2016 Top 20 Global Agchem Companies: Expedited re-organization through M&As, divestments propel global agriculture into new era

Despite the effects of unpredictable weather, unstable exchange rates, and the falling prices of agricultural products, the top 20 global agrochemical companies produced mixed results in 2016.

In a recently released list in AgroPages recently these top 20 global agrochemical companies showed a sharp departure from the performance of their counterparts in 2015, when nearly all of the top 20 global agrochemical companies suffered downturns.

Certain companies, which benefitted from adjusted development strategies, reversed the trend and recorded improved sales. In 2016, the rankings of the top seven companies remained unchanged, as opposed to 2015, when their rankings changed by one position. However, despite the tough market conditions, five companies posted double-digit growth rates, with the highest reaching 30%.

Mixed Performance in 2016

According to statistics from Phillips McDougall, a pesticide consultancy firm, as calculated by distributors, the global pesticide market for crops registered sales of US$49.920 billion in 2016, dropping by 2.5% year annually. In 2013, sales in the global pesticide market reached $50 billion for the first time, which continued to grow in 2014. However, the market suffered a 9.6% downturn in 2015. In 2016, sales in the global pesticide market continued to drop by 2.5%, to below 50 billion, back to the sales volume in 2012.

In 2016, the sales of pesticides by the top six market leaders saw a decline. Monsanto reported the steepest drop, falling by 26.1% annually while the other five companies, including Syngenta, reported a 4 to 6% annual decline. Syngenta, the market leader, saw its sales volume drop down to the threshold of $10 billion. However, popular products and new offerings from the top six companies still witnessed decent sales growth.

The companies ranking from seventh to 12th position, except ADAMA, also saw a change in their their rankings. Sumitomo Chemical saw a significantly rise in terms of both its ranking and growth rate, jumping from 11th place in 2015 to the eighth in 2016, and its sales volume, in dollars, surged by 25.3%, compared to a 10.5% drop in 2015. The reasons for this increase is clear, as in the Japanese market, Sumitomo Chemical has not only developed its business segments and increased its market share through new product research, licensing production or collaborations, but it has also increased production and marketed related agricultural products and technical services in a comprehensive manner. Sumitomo Chemical is also continuing to promote its presence in the crop protection industry, by strengthening its co-operation and increasing its investments.

The tenth-place company, UPL, is another notable new company, with its sales volume, in dollars, increasing annually by 12.8%. The company attributed its achievements to the combined efforts of its various business units, which has propelled its overall growth.

FMC and Platform Ag (Arysta LifeScience), which ranked ninth and 12th respectively, achieved minor growth in 2016. In the 2016 fiscal year, Nufarm also achieved a slight increase in its calculated sales in Australian dollars, but its sales in US dollars have dropped by 8.6% annually, causing its ranking to fall from ninth, in 2015, to the eleventh in 2016.

Out of the eight companies ranking 13th to 20th, there are six Chinese companies while the other two are Kumiai from Japan, which ranked 14th, and Sipcam-Oxon from Italy, which ranked 12th. Huapont Life, which ranked 13th, posted a sharp growth rate of 29%, compared to -12.5% in 2015, achieving the highest growth rate among the top 20 companies.

Rainbow Chemical, which benefitted from its rapid market access, global marketing network and diverse product lines, posted a significant growth in both operating income and profits in 2016. Its sales in dollars achieved a growth rate of 22%, pushing its ranking from the ninth, in 2015, to the 14th in 2016. Fuhua Tongda, which ranked 16th, achieved a 3.4% growth rate, and for many years, the company had been expanding into international markets and complying with environmental standards, to ensure its sustainable development. Jiangsu Huifeng rose from 12th place, in 2015, to 18th in 2016, with a 5.5% growth in sales, which it attributed to its entry into new markets and its customer service.

Two other Chinese companies on the top 20 list appeared to be declining, which include Nanjing Red Sun that dropped from 14th place, in 2015, to 17th in 2016, with its sales in dollars dropping annually by 6.7%. Wynca also dropped from 15th place, in 2015, to 19th in 2016, as the sales of its main product, glyphosate, has continued to decline, due to effects of excess capacity, environmental compliance inspections and the increasing price of raw materials, which resulted in a 16.1% annual decrease in pesticide sales in dollars.

Sipcam-Oxon, which ranked 20th, achieved an annual growth in pesticide sales of 5.4%, which was mainly attributable to its increased business in North America and South America.

Expedited Reorganization through M&As, Divestments Propel Global Agriculture into New Era

ChemChina’s acquisition of Syngenta was completed after a one and a half year long process while Dow and DuPont had an equal merger on 31st August, and Bayer’s acquisition of Monsanto is still ongoing. Sanonda, the agrochemical subsidiary of ChemChina, completed its acquisition of ADAMA. The series of mergers and acquisitions, M&A, involved an amount of up to $200 billion.

The previous global agriculture landscape, dominated by six major companies, will cease to exist, as the global agricultural industry is on the verge of a new era. The future top three leading companies will be Bayer Crop Science-Monsanto, worth $27 billion, Syngenta-ChemChina, worth $17.4 billion, and Dow-DuPont, worth $17.2 billion.

Along with the M&As of multinational giants, proposed spinoff businesses have also been proposed by some financially stable companies. FMC, a second-tier company, acted swiftly and purchased part of a subsidiary agrichemical business of DuPont, with a hefty amount.

Once the purchase is completed, FMC will rank fifth among global agrichemical companies, with projected sales of $3.8 billion. UPL Limited, a minor Indian agrichemical firm, has promised to join the takeover bandwagon. According to business insiders, the company is seeking to spend over $4 billion to purchase the agrichemical firm, Platform Specialty Products Corp, PSP, in a bid to expand its global influence.

BASF recently announced that it will spend EUR5.9 billion on the acquisition of the major portion divested by Bayer, in its acquisition of Monsanto. BASF’s acquisition will include Bayer’s non-selective herbicide glufosinate, international brands Liberty®, Basta® and Finale, as well as Bayer’s major field crop seed business in certain regions, including its InVigor® rapeseed varieties in North America that uses the LibertyLink® trait, and its rapeseed variety mainly grown in Europe, as well as its cotton variety grown in the United States, US, and Europe, and its soybean grown in US. The acquisition will also include Bayer’s research on trait and breeding, as well as the LibertyLink® trait and trademark. On the heels of this announced acquisition, Nufarm announced that it is spending $490 million to acquire crop protection products for the EEA, developed by ADAMA and Syngenta.

Other fast-growing companies, such as AMVAC Chemical Corporation, have completed the purchase of three plant protection product lines, abamectin, chlorothalonil and paraquat, developed by ADAMA, as well as part of the herbicide and fungicide business of Syngenta. The Chinese company, Huapont Life Sciences, has acquired the oxyfluorfen and tebuthiuron business of Dow AgroSciences, to further broaden its product variety and expand its market share.

From 1997 to the current time, the global agrochemical industry has gone through three waves of M&As, which have all brought revolutionary changes. The industry must wait and see what the latest series of M&As will bring to the industry, in terms of opportunities and challenges.

Global Agricultural Recovery Expected

The mixed performance of the top 20 agrichemical giants in 2016 appears to demonstrate that the global agricultural sector is on a track for a slow recovery, with the industry’s growth being imminent, a trend that coincides with the industry’s performance report for the first half of 2017. Among the previous top six companies, with the exception of Syngenta and Bayer Crop Science that registered negative sales growth, DuPont, Monsanto, BASF and Dow AgroSciences all experienced growth at various levels. Certain fast-growing companies also saw varying degrees of growth in their performance during the first half of 2017.

The price of agricultural products in 2017 will fall to a certain extent, compared with their peak from 2011 to 2013, but these prices of agricultural products, except soybean, will approach or exceed their 2009 to 2010 levels. Many markets are expecting a positive performance in 2017, and the pesticide market stands to recover and grow this year. According to the projections of Phillips McDougall, sales in the global pesticide market will increase by 1 to 2% in 2017, depending on favorable weather conditions.

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