The Global Crop Protection Market

1
The Global Crop Protection Market Industry
Prospects Presentation at the CPDA
Conference Salt Lake City Monday 17th July 2006
Phillips McDougall Vineyard Business
Centre Saughland Pathhead Midlothian EH37 5XP Tel
01875 320611 phillipsmcdougall_at_dial.pipex.com
2
Market Performance 2005 (Distributor level
average exchange rates - Nominal US)
Agrochemicals 36,095 2.0
Seed 19,752 4.0
3
Market Development Since 1994
4
Regional Crop Protection Market Development
5
Crop Protection Market 2005
World Market in 2005 31,190 m., 1.5 on 2004
Europe 29.2 of total Prolonged Winter in the
North Very Dry weather in the South Single Farm
Payment EU Expansion Increase in set-aside
rate Reduction in wheat and maize areas Lower
agrochemical inventories
NAFTA 25.0 of total Strong Farm Economy Weak
Dollar at start of season Increase in
agrochemical and trait prices Dry conditions in
Central USA Glyphosate price weakness Increase in
GM area Asian Soybean Rust
Asia 24.8 of total Reduced rice area in Japan
and Korea Improving agricultural economies in
developing countries Further GM uptake in China
and India Drought in Australia, Vietnam and
Thailand Cotton insect pressure in India low Late
but severe monsoon in India Investment in grains
in China Australian wheat planted area down
Latin America 17.1 of total Improving
Agricultural economies Increased GM uptake in
Brazil Drought in South Brazil Drought affects
Argentine cereal planting Growth in Developing
countries Strength of the Real
Africa / Middle East 3.9 of total Economic and
Political uncertainty Infrastructure
requirements Growth in specialty crop markets Low
cotton prices depressed market
Growth Markets
Growth Markets
Static to Slow Growth
Static to Decline
Static to Slow Growth
Static to Decline
6
Crop Protection Market Real Growth 1990-2005
US glyphosate price fall Improved Crop
Prices Drought Recovery in Europe, 5
set-aside LAM Recovery / Soybean Rust in
Brazil Excellent Ag year in the USA
El Nino Freedom to Farm GATT
Change
6.0
4.7
4.3
3.7
4.0
2.2
2.1
EU CAP Reform
2.0
Drought in N Europe
0.1
0.0
-0.5
-0.5
-1.0
-2.0
-1.6
-1.6
-2.5
-3.0
-4.0
GM Crops Weak Crop Commodity Prices Reduced
Support LAM / Asian Economies Weak
GM Crop Expansion Weaker Commodity Prices
Drought in Brazil / S Europe Energy Prices
Brazilian economy
-5.0
-6.0
-5.7
-6.8
-8.0
1990
1991
1992
1993
1994
1995
1996
1997
1998
1999
2000
2001
2002
2003
2004
2005
7
2006 Outlook
8
Company Agrochemical Sales
9
Planting Intentions Change in Area ()
10
Crop Protection Market Outlook 2006
Europe Prolonged winter in the North Drought
recovery in South Europe Single Farm Payment EU
Expansion Shift in Market to new EU member states
Reduction in sugarbeet area
NAFTA Weaker Farm Economy Strengthening of US
Dollar Drought recovery in Central USA Glyphosate
price weakness Increase in GM area Asian Soybean
Rust Corn for ethanol Energy costs
Asia Reduced rice area in Japan and
Korea Increase GM area in China and
India Opportunity for recovery due to improved
weather in India, Vietnam and Thailand Investment
in grains in China Australian wheat planted area
stable
Latin America Improving Agricultural
economies Increased GM uptake in Region Drought
continuing in Brazil Increase in Argentinean
soybean area Growth in Developing
countries Strength of the Real Increase in use of
sugarcane for bioethanol
Africa / Middle East Continued economic and
Political problems Infrastructure
requirements Development of specialty crop
markets for export Cotton prices improving
11
Key Factors 2006
12
Agrochemical Market Outlook Longer Term Factors
13
Energy Costs
14
Breakdown of US Farm Operating Costs
Source USDA
15
Crop Commodity Prices and Farm Incomes
16
Real Growth of Crop Protection Market v US Wheat
Price
Real Growth US Wheat Price (/bu)
US Wheat Price (/bu)
6
4
2
0
-2
-4
-6
-8
1989
1990
1991
1992
1993
1994
1995
1996
1997
1998
1999
2000
2001
2002
2003
2004
2005
17
Commodity Prices 1998-2005
18
USDA Global Production/Inventory Expectations
(Tonnes million)
19
US Grain Stocks (Millions of bushels)
Source USDA
Maize stocks held on farm down 4.6, off farm up
8.3
20
Bio Fuels
21
Bio Fuel Production
22
Bio Fuel Production
23
Sugar Short Term Prospects
Europe Beet 4.0m.ha.
USA Beet 0.5m.ha. Cane 0.4m.ha.
China Beet 0.2 m.ha. Cane 1.3 m.ha.
Mexico Cane 0.6 m.ha.
Thailand Cane 1.1 m.ha.
India Cane 3.8 m.ha.
Australia Cane 0.4 m.ha.
Brazil Cane 5.8 m.ha.

• Key Factors
• Europe accounts for 81 of Beet Agchem market
• Americas account for 82 of Cane Agchem market
• Prices increasing due to decreased 2005
  production
• No current impact of GM
• End of EU sugar price support
• End of enhanced import prices to preferred
  countries
• Expansion of the EU
• Sugar for ethanol in Brazil

24
GM Crops and Seed
25
Market Development Since 1995
Widestrike Cotton
RR/Bollgard II Cotton LL Cotton
Herculex I Maize Corn Rootworm Maize Bollgard II
Cotton
RR/YieldGard Maize
LL Maize, RR Cotton YieldGard Maize RR/Bollgard
Cotton
RR Maize
LL Canola RR Canola RR Soybean Bollgard Cotton
IMI Maize STS Soybean
26
GM Seed Market by Trait
27
Proportion of Crops Planted with GM Varieties
Rest 5.5
NAFTA 78.5
Canada Canola 92.3 USA Soybean 93.2 Maize
68.1 Cotton 81.9
China Introduced 2000 Cotton 32.0
Argentina Introduced 1997/8 Soybean gt99
India Introduced 2002 Cotton 30.2
Brazil Introduced 2004 Soybean 21.7
Lat Am 16.0
Total 222.4 million acres (10.2 over 2004)
28

Soybean Short Term Prospects
NAFTA Soybean 74.3 million acres RR Soybean 72.6
m. acres (97.7)
Canada 2.9 m. acres
USA 71.2 m. acres
LAM Soybean 99.1 million acres RR Soybean 50.7 m.
acres (51.1)

• Key Factors
• RR area approaching maturity in US and
  Argentina
• Increasing RR uptake in Brazil
• Acres increasing lower cost of inputs than
  maize
• Prices improving due to 2005 US drought
• Threat of Asian rust in the USA
• Increased 2005/6 area in Argentina, decrease in
  Brazil
• Lower fertiliser usage than maize
• Platform for output traits
• Limited market outside the Americas

Paraguay 4.8 m. acres
Brazil 56.6 m. acres
Argentina 34.7 m. acres
Countries denoted in blue grow only limited
quantities of soybean
29
Maize Short Term Prospects
NAFTA Maize 96.8 million acres HT/IR Maize 56.3
million acres (58.2)
USA 74.3 m. acres
Mexico 19.8 m. acres

• Key Factors
• RR area in the US increasing
• stack with ECB and rootworm traits
• removal of trade restriction with the EU
• Potential for GM in Latin America, especially
  Brazil
• Prices improving due to 2005 US drought
• Increasing usage in US for ethanol production
• Higher fertiliser cost than soybeans
• Americas account for 67 of global Agchem
  market
• Shift to grain production in China
• 2005/6 are up in Brazil, down in Argentina
• US area down in 2006

LAM Maize 47.9 million acres HT/IR Maize Area 4.3
million acres (9.0)
Brazil 28.3 m. acres
Argentina 6.8 m. acres
Countries denoted in blue grow only limited
quantities of maize
30
Cotton Short Term Prospects
NAFTA Cotton 13.8 million acres HT/IR
Cotton 11.7 million acres (84.8)
USA 13.7 m. acres
Brazil 3.1 m. acres
LAM Cotton 5.3 million acres HT/IR Cotton 0.3
million acres (5.7)
China 12.6 m. acres

• Key Factors
• RR area approaching maturity in US
• Number of competing glyphosate tolerance traits
• Cash crop very sensitive to market prices
• 2003 price recovery killed by increased
  production
• 2005 US area increase, grown for subsidy
• Stacked varieties increase GM area
• RR Flex likely to increase GM area
• NAFTA / LAM / Asia, 79.4 of Agchem market
• US Farm Act

Asia Cotton 44.6 million acres HT/IR Cotton
11.4 million acres (25.6)
India 22.5 m. acres
Australia 0.7 m. acres
Countries denoted in blue grow negligible or very
limited quantities of cotton
31
Industry Structure and RD Focus
32
Crop Protection Company Market Shares

33
Agrochemical Company Sales 2005
m.
34
Agrochemical Company Sales Growth (2000 to 2005)
per annum
Small to medium sized companies amongst the
fastest growing
Note Syngenta not in above as only began
trading in late 2000
35
Moves by Major Generic Companies
36
Company Sales and RD Expenditure 2005
Sales (m.)
Chemical Crop Protection
Seeds / Biotechnology
RD (m.)
37
Product Introductions and RD Products
Introduced 1980-2005
Currently in RD
Bayer
54
7
Syngenta
55
3
BASF
33
7
Dow
29
4
Sumitomo
28
2
DuPont
18
1
Monsanto
3
0
Other Japanese
78
20
Rest
19
7
Total
317
49
In co-development with other companies
38
Leading Company Agrochemical RD Expenditure 2004
Total Expenditure 2250 m. Average
Expenditure 7.5 of Sales
39
Cost of New Product RD
Source Phillips McDougall study for ECPA and
Crop Life America
40
Products in RD / Early Commercialisation




Herbicides

Insecticides

Fungicides

Syngenta

RD

Pinoxaden

Mandipropamid



SYN 523



Early



Butafenacil

Thiamethoxam






Commercialisation

Trifloxysulfuron

Emamectin benzoate




Mesotrione







Pyriftalid





Bayer

RD


Fluopicolide
Pyrasulfotole
Flubendiamide
BYF 1047
Spirotetramat


Tembotrione

Thiencarbazone


Fluoxastrobin
Clothianidin
Foramsulfuron

Early

Mesosulfuron

Prothioconazole

Commercialisation


Iodosulfuron
Thiacloprid




Oxaziclomefone
Ethiprole


Spiromesifen
Propoxycarbazone





BASF

RD

Ethiprole
Topramezone


Orysastrobin









Metaflumizone




Maize/soy Herbicide
F600
Pyrazole Insecticide
Early
Tepraloxydim



Metrafenone






Commercialisation
Picolinofen


Pyraclostrobin

Tritosulfuron

Fenoxanil

Boscalid
Dimoxystrobin

41
Products in RD / Early Commercialisation (contd.)


Herbicides

Insecticides

Fungicides

Dow

RD



DE-742
Spinosyn
Meptyldinocap
Aminopyralid




Early

Florasulam


Zoxamide

Noviflumuron
gamma Cyhalothrin
Commercialisation

Diclosulam



Penoxsulam
DuPont





RD
Rynaxypyr





Early

Indoxacarb

Famoxadone




Proquinazid
Commercialisation
Picoxystrobin

Sumitomo

RD

SYN 523
BYF 1047

Flufenpyr

Pyridalyl

Early


Diclocymet

Metofluthrin

Commercialisation




Profluthrin
Amidoflumet
Dimefluthrin

42
Product Introductions and RD by Crop
Number of new Active Ingredients

Time period



1980/89

1990/1999

2000/2005

In RD

Herbicides

Cereals

15

12

8

3


Soybean

11

10

1

0


Maize

2

10

4

5


Rice

11

19

6

6


FV

2

1

0

0


Other

10

5

2

4


Total

51

57

21

18

Insecticides

FV

11

16

7

9


Rice

5

2

3

0


Cotton

9

12

1

2


Others

4

7

5

4


Total

29

37

16
15

Fungicides

FV

13

8

11
6


Cereals

14

16

8

3


Rice

9

5

5

4


Others

0

0

0

3


Total

36

29

24

16

Others


7

3

4

0

Total


1
23

126

65

49

Average annual rate of introduction

12.3

12.6

10.8

9.8


43
Seed and Trait Industry Structure and RD Focus
44
Seed Sales 2005
m.
45
Seed Companies MA Events From Jan 2005 to
Present
46
Seed Industry Restructuring 2005/6
47
Seed Companies Input Traits
Monsanto
Syngenta
DuPont
Dow
BASF
Bayer
RR maize, cotton,
B.t.
maize
Licenced in RR and
B.t.
B.t.
maize and Herculex
LL Canola and maize
canola and soybean
maize and Herculex I
I maize
LL Cotton
WideStrike cotton
Herculex CRW maize
B.t. maize, B.t. cotton,
Herculex XTRA maize
Herculex CRW resistant
CRW resistant maize
maize
Stacked gene (RR/IR)
Commercialised
crops
Herculex XTRA maize
Glyphosate tolerance in
Stacked gene crops
Glyphosate tolerance
Disease resistance
Other LL crops
Stacked gene crops
maize
Coleopteran and
Lepidopteran resistant
Disease resistance
CRW resistant maize
maize
Soybean cyst nematode
Disease resistance
resistance
Vip Cotton
maize
Soybean cyst nematode
Enhanced RR tolerance
Disease resistance
resistance
Enhanced insect
Enhanced insect
resistance
resistance
Rust resistant soybean
RR wheat
Aphid resistant soybean
RD Stage
48
Seed Companies Output Trait Research
Monsanto

Syngenta

DuPont

Dow

BASF

Bayer

High fermentable starch maize

Enhanced shelf life
Soybean with high
Maize
with high oil
High oil content

Altered oil
banana

oleic content

content

content in
canola

Soybean with low linolenic
Microbial phytase

Soybean with low
Canola with high
Vitamin content
Novel
content

linolenic content

oleic content

carbohydrate
production
Improved energy
maize for feed

Maize with increased
High energy maize

Animal therapeutics
Stress tolerance
Stress tolerance
amylase level

Improved oil soybean

Maize phytase

Improved flavour
Poultry vaccines
soybean

Omega 3 production in canola
Golden rice

ze

Drought tolerant mai
and soybean for food use

Soybea
n with altered protein
Thera
peutic proteins

High Omega 3 Soybean
content

Maize with altered carbohydrate
and protein content

Nitrogen utilisation

High lysine maize for
animal feed
Drought stress tolerant soybean,
maize

Commercialised
Nexera Canola
Nutrium soybean
Vistive soybean
49
Patented v Generics
50
Proprietary v Off Patent Market Share - 2004
Patented 30.8
Off - Patent 69.2
Proprietary 30.8
Generic 33.1
Commodity 36.1
51
Proprietary v Off Patent Market Share
52
Generic Companies Share of World Market
53
Re-Registration
54
Current Status of EU Re-registration procedure
List

No. of
Products of
Accepted
Re
-
registration
Not accepted
Products

Commercial
into
admissible
/ Not
Significance

Annex 1

/ pending

Suppo
rted

Existing Products




1

90

90

53

8
29

2

148

114

12

38

64

3

389

263


135

128

4

204

11


9

2

Total

831

478

65

190

223

New Active Ingredients

55

47

7

Total Existing New a.i.s

120

237


as active ingredients for crop protection

357
55
Products not being Re-Registered in the EU
56
EU Re-Registration Decisions in 2004/5
57
Market Development
58
Crop Protection Market Forecast to 2010 - Growth
( p.a.)
59
Disclaimers
The information contained in this presentation
constitutes our best judgement at the time of
publication, but is subject to change. Phillips
McDougall do not accept any liability for any
loss, damage or any other accident arising from
the use of the information in this presentation.
The information given in this presentation has
been drawn from analyses and reviews presented in
the Phillips McDougall products AgriService and
AgreWorld. For more information about these
products please visit www.phillipsmcdougall.com w
ww.agreworld.com