Harvesting the Profits - A Bumper Year for U.S. Crop Protection Manufacturers

PARSIPPANY, NJ,JUNE 19,2012- Strong commodity demand helped power 2011 U.S. crop protection sales to an 8.3% increase over the previous year, resulting in a $7.1 billion market, according to Kline’s imminent Crop Protection Manufacturers Report: A Strategic Market Analysis of the U.S. Crop Protection Industry.

While sales for generic manufacturers increased 7.6% in 2011, their market share fell slightly as major research-based manufacturers pursued aggressive marketing strategies. Both generic and major research manufacturers are introducing new products containing multiple modes of action, which are pulling prices up and placing pressure on off-patent brands containing straight active ingredients.

The start of the 2011 year was defined by low crop inventories along with high soft commodity prices, which drove planted acres of major crops by almost 7 million acres over 2010. A cold, wet spring delayed planting schedules for most growers in the United States, which contributed to increased sales of seed treatment. Despite the unfavorable weather, corn planted acres exceeded 90 million acres for the second time in history. All segments of the crop protection industry saw increased sales over 2010, with seed treatment and fungicide segments seeing double-digit percentage gains.

High commodity prices and profit per acres potential drove fungicide applications during the year. Fungicides are primarily a crop-driven market that drives yield; during increased wealth and economic conditions, the industry generally sees more fungicide usage. Growers tend to be more willing to invest in their crops and apply fungicides even in situations with less disease pressure.

Weed resistance continued to be a concern within the U.S. crop protection industry. The challenge of controlling herbicide resistant weeds has increased significantly and growers are relying to a greater extent on pre-emergent herbicides. The magnitude of the problem is reflected by over 20 herbicide mechanisms of action and the utilization of these herbicides resulting in the evolution of weeds that no longer respond to those herbicides. Moreover, the number of glyphosate resistant weeds in the United States went from zero in 1996 to eleven in 2011. Consequently, the industry has seen an increase in pre-emergent herbicide use, especially in soybeans where many growers have previously been reluctant to invest in the additional outlay.

Although Bacillus thuringiensis (Bt) traits in corn have increased the convenience of insect control for growers, there is an increasing number of reports of corn rootworm (CRW) seed trait performance failures. Growers are looking at new and different solutions to control corn rootworms and other secondary pests. As a result, ag retailers have seen an increased interest in soil insecticides as a tool for corn production and economic returns. Every grower wants to maximize yield on every acre they plant and corn soil insecticides target a second line of defense for possible CRW trait performance failures within Bt-resistance corn.

Kline’s Crop Protection Manufacturers Report: A Strategic Market Analysis of the U.S. Crop Protection Industry covers the 2011 marketing year for manufacturers in the U.S. crop protection industry. The study provides reliable company and chemical product sales information along with a strategic assessment of the impact of trends shaping the industry.

About Kline
Kline & Company is a worldwide consulting and research firm dedicated to providing the kind of insight and knowledge that helps companies find a clear path to success. The firm has served the management consulting and market research needs of organizations in the chemicals, materials, energy, life sciences, and consumer products industries for over 50 years. For more information, visit www.KlineGroup.com.

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