AGROCHEMICALS MARKET ANALYSIS

Global agrochemicals market was valued at US$ 81.27 Bn in 2023, and is expected to reach a value of US$ 123.83 Bn by 2030 at a CAGR of 6.2% between 2023 and 2030.

Global Agrochemicals Market- Drivers

• Rising global population and increasing food demand: Rising global population and increasing food demand is a major driver for the global agrochemicals market. According to the United Nations July 2023 data, the world population is projected to reach around 9.7 billion by 2050, up from 8 billion in 2022. This population growth, combined with rising incomes and urbanization, is increasing demand for food globally. To meet the food demand of the growing population, agricultural productivity needs to increase. Agrochemicals like fertilizers, pesticides, and insecticides plays a crucial role in increasing crop yields and agricultural productivity. Fertilizers help to replace the nutrients in the soil required for plant growth that gets depleted due to repeated cultivation. Pesticides protect crops from weeds, fungi, and insects that can significantly reduce yields. As the world needs to produce more food for the growing population, the demand for agrochemical products is expected to increase globally. The agrochemicals market growth is further supported by the limited availability of the arable land. With land scarcity, existing farmland needs to be optimized through agrochemicals, in order to improve productivity. Therefore, rising global population, growing food demand, and land constraints make the increasing use of agrochemicals essential, thus driving growth in the global agrochemicals market.
• Need for improving agricultural efficiency and crop protection: Another key driver for the global agrochemicals market is the continuous need for improving agricultural efficiency and crop protection from pests, weeds, and diseases. As per the UN Food and Agriculture Organization June 2021 data, up to 40% of global crop yields are lost to pests and diseases every year. Weeds alone can reduce crop yields by almost 34%. Agrochemical products like herbicides, fungicides, and insecticides play a vital role in controlling these yield losses and protecting crops. With climate change, crop stresses like drought, heat, cold, and salinity are increasing, and thus, affecting yields of the crops. Agrochemicals can help to make crops more resilient to climate change impacts. Regions with tropical climates also witness higher incidents of insect attacks, fungal diseases, and weed growth, thus, boosting demand for pesticides and other crop protection chemicals. Further, reducing seed replacement rates, lack of crop rotations, reduced fallow periods, and continuous cropping of the same land leads to deterioration in soil health and emergence of resistant weeds/pests. This increases the need for agrochemicals like insecticides with different modes of action and advanced fertilizer products to replenish soil nutrients. With the growing need to protect crops from biotic and abiotic stresses and ensure soil health, agrochemical products remain essential for sustainable agriculture. Demand for agrochemicals is also driven by the rising shift towards high-value horticulture crops that require greater plant protection. Therefore, the continuous requirement for improving agricultural efficiency and crop protection against evolving pest, disease, and weed threats is a key factor driving growth in the global agrochemicals market.

Analyst Viewpoint

• Global agrochemicals market presents significant growth opportunities due to population growth, decreasing arable land, and the need to improve agricultural productivity and output. However, the market also faces challenges that need to be addressed. 
• One of the key drivers is the growing global population, which is estimated to reach 9.7 billion by 2050 (United Nations 2023 data). This will drive the market for maintaining and increasing crop yields to meet rising food demand. Secondly, arable land is decreasing globally due to soil degradation, urbanization, and climate change effects. Agrochemicals can help to maximize yields in the available cultivable areas.
• The demand for high-value crops such as fruits and vegetables is rising. This requires greater and more judicious use of agrochemicals like pesticides and fertilizers to obtain higher yields while maintaining food safety and quality standards.
• However, agrochemical overuse leads to environmental issues like soil and water contamination. Regulatory pressures on safety and sustainable agriculture practice adoption are increasing. The industry needs to innovate and promote precision organic farming solutions.
• The Asia Pacific is anticipated to be the fastest growing market, led by populous countries like China and India. Latin America is another high-potential region where agrochemical adoption is increasing.

Global Agrochemicals Market Opportunities:

• Rising production of sustainable agricultural products: Rising production of sustainable bio-based agricultural products is expected to drive the market growth over the forecast period. Due to the toxic ingredients contained in the chemicals agricultural products, their pollution levels are so high that these cause serious and, most of the time, fatal effects to the environment. Most biological products occur naturally, which reduces the cost of production, resulting in relatively cheaper prices compared to chemical pesticides, whose manufacturing cost is high. Records have shown that pests tend to become resistant to conventional pesticides, thus proving, that it is not a long-term solution, on the other hand, the use of organic pesticides and fertilizers offer long term solutions. For instance, in August 2022, Bayer AG (Germany-based Agricultural seeds and chemicals maker) launched a digital farming platform to help U.S. growers enact environmentally friendly practices and connect them with companies seeking sustainable products.

• Shrinking arable land area: The shrinking amount of arable land available for food production is a major factor driving growth in the global agrochemicals market. As the global population continues to grow, there is increasing pressure on the world's finite supply of cropland. According to UN 2021 data, the amount of arable land per person worldwide has declined steadily from 0.39 hectares in 1960 to only 0.22 hectares in 2020. This is expected to continue as the population grows to a projected 9.7 billion by 2050. As the imbalance between population and arable land persists, agrochemicals will continue to play a crucial role in closing crop yield gaps. Companies in the agrochemical sector are likely to see sustained growth and investment as the need for land-saving technologies and yield-enhancing inputs increases.

Global Agrochemicals Market Trends:

• Increasing awareness regarding effects of synthetic agrochemicals: Eco-friendly bio-agrochemicals are the leading market trend nowadays. Associated toxic effects of synthetic agrochemicals are making space for the biological agrochemicals to enter into modern agriculture in recent years. Bio pesticides, such as canola oil and baking soda, are largely used by farmers to inhibit pest growth without any ecological adversity. Additionally, advancement in modern agronomy has led to the innovation of agrochemicals from several soil-borne pathogens, fungi, and bacteria to promote natural growth and high productivity in plants.

Global Agrochemicals Market Restraints:

• Stringent regulations governing the production and marketing of agrochemical products: The stringent regulations can have a negative impact on the global agrochemicals market in several ways. Regulations increase the cost of developing and producing agrochemicals, which leads to higher prices for consumers. Strict regulations can discourage innovation in the agrochemical industry, as companies may be hesitant to invest in research and development if they believe that their products will not be approved. For instance, in 2022, according to the data released by Heinrich-boll-stiftung European Union, amongst the top 10 most commonly used pesticides in Brazil, four have lost their authorization in the European Union.
• Counterbalance: Regulations laid out by the governments need to be a little flexible in allowing the market players to produce the agrochemicals at a more reasonable price.

COVID -19 Impact on Global Agrochemicals Market 

• The COVID-19 had negative impact on the global agrochemicals market's production and supply. The global pandemic affected the operation of several businesses around the world, including the agrochemicals market. In terms of supply, a short-term labor shortage combined with distribution obstacles resulted in a large difference between the number of workers necessary for agrochemical manufacturing. Crop productivity also declined due to lack of laborers in large-scale plantations, and thus reducing demand for agrochemicals during the pandemic.

Global Agrochemicals Market: Regional Insights

• Based on region the global agrochemicals market is segmented into North America, Latin America, Europe, Asia Pacific, and Middle East & Africa.
• Among region, North American region is the dominant region  with 31.40% market share in the global agrochemicals market. This region consists of the U.S and Canada, which have highly advanced agricultural industries. The large presence of commercial farms and technological innovations boosts demand for agrochemicals. For example, in March 2022, according to the U.S. Department of Agriculture, several new pesticide products were registered for use on major crops like corn, soybeans, and cotton. The widespread adoption of genetically modified seeds also supports sales of herbicides. The presence of major agrochemical companies like BASF, Bayer, Corteva Agriscience, FMC, and Syngenta provides easy access to the latest products. These multinational corporations have research facilities in the region developing new solutions. Overall, the combination of advanced farming practices, innovative product development, and intensive commercial productions make North America the dominant regional market for agrochemicals globally. 
• The Asia Pacific region is the fastest growing market for agrochemicals, led by countries like China, India and Australia. Large populations and growing incomes boosts demand for more agricultural output. For instance, in May 2021, according to the Reserve Bank of India (RBI), food prices rises 5.5% year-over-year, indicating robust food demand. This results in increased pesticide and fertilizer usage to improve crop yields. Furthermore, many Asia Pacific countries have policies supporting agricultural development. For instance, in 2020, the Indian government launched the Aatmanirbhar Bharat Abhiyan economic package, which included substantial programs for strengthening farming infrastructure and expanding credit access. Such effortscan boost the rural economy indirectly support agrochemical sales. Rapidly growing middle class populations and increasing meat consumption boosts demand for animal feed, and thereby creating demand for herbicides, fungicides, and other products. With its huge population, growing economy and supportive policies, Asia Pacific presents the highest growth opportunity for agrochemical companies looking to expand globally.

Figure 1. Global Agrochemicals Market, By Region

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Global Agrochemicals Market Segmentation:

Global agrochemicals market is segmented into origin, product type, crop type, application, and region.

• Based on product type, the market is segmented into insecticides, fungicides, herbicides, and others (rodenticides, and others). Out of which, the herbicides segment has major share in the global agrochemicals market due to rapid adoption of herbicide-tolerant genetically modified (GM) crops worldwide. GM crops with herbicide tolerance allow the use of broad-spectrum herbicides for weed control without injuring the crop.

Figure 2 : Global Agrochemicals, By Product Type

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• On the basis of product type, in 2022, the herbicides segment accounted for 43.50% of the revenue share. The herbicides segment dominated the  global agrochemicals market in the year 2022 and is expected to continue its dominance over the forecast period. Herbicides are used in fields to kill the wild plants keeping the crops unharmed. Apart from eliminating weeds, use of herbicide reduces erosion, reduces fuel use, reduces greenhouse gas emissions, reduces nutrient runoff, and conserves water.                                              

Global Agrochemicals Market: Key Companies Insights

• Global agrochemicals market is highly competitive. This is attributed to the focus of governments on agriculture policies; as a result of which the market players are focusing on launching new products in the market.
• Some of the key players in the global agrochemicals market are:
• ADAMA Ltd., Arysta Life Science, Bayer AG, Isagro Spa, K+S Aktiengesellschaft, Nufarm, Nutrien Ltd, OCI Nitrogen, Sociedad Quimica Y Minera De Chile, and The Mosaic Company.

Global Agrochemicals Market: Key Developments

• In February 2023, Best Agrolife (BAL), a India-based agrochemical manufacturer, launched six new formulations – Amito, Promos, Propique, Ghotu, Doddy, and Headshot along with their star products Citigen and Vistara.
• In March 2022, AgFarm, a Dubai- based agrochemical startup which aims to revolutionize the agricultural world, digitally launched the platform in India to allow the buyers to access and buy agro-inputs online.             

*Definition: Agrochemicals, also known as agricultural chemicals, are substances or chemical products that are used in agriculture, in order to enhance crop productivity and protect crops from pests, diseases, and weeds. These play a crucial role in improving crop yields and sustaining food and fiber production.