Future Development of the Crop Protection and Seed Markets

Future Development of the Crop Protection and Seed Markets

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welcome to agribusiness Global live my name is  Renee targas and I'm the editor for agribusiness   Global directs I'll be your host today's webinar  future development of crop protection and Seed   markets is presented by Aleister Phillips and  Derek Oliphant with our founding members of   AG bioinvestor and just a little bit about  our speakers today both got their start at   Phillips McDougall um Aleister specializes in  seed and trade analysis and he just recently   joined agribusiness Global's Advisory Board  Derek specializes in crop protection and is   a key contributor to the AG bio crop report which  is a quantitative and qualitative analysis of the   global crop protection Market so I want to welcome  them both um we also just have a few housekeeping   um we are taking questions from attendees  but we will answer those questions after   the presentation is over um if we don't get to  your question what we'll do is take it and we   will post it online we'll create a blog for all  answers to be um answered by Aleister and Derek   on agribusinessglobal.com and with that I'm  going to turn it over to Alistair and Derek   that's great thank you very much for the  introduction it's a pleasure uh for me and Derek   to be here to speak to you today I'm assuming  that there will be a fair few of our existing   clients at this uh presentation so um hello to  you and for anybody else who's not familiar with   ag bioinvestor we are analysts and consultants for  the global crop protection and Seed Industries and   what we do is uh we Supply multi-client reports  on crop protection and Seed as well as data-driven   databases that look at crop protection usage on  the ground within the particular agricultural   year we also have databases on formulated  and Technical crop protection products   um traded before they actually come to uh  to sale we have a commodity tracking and   forecasting databases as well as more in-depth  GM seed analysis so please feel free to visit   our website at agbioinvestor.com where you're able  to get access to our new service and also arrange   any demos but also we have a free to use service  housed at gm.ag bioinvestor.com where we provide  

um free to use GMC information looking at  utilization rates product introductions areas and   um and more regulatory based data so just before  we get start our presentation I would like to say   that any values that you see in here dollar values  these are all measured at The X manufacturer level   so this is the first stage of distribution coming  from the manufacturer this is not farm gate level   data that we're describing also all values are  will be displayed in nominal US dollar terms and   less explicitly stated when we're talking about  our forecasted numbers these are calculated on   a real basis where we're excluding the impact of  currency and inflation so with that my colleague   Derek is going to start the presentation and  take you through the crop protection part thanks Aleister so yeah we'll look at Global  crop protection market performance uh what we'll   focus on here is looking at what we think the  situation will be as we move through to 2023.   um 2022 of course was a very unusual  year in the crop protection industry   in fact in a lot of Industries globally  crop protection uh definitely the case   you can see this chart here we're going back  a couple of decades and just chatting the   development of the crop protection Market  over time and we can see that the market   has been steadily increasing over the last two  decades with a few periods of Peaks and troughs   um what you tend to see is in terms of low  commodity prices are you can see in 2008 low   glyphosate prices the market tends to weaken also  High inventories as well which puts pressure on   um the pricing of products and how is able to  move through the sort of different channels   but for 2022 we had almost a perfect storm  of different positive factors so we had very   high agrochemical pricing a lot of it is holdovers  coming from the effects of the pandemic and other   energy supply issues very strong commodity pricing  as well um this is obviously a benefit we're   touching a bit more later but strong commodity  pricing tends to be a net positive for the crop   protection industry we also had favorable weather  conditions and a lot of key markets particularly   in high value markets such as Australia also quite  positive in the winter in Europe and also the us   as well we're so as we move through the summer  but we'll touch on that in a bit more detail   all right so looking at 2023 it's important to  see what happened in 2022 as as the first stage   so what we're looking at here is the market  in 2022 as I mentioned very very positive and   nominal terms the global crop protection Market  was up by over 12 which is very strong rates of   growth going by historical standards now currency  was a major uh impact in the market in 2022 we   had a lot of the major currencies such as the  Euro Chinese RMB Japanese Yen or weakening in   comparison to the US dollar so imagine you look  at the market in constant terms if we remove the   effects of currency actually much more positive  and almost 20 percent growth from the prior year   on the right hand side of this table what  we're looking at is the weighted effects of   the currency also volumes and also pricing of  agrochemicals as well and how that influenced   the market in 2022 on a regional basis so for  example you can see Asia Pacific volumes were the   key driver of growth in the region coming from  what a touchstone improved weather conditions   and markets such as Australia we had high pass  pressure in countries such as India and China   um pricing and if you look in America's pricing  is the key positive here so what we mean by   pricing is the very high levels of agrochemical  pricing particularly for products which are very   important in America such as glyphosate and  glyphosate so pricing a key driver in 2022 now what that means for 2023 uh what we're looking  at as we move through into this current year   this this is some of the sort of key Global  factors that will influence the market so   there is expectations for lower fertilizer prices  now what this means typically is that if a farmer   spends Less on his fertilizers and he has more  left over to spend on other crop inputs such   as crop protection chemicals so we tend to  believe low fertilizer prices are a positive   for crop protection Energy prices while they're  still high they are expected to come down from   the peak levels that we've seen in 2022 so this is  different the energy is really across the board so   what we mean is farmers will have lower fuel  costs uh energy costs to actually produce the   agrochemicals will typically be lower so therefore  um some pricing deflation commodity prices   expected to remain strong in 2023 but still lower  than the high pricing situation that we've seen   in 2022 so as I mentioned crop commodity prices  are uh very strongly tied to the performance of   the crop protection Market if we start to see  them coming down from where they were in 2022   then we'd expect this to be a negative for the  market we also have continuing weakness in the   major currency so the dollar is continuing to  strengthen against Chinese Japanese Euro and   British currencies so that is when you look at  in in constant terms that's definitely a negative   as we've seen agrochemical pricing we expect  to start stabilizing and coming down so this   will be a deflector to the market some  of the unfavorable weather conditions   that we had in sort of latter part of 2022  or mid-season particularly in central and   southern Europe and also southern and western USA  particularly California experiencing very hot and   dry conditions uh if these allevia in 2023 then  we'd expect that to be a positive for the market now there's a lot of information here but I'll  just touch on some of the sort of key factors   behind this so what we're looking at is our  expectations for the 2023 Market but in terms of   the key Regional drivers now if we look at North  America a very early indications indicate that the   maze area could be up slightly but expectations  are for the soybean area to actually decline in   Canada free area up strongly but canola down which  is reversing the trend we had in the prior year   who is a very as a more uh intensive crop use  for crop protection than Canada so we tend   to see that as a positive the high commodity  prices again but coming down familiar in 2022.   um glyphosating with what's in it places again  expected to to start coming down from the peak   levels that we've seen towards the end of 20 20  21 and into 2022. for Central and South America   Brazilian soybean and Maize area is continuing  to increase so that's obviously a positive   um some of the negative factors here is  some issues in Argentina so the area down   quite considerably we've also seen shortages of  pesticide Supply in Argentina some Growers are   having issues uh obtaining enough supplies for key  products that they need through the growing season   this could affect sales we have seen pesticide  then put some Brazil Rising sharply due to fuse   over supply issues there were concerns over  inventory about that but we have had a lot   of robust demand in this season that would  deliver that somewhat now in Europe there is   also issues around inventory what we're seeing  in Europe is the very hot and dry conditions   in 2022 led to a decline in pest pressure in  general so a lot of the products that have been   purchased in anticipation of a a strong summer  season we're actually still being held on Farm   or in distribution as this product couldn't move  through the channels because Growers were applying   less than what they expected to so we're seeing  some buildup of filamentary in Europe we're also   seeing some buildup of in between North America  as well there was a lot of pre-buying in 2022   as Growers were very concerned that um they had  the same issues of the prior year where supplies   were very short they couldn't have enough product  to last them for the entire season so pre-buying   in North America was robust uh and coupled with  the very dry hot weather I've seen in a lot of   the Southwest and even stretching into the Corn  Belt as well we've seen these inventories start to   build up so we'd think these would be a negative  as we move to 2023 in terms of companies having to   are trying to sell these products into the channel  that are already quite well stocked in terms of   on-farm supplies and in the distribution Channel  as well other issues in Europe that we're seeing   uh obviously the Russia Ukraine situation is  continuing on but we are seeing some alleviation   in terms of trade from Ukraine due to Black Sea  Grand deals Etc so there are some prospects that   Ukraine could start exporting their crop produce  again and this is partly why we think and what   these places are going to start coming down but it  does allow Ukraine to get back into the picture in   terms of Agriculture and crop protection as well  and Ukraine had been a rapidly developing market   for crop protection products prior to sort of 2022  so we think it's a positive if Ukraine agriculture   starts to kick back in again um of course there  are still continuing issues here and we don't   expect a diplomatic solution anytime soon but  uh definitely more positive moving into 2023 um in Asia Pacific as I mentioned um weather  is very positive in 2022 we think again   um quite positive in 2023 in general uh we're  seeing a lot of recovery from drought that we   had in the sort of earlier 2020s much more  positive and they are starting to increase   the minimum support prices for a lot of crops  which obviously benefits grower incomes and then   subsequently spending on crop inputs as well  and of course Asia Pacific is a very strong   buy for State Market so that the high pricing  continuation of high pricing could be benefit   the market here but that's coming down from Peak  levels but still very high by historical standards now again the importance of  commodity prices to the crop   protection Market what we're looking at here  is tracking it back to the start of 2019   you can see the spikes that we had in 2022 so as I  mentioned very high levels and record levels for a   lot of these different crop Commodities that we've  seen during 2022 through a number of different   situations so Ukraine and Russia inability to  export their products to the same destinations   as they could the prior year a lot of countries  looking to hold on to their own crop produce and   fears of any domestic food security concerns  that are arose primarily through the pandemic   and also the unfavorable weather conditions that  we've seen in the sort of summer in Europe and   the US in particular um but and you can see  future prices here tracking below the levels   that we've seen in 2023 but again for most of  these crops uh still high by historical standards   now here are the freely charged how strongly the  correlation is between truck commodity pricing and   crop protection Market so the blue bars here are  the percentage change in the market from year on   year and the lines are showing the fluctuation in  commodity prices so there's a strong correlation   between increasing commodity prices and then  benefiting the volume of the value of the market   now what we expect for 2023 is because  these commodity prices are coming down   we're seeing agrochemical pricing coming down  as well um and all the different factors are   touched on build up of inventory for example  we do expect a market in 2023 to be a lot less   um positive than it was in 2022 so  the pricing situation the inventory   situation crop commodity pricing situation all  flattening out and we're thanking for 2023 crop   protection market around about a two percent  difference from what we've seen in 2022 so   much less uh Dynamics than what we've seen in  the last few years becoming much more back to   us sort of flattening out uh whether that is a  positive two percent or a negative two percent   that remains to be seen as I mentioned there  is a lot of different factors that could   change that such as weather such as how fast this  inventory could be pushed out and also how robust   agrochemical pricing or the commodity pricing  situation will remain so if we think about plus   or minus two percent into 2023 and again that  is coming from a very very positive uh 2022.   now this slide is really just looking at the  agrochemical pricing and fire Reckoning is   that's going to continue to come down in 2023  you can see the very high peak levels that were   achieved at the end of 2021 and into the start  of 2022. but the trend is very clearly showing  

this is starting to come back down so we had  almost a perfect storm of different variables   in 2021 that affected the the pricing and Supply  situation of key active ingredients these are   listed here so high fake prices High freight costs  High uh intermediate prices as well and also China   um having issues around labor availability and  it's double control power supply policy as well   which has started to to lessen to a degree through  2022 as the policy has slightly changed uh to be   looking at a more Regional level so we expect the  pricing situation to a bit more flat in 2023 which   obviously is leading to less positive outlook  for the market and I mentioned price development   of some of these key metrics that we look at in  the crop protection industry and agriculture as   a whole and you can see um this is from World Bank  we expect fertilizer pricing to start to come down   as I mentioned that could be a positive to crop  protection because a farmer will have more office   income that will be able to be diverted to this of  course offset by any declines in commodity pricing   you can see Grand pricing coming down from 2022  but still very high compared to what we've seen in   the last decade or floor same situation for oils  and meals as well so still positive by historical   standards but again 2022 is a relative outlier and  energy costs a lot of different issues around this   a lot of it relate to Russia Ukraine situation  again and also China as well but you can see peaks   in 2022 and then start to come back down again so  it looks like from all of our indications that all   of these pricing that was peaking in 2022 started  to come back down again as we move through to 2023 now if we start to look for that I had in 2023  and we want to see how the crop protection   Market is going to perform over the next decade  or so or even further out these are some of the   key positive and negative factors that we would  consider so some of the key ones in terms of the   positives for the market moving forward we're  seeing increased technification in developing   markets and this is a coupled with a sort of Base  treated acreage growth in a lot of these countries   so we're seeing southeast Asia Central and South  America some of the smaller countries there   and also Eastern Europe including the sort of  more recent entrance to the EU these are all   countries that are growing rapidly and coming  from a low relatively low base and looking at   increasing their product usage intensity and also  increasing the technification of the products that   they're using so this comes with not only our  value upload but also a volume uplift as well   we're seeing increased uptake of Biologicals  this is a key driver moving forward   um benefiting from a lot of consolidation  in the industry and is becoming much more   technified as well now looking at improved  formulation Technologies for example   we've just seen corteva make a huge acquisition  in this space building from a prior acquisition   earlier this year as well so consolidation is  accelerating and we expect this industry to   continue to to move forward uh far in advance of  the conventional chemical crop protection sector   we're also seeing strong Market penetration of  newly introduced products of course these products   that I'm really introduced now are far from their  Peak sales potential so as we move forward these   products are expected to grow in importance as we  move forward so this is products such as methane   trifleconazole which is a good fit and a lot of  different regions but is finding good success   right now in Europe for septoria control which is  a pest which has developed resistance to a lot of   existing Technologies and we're also seeing new  herbicide modes of action start to come in to   the market now as well so it's a sort of First new  modes of action for weed control for around about   30 years so we're seeing a big shift in herbicide  usage as well and this obviously is expected to   benefit the market moving forward where previously  the GM technology had taken a lot of value but   all of the growth potential out of the herbicides  Market without you seeing resistance issues around   glyphosate Etc ALS products AC case Inhibitors  now as well we're seeing a lot of new uh herbicide   strategies having to come in and this is pushing  and the advancement of new modes of action as well   but some of the negatives as we move  forward we are expected to see new   um plant input trade acres in China so they're  going to adopt for example gmas very soon   we're seeing regulation removing  a lot of products from the market   this is sort of in conjunction with a lot of  countries and regions looking at pesticide volume   reduction targets as well so regions such as the  EU and countries such as China Japan Brazil USA   Etc all looking to over the next 15 to 20 years  significantly reduce the actual applied volumes of   pesticides that are putting down in their fields  this files we've got it as a negative here it does   provide positive potential for some of the newer  technologies that are applied at relatively lower   volumes so a lot of the older products would  expect to start being pushed out the market   these could be replaced by a newer more recent  introductions that are efficacious and much less   um volumes and I mentioned the weather is a key  driver in agriculture in general but also in   crop protection specifically and we're seeing now  effects of climate change start to lead to more   frequent and more severe climatic impacts and as  I mentioned we're seeing now the third consecutive   La Nina here which could lead to dryness in  Central and South America and a lot of regions   particularly Southern regions and Argentina Etc  uh but this is leading to more awake conditions   in South Asia and Australia for example and this  is now becoming more severe and more frequent   these different types of events that we're seeing  now so this is a big challenge for agriculture   in general and crop protection moving forward  and we're seeing a new GMC Technologies coming   through as well that could impact the market such  as those incorporating rnai Technologies such as   those that can provide control of sucking  pests and addition to the current chewing   pest spectrum and also new herbicide tolerance  varieties coming in PPO and hppd for example   so in terms of quantification what that really  means for the market moving forward this is put   from a recent report limited called the future of  Agriculture report and this is a a broad-looking   report that's looking at a number of different  factors uh agricultural socio-economic uh   Etc all looking at um different changes expected  through agriculture in these years across all   different regions and then the subsequent impacts  we expect that to have in the protection Market   so you can see if I would expect it to be  positive moving through to 2035 there is a   huge deflector coming out of the market which is  due to regulation so the EU in particular has a   very harsh regulatory Viewpoint there's a lot of  products expected to expire over the next decade   or so this will uh take all of that value of  the market of course this can some cases can   be replaced by new products or technification  where they're trading up to newer Technologies   such as the lower volume ones that are touched  on but in terms of negative regulation is the   key deflate enough market moving forward but you  can see new products very positive and a lot of   that is coming from new biological products  as well so bio is included in that and bio is   the key driver between now and 2035 and taking  the value of the crop protection Market forward   in actual terms we view the keger of biological  products up to 2035 to be in the double digits   so very strong rates of growth however for  conventional chemical crop protection once   we take all of these factors into consideration  we're actually seeing that being very flat to   slightly negative up to 2035 based on a number of  different factors that we've touched on already   um so that's really the king 2023 and  having a view towards 2075 for all of   these different uh factors so I'll pass  you over to Amsterdam you can discuss in   more detail the sort of performance of The Seed  Market that's great thank you very much Derek   um my part of the presentation we're going to have  a look at what happened in 2022 have a brief look   at what the expectations are so far for the 2023  agricultural year and then look a bit further out   and see have a look at see some of the technology  drivers for future value Evolution so what we're   looking at here is the planted area of the world  and then also some of the key countries and key   crops that are cultivated in the 2022 agricultural  year and when I talk about the agricultural year   that's um the period going from Summer to summer  because you're capturing the uh the main planting   times in both northern and southern southern  hemispheres so what were the some of the key   drivers for these area changes that were here that  we saw in 2022 firstly there was the the high high   input costs were a negative for uh for some seed  particularly nitrogen heavy crops such as a Maize   or corn require high cost inputs and that was  actually a negative for a cultivation also the   domestic consumption or export opportunity of the  cultivation of these crops where where drivers or   would be the opposite and then also the export  tax situation particularly for countries like   Argentina it's the Argentinian soybean it's one  of the key reason why Argentinian soybean declined   three percent was because of these um a high high  export taxes but you can see here just looking at   a crop stand Point we've got uh Maize or corn  declining 2.3 over the previous year really   driven by the major areas in the US which declined  eu27 and China and India all the climbings all   of these major areas dragging down the um the  world total in soybean 3.1 up over the previous   year very strong production in 2022 across across  the world being driven by higher areas in the U.S   China India and Brazil it's interesting to note  that India is the largest soybean area outside of   the Americas and in fact the the fourth largest  soybean area in the world you don't typically   think of India as being a major soybean producer  in Cotton we have a 0.3 increase over the previous  

year largely driven by uh the major areas in  the U.S Brazil and India we have China cotton   area going down that's because the Chinese cotton  area is going for a period of transition at the   moment through government mandate and through  financial support driving cultivation to be   centered into the west of the country and though  while the uh the western part of the country saw   a larger cotton area areas across the rest  of China actually declined pulling down the   um the overall area moving into rapeseed and  sunflower we have a larger rapeseed area despite   Canada falling almost four percent however that  was fully expected in Canada because the year   before there was extreme weather that impacted  production and it was expected that in 2022 to   meet the level of production that was required  yields were actually going to facilitate that so   Growers knew that they were going to have higher  yielding crops that year so they actually planted   less but they still produced the amount that they  required in sunflower we see almost a six percent   decline but that is largely driven by what's have  been happening in Ukraine and you can actually   see that in response to the that declining area in  Ukraine and lots of other countries have actually   increased their sunflower areas to make use of  these high commodity prices it's interesting   to note that Argentina increase area almost 18  percent over the previous year if you went back   20 years it would Argentine would be one of the  largest sunflower areas in the world and in fact   was the largest sunflower exporter before that  title um was transitioned over to the Ukraine   so when you're looking at this slide if you  assume a static seeding rate as in the amount   of seed that goes over a particular hectare  what you're actually looking at here is the   volume change within the industry and so  when you actually translate that over to   what's happened with seed prices and the impact  of currency what that's actually resulted in is   a yes an approximate 6.8 increase in nominal U.S  dollar terms over the previous year but like I say   high input costs have been a negative but that  has been more than offset by the high commodity   prices and there is a very strong correlation  between the trading prices of harvested crops   and the actual seed price because more money into  a Grower's pocket which means companies offering   inputs can price it higher and we've seen higher  input costs for everything in agriculture whether   it be crop protection seed fuel fertilizer  Machinery all input prices were up so I'm   not going to take any time um going through all of  these factors I feel we've um we've covered these   enough already and also you can read the slide at  your leisure afterwards so just moving into 2023   it is a little bit early in seed I mean  the analysis of crop protection and the   seed industry are are quite different because  there are different drivers between the the two   industries and really the what we've seen in 2023  so far is that there has been a positive start in   the South American season we've seen across the  region generally higher Maze and soybean areas and   combine that with a strengthening Brazilian rail  is looking very positive for the start early very   very early indicators show that the U.S Growers  are likely to plant more corn in 2023 and less   soybean that has a very strong impact on the  value of the sector because when you're looking   at a hectare standpoint your average corn bag well  your average hectare price of corn is in the 220   dollars per hectare range where soybean is much  much lower than that so when you're transitioning   air planted area from soybean over to Corn  there is a much stronger positive influence   however there are some negatives that uh have the  potential to impact the traded Seed Market in 2023   we have falling crop prices and even though  they're still relatively strong compared to   history they will be lower than what 2022 is  and you can look at this through the Futures   prices and even when applying an approximate grain  Trader's margin to these um Futures it is still   likely that they will below will be below that was  achieved in 2022 and like I say there's a strong   correlation between trading prices of harvested  grains and oil seeds and what the seed prices but   also they're what we've seen in the first quarter  of the Agricultural year which is equivalent to   the third quarter of the calendar year is that we  are seeing poor exchange rates into uh US Dollars   um so far there has only been one um currency  that has actually been positive and that is   like I say is the Brazilian real but we've seen  declines in the Japanese Yen the pound sterling   the Euro the Euro just in that quarter is about  15 um decline Indian rupee and the Chinese Yuan   as well so all of these we're looking at  uh quite a mixed bag between positives and   negatives and it would be quite interesting  to see how the rest of the season plays out   especially when it comes to the planting times  in North America you know we have this third   third year of uh weather events and it there is  the strong potential that there will be delayed   um U.S planting as we have seen in uh prior years  and if that happens then then that can upset the   uh the planting between Maize and soybean and also  prevent plant acreages may come into play as well   so just looking further out to 2023 and  concentrating on just the GM Seed Market   the reason why we're focusing on just the GMC  Market here is that it is a technology driven   market and when you're when you're looking at a  forecast in real terms you're looking at product   mix and volumes and of course we expect that  there will be a further transition of planted   areas from conventional non-gm areas over  to GM technology and so if we were to put   conventional seed into this analysis all it will  show is the climbing conventional Seed Market as   volume is transitioned away from conventional  to GM hence why we're just focusing on this   but some of the key drivers for the expansion of  the GMC Market out to 20 20 30. we're looking at   an average yearly increase in value terms of 3.4  percent from 2021 to 2030. drivers of that will  

be that the um GM coron area is likely to be much  higher in 2023 given that the Chinese are looking   to adopt a GM technology in corn and soybeans  in the next few years we have greater areas   in the Philippines in Vietnam they're both less  than 20 percent utilization at the moment we're   expecting that to come up we're going to have new  technology introductions in the next 10 years we   have rnai insect protection rnai is ribonuclease  acid interference it's a a new way of um giving   insect resistance it uses post-transcriptional  gene silencing rather than the expression of Delta   endotoxins like you have in current BT technology  we have new varieties of short stature corn coming   out on the market we'll see in subsequent  slides that there is non-gm versions coming   out in the next few years that will soon to be  replaced through biotechnology derived products   in soybean we have further expansion of the  soybean area in the Americas predominantly in   Brazil Brazil is one of these few countries in the  world that is just able to keep on expanding its   arable um area and so combined new areas with new  technology going down on that is going to result   in in lots of new value being put into the sector  in soybean we're going to have new multiple mode   of action herbicide tolerances coming out  and we'll see that in uh the coming slides and so just looking at technology this is a  mixture of both GM and non-gm Technologies uh it's   GM unless it's actually stated in the comments  and so some of the new technologies that we're   seeing coming out on the market is like I say is  this new rnai technology rnai was first deployed   in buyers VT Pro 4 product in South America in  2021 and that was deployed on approximately 200   000 hectares with the company expecting that to  ramp up thereafter in 2023 we have corteva's VOR   seed product coming out in North America which  is a combination of their existing Chrome corn   product with a rnei bolted to it we have  um buyers vt4 Pro product coming out on the   market the year after which is their current  genuity tricepter product bolted with rnai   but some other interesting products that  we have coming out over the next year   um I would like to highlight uh corteva's w3e1  cotton product that's wide strike three in list   one and what's really different about that product  is that it lacks glyphosate tolerance in there   it's almost been a prerequisite for the last 15 20  years that any GM cottonseed product being planted   in the U.S will have glyphosate tolerance however  because of the prevalence of glyphosate tolerant   weeds in U.S cotton crops it's corteva has taken  the decision to actually not use glyphosate   tolerance uh and instead use the herbicide  glyphosate as a mechanism of burn down for   that crop but also to to control volunteer w3e1  um varieties in the subsequent cultivation periods   and just finally on this slide I'd like to bring  to your attention what's happening in soybean   right now we have um the enlist and extend an  extend Flex systems being cultivated in North   America however these generally utilize two or  three modes of action for herbicide tolerance   what's likely to happen over the next 10 years or  so is that we're looking to have four five six way   stacks of herbicide tolerance uh culminating with  um buyers buyers hppd24d glyphosate glucosinate   dicamba and PPO tolerances all stacked within that  product giving the uh the grower the flexibility   uh to use that particular AI at the correct time  during its cultivation period and then finally I   would like to bring to your attention um if you  look down at the the bottom part of the upper   table is the BASF um announced that they would  be bringing out a five-way herbicide tolerance   stack in the 2040s and you may ask yourself why  is a company like BASF saying that they're going   to be commercializing a new product in such a far  away time frame well that's because uh BASF along   with syngenta buyer and corteva took part in agbio  investor and crop life Internationals um Black Box   study for the cost and time it takes to develop  a new GM trait this is available to download from   our um free to access website gm.agbioinvestor.com  please feel free to visit there and download your   copy but I'm happy to summarize the findings  of that report and that is that the time taken   to bring a novel GM trait from Discovery to the  point of commercialization has actually increased   from 13.1 years to 16.5 years but conversely the  amount of dollars that it takes to facilitate that   has fallen from 136 million to 115 million and the  reason for both of these um these data points is   that the time taken for a product to actually  go through the regulatory part has increased   considerably during the time frame that was uh  being pulled for this black box study but foreign   ly the amount of time being spent in early  Discovery phase has actually fallen and this is   as a result of high throughput testing and being  much more selective on the on those candidates   and so with that I think we've actually been uh  pretty good with our time and we we've finished   so with that I'd like to hand back to uh rinny and  um she will be able to um ask us some questions   thank you Alistar and thank you Derek it's a  great presentation and we do have some questions   um from our audience um I'm going to start  with the first one which was Asha Sharma   um let's see um sorry I'm gonna go to  the next one um we are cognizant that   certain diamide patents have expired for I  don't know if I'm going to be able to ride   next cry insecticide in U.S is this context  how you would characterize price trajectory um well first off I don't know about the parents  expired in the U.S I think that's that's some way  

off but I know that the pains are under threat and  coming off in in certain other countries for that   product um obviously Peyton expiry generally  comes with an increase in genetic competition   and from that price erosion as well so I think  it's inevitable it might not be short-term but   definitely longer term has happened with every AI  that has come off patent in general terms for most   ai's the price of the AI will start to decline as  a genetic competition starts to increase and of   course that's why it's important for all of these  sort of companies with their own r d programs to   continue to develop new products so there's always  a proprietary element to the portfolio so they're   protected against genetic competition in a lot of  cases and of course a key strategy for companies   to protect their proprietary element to their  portfolio is to include mixtures with off-paying   products together with the proprietary part as  well so they're protecting not paying product by   combining it with a proprietary one that they can  then offer to to Growers that is advantageous to   them and which obviously our generic competitor  won't be able to offer as well so yeah the pay   and expiry of not just that product but most  AIS is um the price will start to come down   once genetic competition starts to increase as I  mentioned that's for that product it is I think   the the key impact on price erosion are still  some way out because FMC who own that product   do have a lot of different Supply agreements  in place with very big companies so they have   a very strong position in that product they're  very good at protecting the off-pitting lifespan   of products that they have which they've shown  through uh self-venture zone is a good example   it's a product that came off paying the FMC still  able to protect a lot of its market share through   different strategies so I think ESPN expiring  enrollment ultimately with the price erosion   but I think that's more of a long-term impact  for Linux supplier okay all right thank you   uh the next question is where does Biologicals  fit into your crop protection forecast waterfall   well the biological I'll go back to the  slide but um the future the vibe report   has obviously split split out in more  detail this is just a high level overview   um the biological part is included in the  values obviously in the blue bar so this   includes bio unconventional if we're looking  at um Biologicals that actually split through   all of the different categories so they're  not broken out for this chart so we have uh   obviously regulation is unlikely to impact  Biologicals over the next 20 years or so   um they have a very safe regulatory profile  technification is included in here so that's   aspects I was talking about in terms of not just  product identification where we're looking at new   formulations of biological products that are more  efficacious and for example open field situations   but also including untangification as the  technification of a marker that is transitioning   from older products to newer products and a  lot of the time that includes bio as well but   also resistance management bio products are very  important and not just ipms but also and diseases   or other pests that have developed resistance to  existing Technologies so for example if you look   out to 2035 we think the bioherbicides will become  a much more important part of the crop protection   Market so the value of Bio hair besides growth  is rolled into all these different categories and   resistance management is quite an important one  for bioherbicides also area growth so area growth   is not just actual crop area but we're talking  about treated areas as well so as bio starts to   be used on more and more areas then we're looking  at expansion there as well and as I mentioned   they start to be more efficacious and open field  situations you'd obviously expect a potential area   for bioproducts to increase exponentially and new  products as well so we have a continual stream of   new biological products coming into development  and as I mentioned sort of m e activity and   consolidation has really been ramping up in  the sector so what we're getting from that is   where before a product was only available  through certain distribution channels or in   in seven Niche markets the consolidation and  M A that's going to accelerate is expected to   increase the availability of these products as  bigger companies start to take more involvement   in the sector through M A so the answer really is  that bio is is rolled into all of these different   sectors we do have a second in this report  but for the purpose of this presentation uh   bio has put into all of this but it is the  key growth driver up to 2035 as I mentioned   the keger for Bio at this period is actually  a double digit but for conventional chemical   it's actually very very flat over the period  okay all right thank you uh next question is   where do you see hybrid wheat markets developing  and percent of market and what percent of Market   will it displace over typical open pollinated  varieties through 2025 to 2030 and 2030 to 2035. um yeah okay the I mean the hybrid wheat Market  is still a very very developing Market probably   going to be focused on the European and  Canadian markets large wheat areas it's   likely to be something that is going to be driven  by commodity price because Growers actually have   to see that Financial incentive before they  actually pay for a higher priced seed because   um you know AG by your investor we're actually  based in what we were classed as Scotland's grain   belts there's a lot of Serial cultivation going  on around us of which wheat is one of them and   if you speak to Farmers around here and ask them  what they pay for their seed they go oh no sorry   we don't pay for our seed we save our seed  so you know there has to be that development   of the seed is it going to be more vigorous is  it going to have uh have more agronomic traits   in there is there going to have higher disease  resistance or or so forth greater standability   to prevent lodging and so forth so I would say  that the adoption of hybrid wheat is likely to   be dick stated what the the trading prices of  harvested grains will be in uh in the coming   future but there is that General trade within  the seed industry of always moving towards a   higher percentage of hybrid utilization it's  been seen in other cereals such as a hybrid Rye   within the EU the EU area for hybrid Rye has  been increasing generally year on year in the   likes of kws and view Moran do do comment on um  on such developments okay okay thank you Alistar   um next question uh they said thanks for a great  presentation um do you have any comments about the   future of dicamba in Brazil um I think it says  hectors are expected to increase considerably um I mean Brazil um obviously it's a product that doesn't have a  strong history in the country so it's not very   widely used by growers in Brazil and of course as  um Growers look to mitigate against the effects   of glyphosate resistance that we've been seeing  increasingly in countries like Brazil then start   to look at Alternatives and then of course uh  if you have the extend technology then you have   dicamba tolerance that you can then apply dicamba  to your crop but I think um for my understanding   is in Brazil there's a bit of uh because they  don't have the history of dicamba you said the   U.S had and the US is now having these regulatory  issues around dicamba with the extend for example   um and there's been a lot of cases that have  involved potential crop damage to neighboring   Fields Etc what we've seen is there's a  bit of a reticence and Brazilian Growers   to start using this on a wide base because  of the regulatory concerns in the US and the   potential impacts that it has on not their  cropped on for example neighboring crops or   other different crops within their own system so  I think that there is regulatory concerns around   the use of daikanban Brazil because they don't  have the history offer and they're coming from   basically no use of daikum but to what would be  expanded on a number of Acres I think that's maybe   a more longer term and it would be probably  driven more by buyer than by The Growers but   I think we have to wait and see on die come back  taking Brazil because it's my understanding that   grower awareness or grower um acceptance  of that is a bit off at the moment   okay thank you this is a question from Gene  zanazzo Brazil is one of the biggest markets   what is your view for the political situation  there impacting currency and overall business   yeah I think it's it's still quite early to  to tell at the moment but I think it could   have implications for um the crop protection  industry in general and also seeds as well   because I think the previous uh regime was  quite keen on or very um reluctant to stop   any sort of deforestation or increase of  arable land and I think what we're seeing   from the the new government is more of  a focus on environmental policies and   uh stopping the sort of deforestation or at  least not expanding it as fast as what had been   previously so I think the the biggest implications  or potential uh changes that we would see would be   a Slowdown in the increase of available out of  a landing result if you've been in a situation   Alistar mentioned there's that Arab of lands in  Brazil continued to expand but of course that's   coming at the expense of other land so what you've  had before is deforestation change to pasture land   this pasture land then change to use for edible  crops uh if you start to stop the deforestation   then you don't have the same ability to expand and  then you could start to see more of the the switch   that we see in the US between Maize and soybean  for example you could start to see that coming   in Brazil in more of a sort of switching case  rather than just increasing the land that they   have available I think that's the biggest sort of  implication of the the new government in Brazil okay great thank you um just to just to comment  before we we take uh we're going to take a couple   more questions and it looks like there's 17  questions so what we're going to do is take   some of those questions and post them online and  Alistair and Derek will answer those questions   if you visit agribusinessglobal.com you'll  also be able to download this presentation   um at agribusinessglobal.com live we'll  have the presentation and also you can   watch the video again so I just wanted to  say that before we take the next question   um can you comment on BT resistant insects and the   trend for that and where and what is or  will be the responses by seed companies   well um yeah yes there is there is always going  to be uh the emergence of insect resistance   um to to current BT technology it's one of the  reasons why uh companies have entered into inter   licensing agreements with each within with each  other over the last two decades even Monsanto   in its Heyday never had all of the technology  in-house required to lower its Refuge requirements   in the US uh the coron area a certain air certain  percentage of the area has to contain non-bt   traits and to maintain uh susceptible population  of your target pests and so where there has been   some resistance build up to the technology is in  Technologies where only one or two genes have been   pre present however what we have seen um over the  last decade or so is that seed companies have been   utilizing more and more modes of action for the  control of those specific pests to try and reduce   the onset of resistance to that technology and one  of the successes of that is that you have seen the   the the reduction in the level of structured  Refuge that these Growers have been required   to plant I mean it used to be that 20 of your  planted area used to be just for Refuge but   through the pyramiding up of these Technologies we  saw that fall to 10 with DuPont's Optima maker Max   one then it went down to five percent for smart  stacks and then you've now got a refuge in the   bag technology and so I'm sure it's something  that The Regulators are keeping a Keen Eye on   um that there will always be a need for a  refuge area because that is your safety net   for the technology always maintaining these BT  susceptible pests however moving down into South   America in the likes of um the intactor soybean  that has only had one gene for the control of   um soybean lepidoptera there has reportedly  been that in increase in resistance buildup   however that is likely to be managed through  the intactor to extend coming out and and also   conquesta E3 which have multiple modes of action  for the control of these pests but also you know   you have the emerging technology of rnai as well  completely new mode of action for the control of   insect pests Although our Nai right now is only  con confined to called root worm only below   ground polyoptera and so it is likely that in the  future we will see our Nai technology Branch out   to control new insect spectrums I mean there are  in the last few years we did see um once buyer   monsanto's ligus controlling product come out and  that is the first time where we've had a genetic   in seed control of a sucking pest rather than a  biting pest so uh it would be in the next 10 to   20 years I would think that we will see new higher  performing GM traits that come out which will help   manage the resistance build up but GM traits are  not a One-Stop shop Silver Bullet for the control   of these insect pests they are part of an overall  insect protection Management program um the use   of BT technology does not completely eliminate the  need for insecticide sprays they may be reduce the   amount of insecticidal sprays required so it's  part and parcel with the the current technology   great thank you Alistar uh this will be our  last question and again we'll I've copied   all the questions that have been posted and  we will have Aleister and Derek answer those   questions and then post them on a Blog so  please visit agribusinessglobal.com to get   those answers all right last question um in  your forecast on crop protection in 2035 how   much of the traditional uh crop protection do  you see being eroded by Biologicals you seem   to have only declines in market growth  from regulation uh not bio replacement yeah so uh we don't think that Biologicals  are effectively a direct replacement or a   value or off conventional the key deflators for  conventional are regulation um we're not really   seeing um but bios coming in as an addiction  or a compliment to Conventional chemicals   um it's not at this stage or to 2035 regulation is  taking the conventional chemicals out and in some   cases these can be replaced by bile but it's not  a case that a bio product is coming in and pushing   out the conventional uh that can provide the same  control so really what we're seeing is bio is   being complementary to Conventional what would  we actually expect to see is as a big increase   in the number of different hybrid products that  we have so we have there's a few hybrids on the   market now which are conventional with bio  we think this will increase as we go through   to 2035 there'll be a big spectrum of different  hybrid products but I would say that bio is more   complementary to Conventional van replacement  of course in places like the EU where they're   looking to reduce conventional pesticide use  in some cases this can be a bio with comment   but it's not a case of the bio is coming in and  putting the convention although the conventional   is being pushed out by regulation and the bio can  come in where possible to replace that use so I   think it's more complementary than replacement  but definitely bio is the biggest growth driver   if you split in conventional from bio bio  is by far the biggest growth driver to 2035.  

okay thank you thank you Derek and  ellister uh Derek and Aleister also have   um created an article for us for our agribusiness  Global directs January issue it's a complimentary   article to this presentation so please subscribe  if you haven't already so you'll be able to get   that information this concludes our  webinar um thank you again both for   the wonderful presentation and um again this  will be posted on agribusinessglobal.com to   review all right thank you thanks very much  thanks everyone bye bye-bye thank you bye

2022-12-24 21:27

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