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1、AGROCHEM INDUSTRY MARKET OUTLOOKKnowledge InstituteAgroChem Industry Market Outlook|3External Document 2024 Infosys Limited Knowledge InstituteCONTENTSExecutive summary 4Overall state of the industry 6Short-term outlook 8Long-term outlook 12Emerging revolutionary trends 18Conclusion 20External Docum

2、ent 2024 Infosys Limited Knowledge InstituteEXECUTIVE SUMMARYGlobal demand for agricultural commodities is projected to grow at 1.2%per year through 2030 to serve a population of 8.5 billion by 2030.According to the UN Food and Agriculture Organization,crop yield enhancement will provide 87%of the p

3、roductivity improvement required to achieve this target.Agricultural chemicals and the associated businesses and services(together referred to as agrochem in this report)will play a key role in improving crop yields and ensuring food security to meet this global demand.That modest growth figure abov

4、e belies that some sectors will advance more rapidly.The pesticide and other agricultural chemicals market is forecast to grow from$102.9 billion in 2023 to$169.8 billion by 2028,over 10%annual growth,with herbicides having the largest share by function.However,the farming industry faces risks from

5、weather conditions,supply chain disruptions,geopolitical tensions,4|AgroChem Industry Market OutlookAgroChem Industry Market Outlook|5External Document 2024 Infosys Limited and policies promotingsustainable growth.Digital technologies must mitigate these risks through timely information and proactiv

6、e intervention.Mobility backed by big data,analytics,precision agriculture,and satellite-based global positioning systems has the potential to increase yield and farmer income by 3-6%,reduce food loss by 2-5%,and decrease water usage by 1-3%,according to the World Economic Forum.Artificial intellige

7、nce(AI)and machine learning will be applied to improve decision making for efficient consumption of resources such as water.Agriculture contributed to 10%of the total greenhouse gas(GHG)emissions in the US in 2022.The food and agriculture industry contributed to around a third of the global total GH

8、G emissions in 2023.Agricultural chemical manufacturers cannot afford to miss their focus on sustainability while catering to a growing market for food.Knowledge InstituteOVERALL STATE OF THE INDUSTRYThe rising cost of raw materials represents a major challenge for the agrochemical industry.Pests re

9、duce global crop production by a whopping 20-40%,compounded by increasing insect species resistance to pesticides.While farmers may increase pesticide usage,agrochemical manufacturers are aggressively conducting research to develop new formulations as well.Precision agriculture continues to evolve t

10、o address these challenges,aided by leaps in computational advances and emerging so-called phygital digital technologies that measure and enhance key parameters.It is a leading approach that promises to consolidate the digital technology trends mentioned above for continued and responsible industry

11、growth.Other industry growth areas include sustainable farming practices,strategic partnerships and mergers,digital platforms,supply chain resilience,and outcome-based business models(Figure 1).6|AgroChem Industry Market OutlookExternal Document 2024 Infosys Limited AgroChem Industry Market Outlook|

12、7External Document 2024 Infosys Limited Knowledge InstituteFigure 1.Top growth areas for the agrochem industryFigure 2.2024 market capitalization of top agrochem companiesResearch and development(R&D)spending in the agrochemical sector represents 7 to 10%of revenue.Discovery and development of new a

13、ctive ingredients for crop protection in US and Europe increased from$286 million in 2014 to$301 million per a recent study.There is low market concentration in the agrochem sector,averaging 23%.Amongthe top eight companies in terms of market capitalization(Figure 2),the top 5 firms alone accounted

14、for 54%of the total agrochem revenue of$396 billion in 2023.Syngenta continues progress towards its$2billion investment target in breakthrough sustainable and regenerative innovation by2025.1Precision agriculture with digital technologies AI,IoT,big dataSustainable farming practices2Introduction of

15、new products3Strategic collaboration and mergers4Digital platforms,channels5Supply chain resiliency6Outcome-based business models7SyngentaBASFCortevaNutrienSABICUSD,billionMosaicYaraBayer$0$10$20$30$40$50$60$70$63$52$43$37$28$25$9$7Source:InfosysSource:8|AgroChem Industry Market OutlookKnowledge Ins

16、titutePrecision agricultureSHORT-TERM OUTLOOKThe agrochemical industry leverages leverages generative AI alongside the internet of things(IoT)and big data to transform operations,improve decision-making,and drive innovation.Generative AI is increasingly used to design novel agrochemicals and optimiz

17、e formulations.AI models can generate chemical structures with desired properties more quickly than traditional methods.This accelerates the development of effective pesticides and fertilizers tailored to specific crops and environmental conditions.IoT devices play a crucial role by providing real-t

18、ime data from fields through sensors and connected machinery.These sensors collect data on soil moisture,weather conditions,and crop health,which is then integrated into big data platforms.Big data analytics process this vast amount of information to uncover patterns and insights that guide AI-drive

19、n recommendations.For example,IoT sensors can provide data on pest infestations,and AI algorithms can predict outbreaks and suggest targeted pesticide applications,minimizing chemical use and maximizing crop yield.SABIC for example uses sensors in its smart farming technology center to measure key p

20、arameters and predict nutrient requirement,pest control,and water management for sustainable agriculture using AI.The convergence of generative AI,IoT,and big data is revolutionizing the agrochemical industry by accelerating innovation,enhancing precision,and improving sustainability.External Docume

21、nt 2024 Infosys Limited AgroChem Industry Market Outlook|9Knowledge InstituteSustainable farming practicesSustainable farming practices aim to balance productivity with environmental stewardship,and the agrochemical industry increasingly supports these methods through digital technologies.Sustainabl

22、e practices include integrated pest management(IPM),precision agriculture,and organic farming.Integrated pest management IPM combines biological,cultural,and chemical methods to manage pests with minimal environmental impact.Digital technologies enhance IPM by providing real-time data and predictive

23、 analytics.For example,Bayers digital platform Climate FieldView integrates data from IoT sensors and satellite imagery to monitor pest populations and recommend targeted interventions,reducing the need for broad-spectrum pesticides.External Document 2024 Infosys Limited Organic farming With its foc

24、us on natural inputs and synthetic chemical avoidance,organic farming reduces carbon emission,sequesters or separates CO2 from the atmosphere,and reloads the soil with vital nutrients.Digital tools support organic practices by providing data on soil health and crop performance without relying on che

25、mical inputs.This approach also optimizes crop rotation,enhancing soil fertility and productivity sustainably.Digital technologies are critical to implement and scale sustainable farming practices.They enable precise application of resources,enhance pest management strategies,and support organic met

26、hods,driving both environmental and economic benefits.Knowledge InstituteIntroduction of new productsThe development and introduction of new agrochemical products rely on advanced tools,streamlined processes,and strategic practices.The following have emerged as major forces to improve product introd

27、uction:High-throughput screening(HTS).This tool accelerates discovery of new agrochemicals by quickly testing effectiveness of thousands of compounds.For example,BASF uses HTS to identify promising candidates for pest control and crop protection.Computational chemistry and molecular modeling.These t

28、ools predict the properties and behaviors of chemical compounds,facilitating the design of novel molecules.Corteva Agriscience employs these techniques to innovate herbicides and insecticides with targeted action and reduced environmental impact.Field trials and data analytics.Before commercializati

29、on,products undergo extensive field trials to assess performance 10|AgroChem Industry Market OutlookExternal Document 2024 Infosys Limited AgroChem Industry Market Outlook|11Knowledge Instituteunder real-world conditions.Data from these trials is analyzed to refine formulations using big data and AI

30、.Syngenta uses Climate FieldView to integrate trial data to optimize product development.Recent successful examples include:Bayers InVivo technology.This platform integrates genomics and AI to develop targeted crop protection solutions,leading to more effective and environmentally friendlyproducts.E

31、xternal Document 2024 Infosys Limited Cortevas Rinskor Active.Developed through advanced molecular modeling and field testing,this herbicide provides effective weed control while minimizing collateral damage to crops.Stringent regulatory requirements,long development cycles,and high R&D costs contin

32、ue to challenge agrochem firms.Leaders are overcoming these challenges through:Collaborative Research.Partnering with academic institutions and research organizations to leverage expertise and sharecosts.Adaptive trial design.Using iterative field trials to refine products based on real-timedata.Sus

33、tainability focus.Integrating environmental impact assessments early in the development process to align with regulatory expectations and market demands.12|AgroChem Industry Market OutlookKnowledge InstituteLONG-TERM OUTLOOKStrategic collaborations and mergerssolutions to farmers in diverse geograph

34、ies.In 2024,UPL announced its acquisition of Corteva Agrisciences fungicide business to strengthen its leadership in that market.Recent strategic collaborations and mergers reflect a trend toward agrochem innovation,market expansion,and integrated solutions.Here are notable examples and rationale:Ba

35、yer and Monsanto.Following Bayers acquisition of Monsanto in 2018,the merger aimed to combine Bayers existing crop protection portfolio with Monsantos leading seed technologies.The rationale was to create a comprehensive agronomic solutions provider,integrating crop protection and seed technologies

36、to enhance precision agriculture and improve farm productivity.This strategic move was designed to leverage complementary strengths and offer holistic solutions to farmers.It became controversial due to Bayers exposure to litigations from Monsantos herbicide cases,and financial and structural challe

37、nges from integrating the two entities.Corteva Agriscience and UPL Limited collaboration.In 2021,Corteva and UPL Limited formed a strategic alliance to enhance the availability of Cortevas crop protection products in emerging markets.This partnership allowed Corteva to expand its global reach,partic

38、ularly in regions where UPL has established distribution networks.The collaboration aimed to leverage UPLs strong market presence and local expertise to accelerate growth and deliver innovative External Document 2024 Infosys Limited AgroChem Industry Market Outlook|13Knowledge InstituteSyngenta and

39、China National Chemical Corporation(ChemChina).ChemChinas acquisition of Syngenta in 2017 was a landmark deal designed to strengthen ChemChinas position in the global agrochemical market.The acquisition provided ChemChina with advanced technologies and an extensive global network.For Syngenta,the de

40、al enabled increased investment in R&D and expanded its market presence,particularly in China and other growth regions.Three years after the acquisition,the deal gave Syngenta access to the Chinese market,with a quarter of its sales from China,but leaving ChemChina in deep debt with plans to go for

41、an IPO while waiting in weak market conditions in China.Nutrien and BioConsortia collaboration.In 2020,phosphate and potash producer Mosaic entered into an agreement with BioConsortia to develop and launch nitrogen-fixing microbial products for non-legume crops.This collaboration sought to enhance c

42、rop yields while reducing reliance on synthetic nitrogen fertilizers,aligning with sustainable agriculture practices.In 2022,BioConsortia saw compelling initial results in vegetables when the nitrogen-fixing technology was tested,with an almost 20%improvement in reduced fertilizer rate.These strateg

43、ic moves illustrate the industrys prioritization and bold moves to expand market access,integrate technologies,and leverage global networks to drive innovation and growth.External Document 2024 Infosys Limited 14|AgroChem Industry Market OutlookExternal Document 2024 Infosys Limited Knowledge Instit

44、uteDigital platforms and channelsRaw material cost accounts for 35 to 40%of net sales in the specialized chemical industry.Procurement cost reduction delivers non-linear bottom-line improvement.Digital channels have made great strides to remove information asymmetry between buyers and sellers for pr

45、ice discovery to arrive at a fair price.The agrochem industry increasingly harnesses digital platforms and channels to enhance market reach,streamline product offerings,and engage with customers.Recent initiatives include:Digital marketplaces and platforms.Companies leverage digital marketplaces to

46、expand their reach and simplify the purchasing process.Bayers digital platform,Bayer Crop Science Digital Solutions,integrates e-commerce capabilities and enable farmers to access products,services,and agronomic advice directly from their devices.This platform provides a comprehensive suite of tools

47、 including precision agriculture solutions and digital recommendations.The ABCD companies in food commodity trading Archer Daniels Midland,Bunge,Cargill,and Louis Dreyfus have controlled 70-90%of the global grain trade for decades.They decided to standardize and digitize grain trade using blockchain

48、 and artificial intelligence in 2018,for efficiency,transparency and cost reduction.The ABCD firms witnessed record profit or sales in 2023,driven by demand outstripping supply and surging food prices.Digital platforms and channels will continue to influence them positively in the years to come.Prec

49、ision agriculture tools.Firms like Syngenta are investing in precision agriculture technologies such as Climate FieldView.This platform offers farmers real-time data,analytics,and insights to make informed decisions on crop management.By integrating data from IoT sensors and satellite imagery,Climat

50、e FieldView optimizes agrochemical use,improving efficiency and yield.Customer Relationship Management(CRM)Systems.Corteva Agriscience has developed advanced CRM systems to enhance customer engagement and support.Their digital solutions include personalized marketing and customer service platforms t

51、hat leverage big data and AI to provide tailored recommendations and support throughout the crop cycle.Digital education and training.Toempower users,companies like FMC Corporation offer digital training programs and webinars.These initiatives help farmers understand new products and technologies,en

52、suring better adoption and usage and building customerloyalty.These digital initiatives improve market access and customer engagement,while also driving operational efficiency and enhancing product adoption.By integrating advanced digital tools,the agrochem industry is transforming how it delivers v

53、alue and interacts with trading partners.AgroChem Industry Market Outlook|15External Document 2024 Infosys Limited Knowledge InstituteSupply chain resiliencyThe agrochemical industry has undertaken several strategic steps to enhance supply chain resilience,particularly in response to disruptions suc

54、h as the pandemic and geopolitical tensions.Supply chain resilience measures industry capability to return to normalcy within a specific time when disruptions such as the Suez Canal obstruction occur.One proven resilience intervention is timely flow of critical information across supply chains with

55、a control tower that consolidates information from diverse sources for a comprehensive view and effective decision-making.Here are selected agrochem approaches:Diversification of supply sources.To mitigate risks associated with single-source dependencies,companies are diversifying their suppliers an

56、d production locations.Bayer has expanded its network of suppliers and production facilities across different regions to ensure a more stable supply of raw materials and finished products.Digital supply chain management.Leveraging digital tools has become a major business strategy.BASF initiated a p

57、ilot project to establish a blockchain platform for the complex cotton supply chains,to enable transparency and traceability when sourcing the commodity.The solution traces the journey of a cotton garment starting from a BASF seed from the farmer all the way to a retail store.Syngenta connected 30 o

58、f its warehouses in three years for real-time information flow,resulting in 4%savings in warehousing costs.Inventory management and safety stocks.Maintaining strategic inventory levels and safety stocks buffers against short-term disruptions.For example,Corteva Agriscience increased its inventory of

59、 critical raw materials and finished goods to rebuild its safety stock and ensure continuity during supply chain interruptions.Agile supply chain strategies.Implementing agile supply chain practices enables companies to adapt quickly to changing conditions,including flexible manufacturing processes

60、and alternative logistics solutions.BASF has implemented an integrated supply chain by sharing information across its suppliers,partners,and customers.Recent disruptions,such as high-profile shipping delays pandemic,Suez,and Baltimore,to name a few have tested these strategies.Companies have managed

61、 these challenges by accelerating digital transformation initiatives and investing in supply chain resilience programs.Forexample,Bayer and Corteva have enhanced their digital platforms to better forecast demand and effectively manage logistics disruptions.Knowledge InstituteOutcome-based business m

62、odelsto invest in crop success and provides a clearer value proposition for farmers.Adoption levels of this business model vary globally.In North America and Europe,adoption is more advanced,driven by higher technology integration and better access to data analytics.For example,BASFs Smart Farming i

63、nitiatives in Europe use data-driven insights to optimize the application of chemicals,aligning their revenues with the efficacy of their products.In contrast,adoption is slower in emerging markets due to lower technological infrastructure and varying levels of market sophistication.However,even in

64、these regions,there is growing interest in outcome-based models as they offer a way to enhance product value and customer satisfaction.Overall,outcome-based models are reshaping the agrochem industry by focusing on delivering measurable results,driving innovation,and fostering stronger partnerships

65、between suppliers and farmers.The agrochem industry increasingly leverages outcome-based models to drive growth and efficiency.These models focus on delivering specific performance outcomes rather than simply selling products.This shift is transforming how agricultural solutions are developed,market

66、ed,and evaluated,aligning manufacturer incentives with the success of their clients.Syngentas regenerative agriculture is an example where an agrochem firm nurtures and restores the soils health with methods such as intercropping of multiple crops,crop rotation,livestock integration,and precision fa

67、rming.Outcome-based models in agriculture chemicals involve contracts where chemical providers are compensated based on achievement of agreed-upon results,such as increased crop yields,improved soil health,or reduced pest damage.Syngenta implemented performance-based contracts for its crop protectio

68、n products,where payments are tied to crop yield improvements achieved through their solutions.This approach incents both parties External Document 2024 Infosys Limited 16|AgroChem Industry Market OutlookAgroChem Industry Market Outlook|17External Document 2024 Infosys Limited Knowledge InstituteKno

69、wledge InstituteEMERGING REVOLUTIONARY TRENDSDigital technologies are revolutionizing the agriculture chemical industry by enhancing operational efficiency and offering significant benefits to agricultural customers.Here are the primary technologies and their combinations driving this transformation

70、(Figure 3):Precision agricultureLeveraging GPS,IoT sensors,and AI,precision agriculture enables farmers to apply chemicals more accurately,optimizing the usage and reducing waste.For example,John Deeres precision agriculture technologies use GPS and sensor data to tightly manage fertilizer and pesti

71、cide application,improving crop yield and sustainability.Data analytics and AIAdvanced data analytics and AI help analyze vast amounts of agricultural data to predict weather patterns,pest outbreaks,optimize chemical usage,and improve supply chain management.BASF uses AI-driven insights to forecast

72、pest patterns and tailor chemical applications,enhancing product efficacy.Blockchain aids supply chain transparency and traceability,improving chemical product integrity and regulatory compliance.Syngenta employs blockchain to track the journey of its chemicals from production to application,ensurin

73、g authenticity and reducing counterfeiting.18|AgroChem Industry Market OutlookExternal Document 2024 Infosys Limited AgroChem Industry Market Outlook|19External Document 2024 Infosys Limited Knowledge InstituteDigital AppsMobile apps and digital platforms facilitate real-time communication and data

74、sharing between agricultural chemical providers and farmers.For instance,Corteva offers a suite of digital tools that integrate with farm management systems to assist farmers in planning and managing chemical applications efficiently.Remote sensing and dronesDrones equipped with multispectral camera

75、s capture detailed aerial imagery,enabling farmers to monitor crop health and determine the precise need for chemical applications.Suppliers like DJI offer drones that provide actionable data to optimize pesticide and fertilizer application,leading to more targeted and efficient use.These technologi

76、es streamline agrochem operations and empower farmers with precision tools,and these and other examples continue to demonstrate increased productivity and sustainability.Figure 3.Techs role in agrochemPrecision agricultureGPS and IoT sensors,devicesAI-driven analyticsRemote sensing,variable rate app

77、licationRemote sensing and dronesComputer visionDrones for aerial imageryData analytics and AIAdvanced data analyticsBlockchain for immutable traceabilityDigital platforms and automationPersonalized recommendation to farmersReal-time monitoring,agribotsDigital marketplacesSource:Infosys20|AgroChem I

78、ndustry Market OutlookExternal Document 2024 Infosys Limited Knowledge InstituteCONCLUSIONThe agrochem industry will continue to experience modest growth as it grapples with rising inputs and increased supply chain volatility.Digital technologies will continue to play a key role,and the macro trend

79、is to integrate within and between firms.This ecosystem and its vast potential for data sharing,offers the next frontier in efficiency and resilience.Data itself has become an additional virtual commodity,with quality backed by speed.Tech is the engine acting upon data across its life cycle,from dat

80、a gathering from the field to its filtering,mining for insights and timely actions,and eventually for autonomous action using the rapidly advancing AI and its associated technologies.Food is literally the stuff of life,and the agrochem industry has a noble opportunity to transcend financial performa

81、nce and serve a greater purpose.As a key partner to agriculture,agrochem helps feed the world,in the pursuit to serve global demand at an affordable cost and sustain the planet.AgroChem Industry Market Outlook|21External Document 2024 Infosys Limited Knowledge Institute22|AgroChem Industry Market Ou

82、tlookExternal Document 2024 Infosys Limited Knowledge InstituteAbout Infosys Knowledge InstituteThe Infosys Knowledge Institute helps industry leaders develop a deeper understanding of business and technology trends through compelling thought leadership.Our researchers and subject matter experts pro

83、vide a fact base that aids decision making on critical business and technology issues.To view our research,visit Infosys Knowledge Institute at or email us at .AuthorsKapil Ravindrakumar Nanchahal|Vice President,InfosysJeff Kavanaugh|Global Head,Infosys Knowledge Institute Ramachandran S|Principal C

84、onsultant,Infosys Knowledge Institute 2024 Infosys Limited,Bengaluru,India.All Rights Reserved.Infosys believes the information in this document is accurate as of its publication date;such information is subject to change without notice.Infosys acknowledges the proprietary rights of other companies

85、to the trademarks,product names and such other intellectual property rights mentioned in this document.Except as expressly permitted,neither this documentation nor any part of it may be reproduced,stored in a retrieval system,or transmitted in any form or by any means,electronic,mechanical,printing,photocopying,recording or otherwise,without the prior permission of Infosys Limited and/or any named intellectual property rights holders under this document.For more information,contact I|NYSE:INFYStay Connected