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The world pesticide industry in 2001 was valued at about $40.9 billion, based
on product sales at the end-user level. Herbicide products accounted for 53%
of the total world market, insecticides for 27%, and fungicides for 20%. Other
products including plant growth regulators, fumigants and nematicides, defoliants
and desiccants are not included. The United States, Western Europe and Japan
are the most intensive consuming regions, and accounted for about 46% of global
sales.
This report focuses mainly on herbicides, insecticides and fungicides used
in agriculture and less on home, garden, and turf products, or other pesticides.
In terms of 2001 dollars, the overall market is not expected to grow during
2001–2006. Increased plantings of insect-resistant crops will decrease
insecticide usage while increased plantings of herbicide-tolerant crops may
increase the quantity of herbicides used, depending on the herbicide the crops
are linked to and the herbicides that are displaced.
Twenty basic producers of pesticide active ingredients account for over 90%
of global pesticide sales. Eleven of these firms have annual pesticide sales
in excess of $500 million. The six largest producers—Syngenta, Bayer CropScience,
Monsanto, BASF, Dow AgroSciences and DuPont—accounted for over 80% of total
world sales and each has annual pesticide sales ranging from $2.0 billion to
$6.0 billion. Three of the six largest producers are headquartered in Western
Europe, and three are based in the United States.
Generally flat to falling pesticide prices (in inflation-adjusted terms), rising
or contained costs and maturing products with saturated markets combined with
pesticide product bans caused by the increasingly stringent regulatory environment
have resulted in a significant decline in operating profits for the world industry.
Some companies have left the business after careful evaluation of their pesticide
business. The need to globalize operations, to redirect R&D funding to biotechnology,
particularly in the case of proprietary pesticide producers, and to comply with
environmental regulations has resulted in massive consolidation and marketing
alliances. This trend is expected to continue through the decade.
In the mid-1990s the pesticide industry entered a new era in two diverging
trends. In trend one, the largest pesticide producers with sales revenue exceeding
$2 billion, noted for their production of proprietary pesticides, began expanding
rapidly into biotechnology through direct investments and strategic alliances
with new agricultural biotechnology firms. The fruits of research in the new
approach include transgenic seeds incorporating herbicide resistance and insect
pest resistance. The sales of the herbicide-tolerant seeds in turn increase
the sales of broad-spectrum herbicides that the crops are immune to, while the
insect-resistant seeds may instead act to decrease insecticide applications.
Trend two was the rapid expansion of generic pesticide producers, primarily
by acquisitions of both pesticide producers and mature product lines. The generic
producers are noted by their relatively small size at substantially less than
$1 billion in sales revenue, relatively low spending on R&D, and emphasis
on low-cost manufacturing, though with low gross margins compared with the proprietary
pesticide producers. Prominent examples of generic pesticide producer leadership
include Makhteshim-Agan (headquartered in Israel) and NuFarm (headquartered
in Australia).
Public concern over perceived health hazards and the environmental consequences
of chemical pesticide applications continues to shape the market and influence
the direction of R&D. Regulatory authorities in the United States and Western
Europe are requiring reregistration of older pesticides in order to reassess
the potential hazards arising from their currently registered uses. As a result,
many older pesticide products are being removed from the market—either
voluntarily by producers electing not to support them, or involuntarily as a
result of the regulatory requirements for reregistration.
The EPA is encouraging the development and registration of new pesticides that
pose lower risks to public health and the environment; for example, the EPA
expedites the reviews of biorational pesticides. The agency also has set up
a priority planning system that emphasizes risk-based criteria for sequencing
the completion of reviews.
There are very large regional differences in the acceptance of biotechnology
in the form of seed traits that include pest management properties. For example,
while a significant portion of the major crops of the United States including
corn, soybeans and cotton are genetically modified, the Western European market
remains essentially closed to transgenic crops at least for the present. Future
developments in the global markets for transgenic crops will impact the demand
for chemical pesticides.
The United States remains the highest-value market for pesticides. End-user
sales of herbicides, insecticides, fungicides and other pesticides in the United
States totaled about $9.8 billion in 2001. Agricultural crop markets accounted
for about 80% of total U.S. pest control product sales and noncrop markets accounted
for 20%. Herbicides are the dominant product group with $6.1 billion in sales,
followed by insecticides and fungicides. Herbicides are also the highest-value
product group in the estimated $1.9 billion U.S. noncrop pest control sector,
followed by insecticides.
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