A greater focus on biofuels will increase crop acreages and support demand for pesticides
Los Angeles, CA (PRWEB) July 07, 2012
IBISWorld estimates that the US agricultural industry loses about $20.0 to $30.0 billion to plant pests and diseases each year. The Pesticide Manufacturing industry manufactures chemical and pesticide products to manage these agricultural pests and diseases. Because of its ability to boost productivity, the industry is considered an integral part of the $200.0 billion US agriculture sector. However, over the past decade, actual pesticide use has experienced little growth. According to IBISWorld industry analyst Radia Amari, this stagnation has occurred because of the increasing adoption of integrated pest management strategies, organic farming, more selective herbicides and the development of biopesticides, which are increasingly being used as alternative pest-control agents. Moreover, the adoption of genetically modified crops in 2007 and low farmer income during the recession caused revenue volatility over the five years to 2012. Nonetheless, from 2007 to 2012, industry revenue will grow at an estimated average annual rate of 1.7% to $15.4 billion. As the economy continues to recover and farmers experience higher incomes, customers will encounter increased crop production and demand for pesticides. Revenue is thus expected to grow about 3.9% in 2012. This growth, however, will be partially stunted by higher operating costs, causing profit to drop.
Historically, agricultural output and income levels have been the most important determinants of demand for the Pesticide Manufacturing industry, but new variables have emerged in recent years to trouble pesticide manufacturers. These variables include the flow-on effects of biotechnology developments and the growing sizes of the areas dedicated to genetically modified (GM) crops. “Even with these potential concerns for the industry,” Amari says, “increases in the size of crop areas planted for biofuel will enable the industry to continue growth.”
While the industry is anticipated to experience revenue growth during the next five years, the number of manufacturers is expected to decrease. As firms sought to gain market share and research and development advantages, a number of companies underwent mergers and acquisitions from 2007 to 2012. As this trend of consolidation continues, firm numbers are projected to decrease over the five years to 2017. The three largest players, Bayer AG, E. I. du Pont de Nemours and Company, and Monsanto Company, account for less than half of total industry revenue, and the industry is expected to remain fragmented despite the consolidation of recent years. For more information, visit IBISWorld’s Pesticide Manufacturing in the US industry report page.
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IBISWorld industry Report Key Topics
This industry formulates and prepares agricultural and household pest control chemicals. Key products include pesticides (herbicides, insecticides and fungicides) and agricultural chemical products (insect repellents, sheep dips, fly sprays and flea powders). Key markets for this industry include the agricultural sector, households and various commercial and industrial users.
Key External Drivers
Industry Life Cycle
Products & Markets
Products & Services
Globalization & Trade
Market Share Concentration
Key Success Factors
Cost Structure Benchmarks
Barriers to Entry
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