Future Development of the Crop Protection and Seed Markets
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