8 things you need to know about the global agricultural market in 2021

New trend/new development direction

Supply/demand dynamics:

The imbalance between supply and demand of crop protection products has further promoted the commercialization of key technical materials, and has also eroded the prices and profits of manufacturers, trading companies and distributors. This oversupply situation has been going on for several years, and with the spread of the epidemic, the oversupply situation continues to aggravate. Countries encourage the restart of manufacturing and infrastructure construction to revive the sluggish economy and increase export GDP. Channel inventory has reached its limit. Uncertainties in labor supply and logistics have prompted a further increase in product inventories worldwide, which has led to a decrease in speculative sales. Many manufacturers report that the outlook for 2020 is promising, but a large amount of inventories and the uncertainty of the shift of production to household consumption will also be followed by 2021.

Trade and tariffs:

The biggest obstacle to free trade is tariffs. The Sino-US trade conflict is currently manifested in the imposition of additional tariffs on various chemicals, which further promotes the hoarding of products to avoid price increases in channel circulation. The border tensions between China and India have affected the trade and logistics between the two major manufacturing countries, which also exposed the fragility of its supply chain as a source of technical medicine. The above high-profile dispute is just the tip of the iceberg. The WTO is considering 32 complaints about agricultural products, and these dissatisfaction may intensify as countries work hard to boost their economies. In 2019, 19 formal complaints were submitted to the WTO. As of the third quarter of 2020, there have been three complaints indicating that the formal complaint process is in the suspension stage, and countries are busy dealing with the epidemic and reassessing their priorities.

Geopolitical pressure:

People are beginning to rethink the process of globalization. Countries are working hard to reduce their dependence on foreign sources of food, energy, telecommunications, technology and medical care, especially the pharmaceutical industry, which has many similarities with agrochemicals. This change is spreading across all continents, but the extent of its impact will not be known until a few years later. From major markets such as the United States and the European Union to developing economies such as Indonesia, Brazil, India and China, governments have begun to implement manufacturing infrastructure incentives and penalties for overseas profits. However, globalization cannot be completely avoided. Many products are produced in local countries with limited production, so we still have to continue to rely on overseas imports.

Enterprise mergers:

Every economic recession causes some companies to go bankrupt. Between 2008 and 2010, more than 225,000 companies went bankrupt in the United States alone. The first to bear the brunt was the well-known financial and insurance institutions. Publishers, utility companies, chemical companies, and farms large and small were also forced to close due to excessive leverage. Today, the same scenario is happening, and liquidity has become the primary condition for the survival of the enterprise. TerrAvion became the first victim to make headlines. As a leader in image and data management, TerrAvion filed for bankruptcy protection and suspended all its businesses in September this year. This will trigger a series of mergers and acquisitions, and companies that are short of funds have dumped their assets in an attempt to continue their operations or pay financiers. From manufacturers to farmers, all levels will be affected. Especially farmers, they are facing a liquidation, because production costs have been steadily rising, while the decline in commodity prices and changes in demand have put great pressure on profitability. As consumers re-plan the focus of consumption, agriculture will be affected far beyond the retail and entertainment industries that are currently under impact. We will continue to see accelerated integration of Chinese suppliers.

The development of precision agriculture

High precision applications:

Image, automation and robotics will eventually be integrated into suitable agricultural applications, which will significantly change the frequency and amount of agricultural field behavior. There are many noteworthy examples, such as AMVAC's SIMPAS system, Rantizo and Poladrone's palm tree precision spray projects, etc. All of these precision agriculture applications have been commercialized. Other technologies still in development—Blue River/Deere, Bilbery, WeedIt—represent other scalable technological innovations. Due to labor uncertainty caused by quarantine, border closures, and worker infections, companies must avoid labor interruptions, which will accelerate the application of factory and field automation. Precision agriculture differs due to different countries, different crops and different national conditions.

Regulatory challenges

With the gradual strengthening of restrictions on agricultural products by the EU-led regulatory system for hazards, many active ingredients are being reviewed globally. Prior to 2009, the European Union had been the world's largest pesticide market, and was later surpassed by Asia and Latin America in 2013. Under its new "farm-to-table" initiative, the European market is expected to remain flat, and the use of agrochemical products will continue to decline. The initiative outlines the sustainable development goals and aims to reduce the use of pesticides by 50% by 2030. %, and reduce the use of mineral fertilizers by 20%. Currently, Europe has banned about 72 pesticides approved in the United States. Other countries are following suit. Brazil has banned 17 compounds that are legally used in the United States, while China has restricted 11 pesticides. The most direct impact is that organophosphorus (chlorpyrifos), neonicotinoids, glyphosate and paraquat are restricted in different forms in major global agricultural markets. Mexico currently bans the import of glyphosate and its intermediates, and other countries such as Thailand and Vietnam have also formulated frameworks to phase out the world's most widely used pesticide.

Back-end integration and strategic sourcing

In order to make the supply chain more predictable, companies are seeking a new business relationship that is superior to price transaction relationships and pays more attention to transparency, reliability, risk sharing and business convenience. This new model encourages companies to share strategic development plans and operational details to ensure that companies cooperate with partners who share common goals and cultures. In the absence of other options, some supply chains still have to do business with low-cost suppliers, especially for the raw materials needed to produce the original drug, but some companies are studying logistics, labor, licensing, import and export regulations, and rules of origin , To promote the creation of more predictability in the manufacturing-to-market model.

Sustainability

As consumers continue to demand that products have socially responsible attributes and require increased production transparency in order to evaluate various options, achieving a sustained balance between people, the planet and profits has become a key issue for the company. Many initiatives have been put forward, including improving soil health, farm productivity, food security, farmer prosperity, climate action (including carbon storage), water management, biodiversity, supply chain transparency, worker safety, gender equality, nutrition and food safety . These initiatives are critical because companies directly market to consumers, and consumers pay more attention to the food production process and the social influence of the companies they support. Many multinational companies have accepted the United Nations Sustainable Development Goals, many of which have clear benchmarks to be achieved before 2030.

E-commerce

Driven by companies such as FBN, AgVend, and several other companies, true e-commerce is becoming more widely used in the retail sector. Followed by established retailers like Nutrien, and many participants who need to upgrade their products in the socially restricted 2020. Nutrien currently has important e-commerce capabilities. This sudden change has forced farmers and consultants to enter the value chain in different ways, something they have resisted for the past two decades. The forced migration to digitalization in 2020 will cause some people to adopt new procurement methods, which will bring permanent changes to the value chain that has been slow to apply in digital infrastructure.

Invasive species

As commodities and people continue to flow around the world, invasive alien species have also taken the opportunity to invade new environments without natural enemies. Insects, diseases, and weed species overwhelm habitats and crops. The most susceptible regions are the Americas and Europe, which are also the main crop producing areas. Notable pests that may endanger crops include Spodoptera frugiperda on corn in Asia and Africa, Xylella fastidiosa on Italian olives, Fusarium oxysporum Tropic 4 on bananas, locusts/leafhoppers in Africa and the Middle East, and citrus greening ( Global), wax zen and many other pests are threatening their non-native environment.

Biological products, fertilizers and soil health

Due to the development of the production system, the use of chemicals has been reduced, and the opportunity to enter the key export market (EU) and obtain certification are retained. These are all priority factors for consumers. Therefore, the market segment will continue to be in double digits. Compound annual growth rate growth. As more research focuses on soil health, plant microbiota, and the reduction of non-biological and biological stressors, the production of bio-insecticides, bio-stimulants and bio-fertilizers has risen sharply and has become more widely used. The integration of these areas will continue, and traditional chemical companies will supplement their product lines with gentler solutions. Consumer needs, changes in regulations, worker safety and environmental management are all urging people to deepen and strengthen the understanding and application of these products at the farm level.