesticides, such as glyphosate, imidacloprid, abamectin and acetochlor, have suffered from serious overcapacity in China.
According to the data from National Bureau of Statistics, China's pesticide output reached 1.92 million tonnes in Q1-Q3 2011, up 15.7% compared with that at the same period last year. Pesticide output in the whole year of 2011 is predicted to reach about 2.5 million tonnes and domestic demand may reach 308,000 tonnes, based on CCM’s latest issue of Crop Protection China News.
Glyphosate, an effective herbicide but with tragic destiny in China, is always mentioned when talking about pesticide overcapacity in China. Domestic glyphosate capacity reaches over 720,000t/a in 2011, but the output is predicted to be 300,000 tonnes to 350,000 tonnes. With dim consumption capability in oversea market and low consumption amount in domestic market, downturn of domestic glyphosate industry continues in 2011. Performance of some main glyphosate manufacturers in China mirrored the downturn in Q1-Q3 2011, such as Nantong Jiangshan Agrochemical & Chemicals Co., Ltd. and Anhui Huaxing Chemical Industry Co., Ltd.
Although the amount of pesticide output and sales volume in 2011 is predicted to increase to a certain extent, domestic pesticide industry still seems to be trapped in downturn. According to the 2011 Q3 financial reports of all the listed pesticide companies in China, including 20 listed companies that mainly engaged in pesticide production and sales, total revenue of these companies reached USD4.07 billion in Q1-Q3 2011, up 24.07% compared with that at the same period last year. However, the net profit in this period on the other side witnessed slide, reaching USD100.66 million, down 32.28% over Q1-Q3 2010.
Acetochlor, a herbicide used in large dry farmland, also faces overcapacity this year. Its total capacity reaches 140,000t/a in 2011, but only 10,000 tonnes and 20,000 tonnes are consumed in domestic market and oversea market respectively.
Overcapacity is still considered to be the main reason for the downturn of domestic pesticide industry. At the beginning of 2011, although insiders have ever predicted that domestic pesticide industry may recover in 2011 due to the prediction of price increase of raw materials, the intense competition and lagging price increase of pesticides have made the industry remain in downturn.
Business of products like imidacloprid and abamectin are even more difficult in China in 2011. Serious product homogenization, overcapacity and impact from foreign products such as chlorantraniliprole have made enterprises face even larger pressure. At present, pesticide export is still considered to be an efficient way to ease the overcapacity pressure in China. However, fundamental problems can't be solved by only depending on pesticide export. As more and more high-level pesticides with low toxicity
Domestic pesticide output gradually has surged in recent years, but the domestic demand accounts for merely 1/8 of the total output. As an export-oriented country in pesticide industry, China has a large amount of pesticides exported to oversea market AGROLOOK
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and residue, and improved pesticide effect developed by foreign pesticide giants, the pesticide demand in oversea market will indirectly decrease. Cracking down and standardizing the chaotic pesticide industry, leading to orderly production, more investment in new pesticide R&D, etc. are considered to be good ways to ease the downturn in domestic pesticide industry. Unfortunately, it is more easier said than done, and serious overcapacity in China may still continue in the next few years.
The UK must safeguard its global leadership in plant science research to help address major challenges of food security and economic growth. That was the key message delivered by Dominic Dyer, chief executive of the Crop Protection Association (UK), on a recent visit to the John Innes Centre in Norwich. “We cannot afford to be complacent about the food security threat in the UK,” he said. “As a nation we are only 55% self-sufficient in food production, yet the population is forecast to increase by some 10 million over the next 20 years. With crop yields flat-lining and food prices rocketing, the UK must take action to optimise its agricultural productivity, through access to the most advanced farming technologies and continued investment in productive agricultural research.”
(Source: Crop Protection China News 1123)
UK Scrutiny and policing of products at Crop World 2011 At the 2011 Crop World Global Congress and Exhibition, held at London’s ExCel Exhibition Centre from 31 October to 2 November, the European Crop Protection Association, with the co-operation of the event organisers, undertook careful scrutiny and policing of the products on offer by exhibitors.
Mr Dyer praised the efforts of scientists at the John Innes Centre to explain their research and engage proactively with members of the public. Highlighting the findings of recent research conducted for the Crop Protection Association, he said there were clear indications that rising food prices and increased awareness of the global food security threat meant consumers were more willing to embrace science in food production.
As has been the case in previous years, the group prevented a number of exhibitors from advertising patented products and infringing UK patent law. Attempts to infringe UK patent law were stopped and unlawful material confiscated. In cases where the Exhibitor persistently attempted to infringe UK patent law and the Exhibition’s Terms and Conditions, the Exhibitor was removed from the exhibition and the stand was closed.
But he warned that public funding of research at the UK’s leading plant science institutes must be maintained or key opportunities to improve the productivity, climate resilience and resource-use efficiency of major food crops would be lost, alongside prospects for much-needed economic growth in UK agriculture, food production and technology-based exports.
ECPA will continue to work with the organisers to show vigilance at future events and shall exercise their full legal rights to protect the intellectual property of companies.
“Recent reports of cut-backs at leading research centres such as Rothamsted and the John Innes Centre are directly at odds with the Government’s commitment to ring-fence the science budget. A reduction in staff and research activities will compromise the UK’s ability to deliver on the ‘sustainable intensification’ of agriculture called for in the recent Royal Society and Foresight reports,” he said.
“It is unfortunate that this action has been necessary but ECPA will continue to take all necessary measures in order to ensure that intellectual property of companies is properly protected”, said Dr Friedhelm Schmider, ECPA Director General. (Source : BCPC News)
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The study estimates a contribution of 8.7% to wheat production in France, 6.8% in the UK and 5.0% in Denmark respectively. “The notion that we have to choose between food security and ecosystem health is being challenged more and more often by agronomists, conservationists and economists alike, as they look carefully at the food production and environmental challenges ahead,” said Friedhelm Schmider, Director General of the European Crop Protection Association (ECPA). “In fact, you can't have one without the other and the use of technologies like advanced crop protection chemistry, enable you to have both.”
Any short-term cuts in research expenditure would prove a false economy, with damaging effects not only for agricultural competitiveness, but also for jobs, growth and wealth creation within the rest of the food supply chain, he warned. “UK research institutes are at the cutting edge of a rapidly advancing knowledge-base in food and agricultural science. Continued investment in these sectors, including targeted support for translational research to ensure advances in basic science feed through to on-farm innovation, will be a driving force for economic growth and prosperity,” said Mr Dyer.
Concentrating on the food security challenge, Schmider pointed out that, “Harvest gains of the scale indicated by the report have a significant positive impact on European food prices and availability, as well as reducing Europe’s excessive dependency on imports.”
“In the UK alone, the plant science sector underpins a food supply chain worth more than £85 billion and employing over 3.5 million people. But without continued access to new technology and innovation, the UK risks losing out to competition from emerging economies such Brazil, China and India, whose Governments are investing heavily in agricultural research.”
“Given the competitive advantage Europe enjoys in wheat production, this is a very desirable situation. We will need even more innovation in crop protection chemistry and the widespread adoption of advanced farm management practices, if we are to make European agriculture more productive and sustainable.”
(Source : Corp Protection Association, UK)
Triazole treatments protect wheat yields across Europe
The report emphasizes the crucial role of triazoles in overcoming the resistance of fungal diseases to other crop protection treatments. According to Schmider, disease resistance in food crops works in the same way that humans develop bacterial resistance to antibiotics. “Resistance is evolution in action… in response we need a wide variety of crop protection chemistry and management practices, otherwise fungal diseases will overwhelm our crops. The triazole family has provided this broader spectrum of activity and their contribution is clearly evident in our harvests, but new solutions will be required over time. Using a wide variety of active ingredients separately or in combination is the answer.”
Developments in the way farmers battle the constant threat of fungus infestation of our food supply were highlighted at the European Parliament. A new study (embedded below) shows that the triazole family of chemistry has contributed significantly to the sustainability of Europe’s wheat supply and the management of pest resistance. The research, conducted by the leading UK environmental consultancy ADAS, found that triazole fungicides add up to 8.7% to the wheat harvest directly and an additional 10-15% thanks to their role in combatting fungal resistance over time. The triazoles make an important contribution to most types of fungus control – even commonly used in human medicinal applications. They are the key means of protecting European harvests from Septoria tritici, the most destructive fungus attacking wheat, and for fungal diseases affecting a wide range of fruits, vegetables and other crops. AGROLOOK
“The crop science industry is committed to innovation and the development of farm management practices that ensure Europe can enjoy fungus-free food and the sustainable increase of agricultural productivity.” (Source : ECPA)
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