The global agrochemicals market, valued at approximately USD 232.71 billion in 2023, is projected to grow at a CAGR of 3.10% between 2024 and 2032, reaching an estimated USD 278.67 billion by 2032. This industry, which plays a crucial role in supplying essential agricultural inputs such as pesticides, herbicides, and fertilizers, faces a variety of challenges and opportunities in the coming years.
Agrochemicals, encompassing synthetic chemicals and biological compositions, are vital in enhancing crop quality and yield in agriculture, floriculture, and horticulture. This market segment includes fertilizers, adjuvants, pesticides, and plant growth regulators. The product categories in this market are diversified into fertilizers, pesticides, adjuvants, plant growth regulators, among others, and are utilized in both crop-based and non-crop-based applications. The demand for agrochemicals is significantly driven by the increased consumption of cereals, grains, and fresh produce like fruits and vegetables, especially in Asian nations.
The Asia Pacific region, including countries like India, China, and Japan, is a leading market for agrochemicals, driven by its substantial agricultural production and growing population’s food demand. Despite the growth projections, the agrochemical sector faces several challenges. For instance, fluctuating inventory levels and supply trends, such as oversupply in herbicides leading to price fluctuations, pose significant challenges for businesses. These challenges are compounded by geopolitical factors, including international conflicts and trade tensions, which can disrupt the supply of critical raw materials and agrochemical products.
In terms of revenue, the agrochemical sector is expected to maintain double-digit growth in the next fiscal years, with a forecast of 12-13% and 10-12% growth in 2023 and 2024, respectively. This growth is partly attributed to the export market, with Indian exporters benefiting from the China +1 procurement model and healthy demand from Brazil, the US, and Europe. However, domestic demand in India is likely to see a moderation due to factors like uneven monsoon and a slower increase in rural incomes.
The industry also faces challenges from rising input costs, particularly imported ones, leading to a decrease in operating profitability. Prices of key inputs like glyphosate, glufosinate, imidacloprid, and bifenthrin have increased by almost 30% since March 2021. This, coupled with slowing domestic demand and high competitive intensity, is expected to reduce operating margins.
Furthermore, the geopolitical climate and international trade relationships significantly impact the industry. Trade tensions between the United States and China, the ongoing Russia-Ukraine conflict, and the Mexican government’s ban on glyphosate and GMO seeds are among the key geopolitical factors affecting the agrochemical industry.
In conclusion, while the global agrochemicals market is projected to grow, it is not without its challenges. These include managing inventory fluctuations, navigating trade policy uncertainties, and monitoring international conflicts. The industry’s success in the upcoming years will depend on how effectively it can address these challenges while capitalizing on the growth opportunities presented by the increasing global demand for agricultural products.