"Unless you’ve been completely out of touch with the agricultural marketplace the past two years, you know that one of the major trends impacting today’s crop protection supplier industry is consolidation.
From the Big Six companies that dominated the crop protection supplier landscape at the start of the 2010s, there will soon be only a Big Four left in their place, with several other smaller players jockeying for position.
While this might seem completely unprecedented in its scope, V.M. (Jim) DeLisi, Owner of Fanwood Chemical (which provides detailed agrichemical import and export reports, technical marketing of custom manufacturing services, and regulatory services), said the crop protection products marketplace has seen this kind of ‘consolidation’ on a semi-regular basis for many decades now. ‘Major mergers in this sector have occurred about every 15 years since 1970,’ said DeLisi, speaking at the 2017 AgriBusiness Global Trade Summit in Las Vegas, NV. ‘In fact, 40 to 60 agrichemical companies that were doing business during in 1970 disappeared or ended up part of one of the current mega companies since that time.’
As for why the industry is witnessing this latest round of mergers in 2017, you need look no further than current conditions in the overall agricultural market. ‘The largest driver of agriichemical mergers is the market price for crops such as corn and soybeans,’ said DeLisi. ‘Corn prices in 2008 were $8 per bushel. In 2016, they were $3 per bushel. So in essence, the agricultural market lost $15 billion in value between 2008 and 2016. These kinds of losses have impacted ALL the suppliers to this market. And it’s put most growers in a kind of ‘survival mode’ when it comes to spending money and looking for ways to increase their profits.’
In many cases, this means growers are looking to crop protection/seed companies for new innovations/products to help manage increasingly aggressive/resistant pests/weeds, he said. ‘New product development costs, for both seeds and chemicals, are in the range of $300 million to $500 million in development and registration globally,’ said DeLisi. ‘Only the latest companies have the resources and leverage to both finance and then recapture this level of investment in an attempt to ‘stay ahead of the weeds and bugs.’ Mergers were chosen as the path to increased revenues to allow for more research and development expenditures while protecting shareholder value.’"