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2007 recovery for European market
Feb. 12, 2008
An improvement in weather conditions and higher commodity prices resulted in a much more buoyant environment for the European agrochemical market in 2007 than in 2006. Overall, the general expectation for market performance is far more positive, concludes a Phillips McDougall AgriService analysis carried out for the European Crop Protection Association (ECPA).
In the longer term, further growth is expected, driven by central and eastern European markets. However, conditions will remain "very competitive" in the original EU-15 countries. Regulatory issues, which are leading to ever greater restrictions on product availability and pesticide use, are key pressures for the future. Changes to EU subsidy regimes and increasing demand on land and crops for the biofuel sector present additional challenges.
2006 market
In 2006, the agrochemical market in the 25 EU member states and the European Free Trade Association (EFTA) nations amounted to Euro 6,578 million ($8,263 million) at the ex-manufacturer level, down by 1.8% on 2005. Excluding currency and inflationary factors, the real decline was 4.1%. Adverse weather conditions were the major factor. A prolonged winter affected autumn and early spring spraying, and this was followed by a hot, dry summer in northern Europe. Southern Europe experienced more normal weather, allowing the market here to partially recover from the severe drought of 2005.
In 2006, the agrochemical market in the 25 EU member states and the European Free Trade Association (EFTA) nations amounted to Euro 6,578 million ($8,263 million) at the ex-manufacturer level, down by 1.8% on 2005. Excluding currency and inflationary factors, the real decline was 4.1%. Adverse weather conditions were the major factor. A prolonged winter affected autumn and early spring spraying, and this was followed by a hot, dry summer in northern Europe. Southern Europe experienced more normal weather, allowing the market here to partially recover from the severe drought of 2005.
In product terms, the greatest sales growth was seen for plant growth regulators and fumigants, particularly in cereals, oilseed rape and potatoes. Herbicides were slightly ahead, with lower sales in sugar beet and potatoes offset by growth in other crops. Insecticide and fungicide sales fell in all crop sectors except oilseed rape and pome fruit.
European(1) agchem market by category (Euro million)
Category 2005 % change 2006
Herbicides 2,842 + 0.8 2,865
Insecticides 979 - 3.6 944
Fungicides 2,592 - 4.6 2,472
Others 275 + 8.0 297
Total 6,689 - 1.6 6,578
(1) EU-25 + EFTA region. Source: ECPA/Phillips McDougall AgriService.
Only the oilseed area expanded, with oilseed rape benefiting from increased biodiesel demand. Oilseed rape plantings rose by 11.1%, while sunflowers were up by 9.1%. Areas declined for other major crops: potatoes (-1.6%); cereals (-3.6%); maize (-4.5%); and sugar beet (-14.5%). The beet sector has been hit by the ending of the EU sugar price support system and the acreage is expected to decline further.
The oilseed sector also showed the most positive results for agrochemical sales, particularly oilseed rape and the more minor crops, sunflowers and soybeans. Agrochemical sales increased for maize and pome fruit, but declined for cereals, sugar beet, potatoes, grapevines and other fruit and vegetables. Although cereal herbicide sales rose, this was offset by lower insecticide and fungicide use due to the poor weather.
European agchem market by crop 2006
Cereals 32.6%
Grapevines 9.8%
Maize 8.6%
Oilseed rape 7.9%
Potatoes 5.1%
Sugar beet 4.8%
Pome fruit 4.6%
Sunflowers 1.6%
Other fruit & vegetables 12.9%
Other crops 12.1%
Source: ECPA/Phillips McDougall AgriService.
The European crop protection market has grown by an average of 8.3% in dollar terms over the last five years. This is the largest growth rate of all regions in the world, although part of it is due to currency translation, the analysis points out. In 2006, Europe accounted for 30.3% of the global market, ahead of the NAFTA region and Asia, which each represented 24.3%. European growth has been led by central and eastern European countries, particularly the new EU member states, which have significantly increased their food exports to the EU-15. In addition, agrochemical sales in Russia and Ukraine continue to expand, with each market recording some 20% growth in their own currencies in 2006.
Source: ECPA
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