Plant protection products. Russian market Analysis

Russia is traditionally one of the leading producers of agricultural products. The growth of the world population encourages agricultural producers to introduce various technologies to increase yields.

This study by SBS Consulting analyses the Russian market for plant protection products (PPP) for the period from 2015 to 2020. The report examines the main indicators of market dynamics, production and consumption structure, imports and exports of PPPs. Special attention is paid to the factors affecting the market and the main challenges faced by the industry.

Dynamics of the PPP market

Market volume:

• The PPP market in Russia grew at a compound annual growth rate of 14% during the period from 2015 to 2018.
• In 2019, there was a 22% decline in the market due to a number of factors:

— Decrease in gross harvest and crop yields.

— Falling crop prices.

— Decrease in purchasing power of agrarians.

PPP production:

• PPP production in Russia in physical terms increased by 27% in Q3 2020..
• The main driver of production growth is herbicides, which account for 60% of domestic production.
• Insecticides accounted for 20% of production, fungicides - 19%, anti-germination agents and plant growth regulators made up the remaining share.

Production dynamics (mln tonnes):

• 2015: 61
• 2016: 93
• 2017: 110
• 2018: 107
• 2019 (9 months): 100
• 2020 (9 months): 127

Market structure

Main PPP segments:

1. Herbicides: Weed control agents, accounting for 60% of domestic production.
2. Insecticides: Anti-insect agents, accounting for 20% of domestic production.
3. Fungicides: Antifungal agents, 19% of domestic production.
4. Sprout suppressants and plant growth regulators: the remaining share.

PPP consumption dynamics (kg/ha):

• Over the last 4 years, the PPP market has been growing at an average annual rate of 7%.
• The market is far from saturation, and the intensity of PPP use must increase at the same rate to maintain high yields.

Imports and exports of PPP

Imports:

• In 2019, PPP imports into Russia decreased by 10%.
• In 2020, there is a tendency to recover the value of imports.
• In 2019, imports of herbicides decreased by 25% due to anti-dumping duties from 27% to 52%.
• Imports of fungicides decreased by 13% in 2019 due to higher import prices and increased domestic production.
• The value of insecticide imports increased by 22% in 2019 and continued to increase in 2020.
• Germany, China and France accounted for more than 50% of imports in 2020.

Exports:

• In 2020, the volume of PPP exports increased by 35% due to favourable conditions on agricultural markets and the ruble devaluation.
• In 2020, 17% of the industry's output is exported.
• The main importers of domestic PPP products are CIS countries, with Kazakhstan accounting for almost 50% of exports in 2020.

PPP industry challenges

• Dependence on imported ingredients: More than 85% of all active ingredients are imported from China and India.
• Investment in R&D: To increase sales, domestic PPP manufacturers need to invest at least 7-10% of revenue in R&D.
• Environmental regulation: There is growing pressure on the market from environmental regulation of PPP, and there is a risk of substitution of chemical PPP with more expensive biologics.

Conclusion

The plant protection products market in Russia demonstrates significant growth potential despite temporary difficulties, such as a decline in gross yields and the purchasing power of farmers. The main drivers of growth are the intensification of agricultural production and the increase in cultivated land.

To maintain sustainable growth, the industry needs to minimise dependence on imported ingredients, invest in R&D and adapt to new environmental requirements. The development of domestic production and increased exports are also important areas for strengthening the position of the Russian market of PPPs.