Pesticide market update
By Blair Andrews
As other business sectors struggle in the wake of the economic downturn of late 2008, the pesticide market is booming.
|High weed pressure is the primary concern for growers using herbicide, but drought, and other environmental factors in other parts of the world, will drive demand as well.
As other business sectors struggle in the wake of the economic downturn of late 2008, the pesticide market is booming. A report from market research publisher Specialists in Business Information (SBI) shows just how strong the crop protection market has been through much of 2008. SBI estimates the global pesticide market surged 29 percent over the 2007 level of $40.7 billion (all figures in US dollars) to $52.4 billion, a record increase that came at a time when a global financial crisis was in full swing. Despite the economic instability and increased pressure from environmentalists and the media, forecasts for the pesticide industry are calling for double-digit growth for several years after 2009.
In his assessment of the pesticide market, Peter MacLeod, vice-president of the chemistry division of CropLife Canada, (the industry trade association) says the crop input industries are being driven by the success of agriculture. “Agriculture is facing the huge challenge of feeding a growing world population, compounded by the fact the new middle class in developing countries like China and India has been creating a higher demand for meat products,” explains MacLeod. “They want to go from a starch-based diet to adding more meats into their diet. This compounds the demand effect for feed grains in livestock production. There’s certainly an increase in demand for food and feed globally.”
Food and feed demand is only part of the story. MacLeod says there is also the bio-products industry that uses crops like corn and soybeans to make a host of renewable products. “So there’s demand coming from all sides as well as the traditional food market to meet the world’s growing population. We’re talking 9.5 to 10 billion people by 2050. That’s a real challenge,” says MacLeod, referring to population estimates from the Food and Agriculture Organization of the United Nations.
Weather playing role in demand
The need to feed to this population that is growing in both size and affluence presents agriculture and related industries with some solid market fundamentals. Despite increasing concern regarding pesticide use, Dr. Gord Surgeoner, president of Ontario Agri-Food Technologies (OAFT), agrees with the strong outlooks for the pesticide market. In addition to the need to provide food, Dr. Surgeoner says weather conditions will also play a role in the demand for pesticide products. “I do see a fair bit of drought impact in the southern hemisphere in places like China, Australia and Argentina. We will need pesticides because of the large acreages we will handle. The use pattern depends to some degree on weather, but we absolutely need these products.”
OAFT is a non-profit organization comprised of members from grower associations, universities, industry and governments. It focuses on ensuring Ontario producers have access to the latest technologies.
MacLeod expects that the growth in the North American market will be lower than in other parts of the world. Echoing Surgeoner’s comments, he notes that the pesticide industry responds to demand, especially if there is a pest outbreak. In general terms, he is of the opinion that the market will be steady in the European Union, there will be growth in North America in the range of three to five percent and the growth in parts of Asia and South America could likely double the North American figures in the coming years. “It depends on the areas that are increasing production right now in Asia and South America,” says MacLeod, adding that a lot will depend on how well agriculture will perform. He notes commodity prices will impact on the crop protection industry. “When things are in low ebb, farmers are still going to use these pest management tools, but perhaps using different types such as lower cost weed control and accepting a higher level of insect or disease damage when crop prices are low.”
Chemical industry complements biotech innovations
As for the conventional industry moving forward under more pressure from the “eco-movement” and the media, MacLeod says the continued emphasis on innovation and sustainability will continue to be key parts of the strategy. “There’s a real crunch in meeting that challenge in feeding the growing population without converting more land into farming. So we need to be more productive per hectare. We don’t want forests, wetlands or natural protected areas converted into farmland.”
MacLeod says the drive for productivity boosts the demand for pest control technology as well as biotechnology. He cites the work on developing more drought-tolerant crops and more saline-tolerant crops as examples of increasing the productivity of the current land base as well as turning marginal land into productive farmland.
Surgeoner adds that innovation and the drive for better productivity also have led to a significant reduction in the volumes of pesticides used by Canadian farmers. This reduction, he says, should not be overlooked in the debate concerning pesticide use. “The management of pesticides is far better today than it was even 10 years ago,” notes Surgeoner. “The idea that we all need to have a license in order to apply these is very critical for the good will for society at large.”
Lack of science hurts pesticide ban
Debate concerning pesticides is heating up in Ontario, fueled by a ban of cosmetic pesticides that goes into effect on April 22, 2009. The agriculture and forestry industries are exempt but this has not eased concerns that they could be next on the list. The ban prohibits the sale and use of pesticides for cosmetic purposes on lawns, gardens, parks and school yards, and includes many herbicides, fungicides and insecticides. More than 250 products will be banned for sale and more than 80 pesticide ingredients will be banned for cosmetic uses. While the pesticide industry continues to speak out against the ban, Surgeoner adds that innovation will drive the development of alternative products. “I think you’re going to see people respond to the lack of control. I have all kinds of neighbours asking where they can get glyphosate because weeds are all over the place in their stone driveway. So I think you are going to see some innovative products come down the pipeline that will be used in urban environments.”
As the debate evolves Surgeoner would like to see some evidence that cosmetic pesticide bans have the desired effect of reducing cancer rates and other health problems, particularly in children, by limiting the exposure to the chemicals. “If we are going to go to this giant experiment of banning these things in urban in environments, let’s start the epidemiology studies now,” says Surgeoner. “If we look at cancer rates of children before and after, is there any difference? I don’t see anybody setting up the programs to evaluate if this had any impact on human health. I think that should be done given the amount of change that it is causing.”
Surgeoner also says consumers have to be reassured that pesticides are rigorously tested and evaluated by Health Canada, and that products are also used to ensure a safe food supply. “They have been shown not to represent unacceptable risks to human health and the environment. And many higher risk compounds like molds will develop if we do not have these kinds of chemistry.” And while farmers are exempt from the legislation, Surgeoner encourages them, for their own interests, to get involved in the discussion. “Farmers use these products every day. They know the value of them and they understand that they cannot compete globally if they don’t have these products.”