Purple Gas – Seed & Crop Protection Market Maturity To Benefit Distributors & Farmers Relative To Crop Consumers

Monthly Update – Global Agriculture – Daily Chemical Reactions

Purple Gas – Seed & Crop Protection Market Maturity To Benefit Distributors & Farmers Relative To Crop Consumers

Key Findings

• General Thoughts: We view the maturing of the seed trait and crop protection industry as beneficial to distributors and farmers but negative for global seed and crop protection sector profit margin growth and sustainability efforts.
• Supply Chain/Inputs: We discuss the slowdown in seed and crop protection R&D, and why we see less risk facing some already commoditized input chains, such as ammonia, among cost-advantaged global fertilizer producers.
• Energy/Biofuels: We discuss the biofuels market, looking at competing production technologies relative to those that are crop-based, with scale being a major issue for all, and we flag rising fuel and food competition from crops.
• Sustainability/Energy Transition: Green and blue ammonia growth efforts are not currently focused as much on agriculture end-markets relative to their role as hydrogen carriers and decarbonizing other industries, such as fuels.
• Downstream/Other: We note 2024 crop conditions and why we foresee farmer income support amid greater input selection and rising crop demand. Overall, we see farmers in a better medium-term position than crop consumers.

Exhibit 1: Agriculture input (seed & crop protection) margins have fallen relative to their 2017 average, and we partly link to maturing sector technology, which we see benefiting input distributors and farmers relative to crop buyers.

Source: Bloomberg, C-MACC Analysis, June 2024

See the PDF below for all charts, tables, and diagrams