Chemical Crop Protection (CP) products are one of the three essential inputs for growing crops, along with seeds and fertilizer, and account for a significant proportion of farmers’ variable costs.  Since the modern industry was founded in the 1930s, it has made great strides in introducing ever safer and more efficacious products.

Superficially it might seem that the CP industry is slow moving, compared to say the FMCG[1] sector:

• It is driven by an annual agricultural cycle where farmers produce between one and three crops a year and this is reflected in the relatively low frequency of their purchases.
• The average age of a CP product is around 40 years. Unlike in, say, the pharmaceuticals industry, once a product comes off patent, after around 15 years on the market, its sales do not plummet as there are many strategies which companies can adopt to defend their products against generic competition[2].
• It can take ten years or more from the discovery of a new active ingredient to its first launch.

However, upon closer inspection, this is not the case. There are some major drivers in the industry which are leading to an accelerating rate of change.  Chief among these are first, the increasingly demanding regulatory environment and second, the development of resistance to insecticides, herbicides and fungicides. These forces have contributed to ongoing change and significant restructuring in the industry over the past three years.

Regulatory and legal challenges

Crop protection products have always been subject to close scrutiny from the regulatory authorities, and had to satisfy toxicological, environmental and efficacy requirements in order to reach the market. These criteria have become increasingly demanding over time, leading to escalating costs for developing and introducing new products. Industry analysts Phillips McDougall estimated that it costs $286m to bring a new active ingredient to market in the period between 2010 and 2014, up from $152m in 1995[3], and this has in all likelihood since increased.

The EU currently presents the most challenging regulatory regime in the world. It used to be the easiest and EU countries were the first in which companies would launch their new products but now the opposite is the case. By way of example the guidance documents provided in order to meet the requirements on the current regulations run to around 1,400 pages, a ten-fold increase on those provided for the previous legislation. One particularly demanding characteristic of the prevailing EU legislation is that it is based on hazard, rather than risk – less account is taken of the degree of exposure to the product[4] or the product benefits – whereas other regimes are risk-based and consider these other factors.

Decline in available substances

Since the 1990s it has been necessary to re-register existing products every few years to ensure they meet the latest standards, with re-registrations typically being granted for seven to 15 years. Many products have failed to meet these standards, or have not been defended by their companies, and as a result the number of active substances available to the EU farmer has declined from more than 900 in the 1990s to around 400 in 2019.

Under the current legislation 77 products have been identified as Candidates for Substitution[5] when their registrations come up for renewal because they meet one or more toxicological, environmental or other criteria. Many of these have lost their registrations, including some significant products such as mancozeb, the world’s second largest fungicide and glufosinate, one of only three non-selective herbicides[6], the others being paraquat, which has also been banned in the EU, and glyphosate which is under increasing pressure (see below).

Other new criteria such as endocrine disruption threaten to lead to many more withdrawals in the future. If a product is withdrawn in the EU it can have an impact on other markets (and the EU food supply chain) by limiting imports of crops treated with those products into the EU[7].  Moreover, some emerging markets look to the EU for guidance.  For example, seeing the pressure glyphosate is under in the EU, Vietnam has banned it.

Increasing restrictions

In addition to increasing hurdles for introducing new products and re-registering existing ones, products in the EU are subject to further pressures.  The large neonicotinoid group of insecticides has been severely restricted due to concerns over safety to bees, although this is disputed by the industry. Glyphosate, the largest CP product in the world by some margin with sales of around $5 billion, was almost banned in 2018 due to political pressure on the product, even though it is one of the safest CP products known to man. It is now scheduled to be reviewed in 2022, earlier than would normally be the case and some EU member states have declared that they are unilaterally going to ban it. Its large sales and high profile make it a political target for NGOs and governments.

These withdrawals and bans restrict the availability of products to farmers.  The loss of the neonicotinoids makes it much more difficult to grow oilseed rape in the EU as key seed treatments contained these products. With the loss of glufosinate and, before that paraquat, farmers now only have access to one remaining non-selective herbicide: glyphosate. Thus, the EU farmer is at an increasing competitive disadvantage to his counterparts in other regions. And this is at a time when food security is rising up the political agenda as a result of COVID-19, although the global food supply chain has proved remarkably resilient so far in the face of the pandemic. Europe is already heavily reliant on food imports and this is likely to increase. Ironically, France, one of the countries doing most to try to reduce the use of CP products in the EU, has recently declared that the CP industry, along with other input sectors, is an ‘essential’ industry during the pandemic and its products ‘indispensable’. The situation is further exacerbated by the fact that the rate of new product introductions is declining (see below) so farmers have fewer products in their armory.

Future regulation

In the future, new legislation is likely to increase the already strong pressures on the industry. The EU General Food Law, due to come into force in 2021, includes provisions for more public access to information on registrations and studies and more pre-notification of intended studies. This could make the process even more vulnerable to political factors than it already is. The European Commission’s recently published ‘Farm to Fork’ and ‘Biodiversity’ strategies contain provisions ‘for a revision of the Sustainable Use of Pesticides Directive to significantly reduce use and risk and dependency on pesticides and enhance Integrated Pest Management’. However, it also  proposes a revision of the regulatory procedure for biologicals with a view to making it easier to register such products as alternatives.

While other regulatory regimes outside the EU are not yet as demanding, they are also becoming much more challenging.  Requirements in Brazil, an agricultural powerhouse and the world’s largest CP market, have become much more onerous. Japan is introducing a system for re-registration of products. India recently proposed a ban on 27 products including major ones such as 2,4-D, atrazine and deltamethrin. Even the US, considered to be the country with the most objective and science-based regulatory system, is becoming more difficult.

CHAP provides various services which can help companies and other industry stakeholders address the regulatory challenges.   For example the E-Flows Mesocosm has been developed in partnership with Fera Science Limited. This is Europe’s most advanced edge-of-field water assessment facility, which enables environmental testing of plant protection products to meet the most stringent regulatory standards, helping to introduce a wider range of more effective products to market more quickly and to help farmers tackle threats to their crops.

Legal challenges

In addition to the regulatory challenges, some products face challenges on the legal front.  The most high profile example of this glyphosate, where in the US Bayer faces more than 100,000 claims against the product on the grounds of carcinogenicity, even though there is no proven effect and the US Regulatory Authorities, the EPA, have declared it illegal to describe glyphosate as a carcinogen on the product label.

There is no doubt that some older products with less favourable toxicological and environmental profiles should be phased out, and it is good that standards and product safety are continuously improving in line with scientific advances.  However, in the case of many other products the justification is less obvious, glyphosate being the ultimate example.

Resistance

One consequence of reducing the number of active ingredients available to farmers is that it makes it increasingly difficult to manage resistance in pests to chemical control. Resistance was first documented in 1914 and has been an ongoing issue for the CP industry. Originally it was mainly a problem with insecticides where the use of multiple sprays per season on some crops, notably cotton[8], combined with the multi-generational nature of insects led to the build-up of resistance to some products in the early product groups such as organophosphates and carbamates[9].

More recently resistance has become an issue with pyrethroids, especially in the malaria control sector where the prevalence of insecticide-treated bed-nets has promoted its development. There is also growing resistance to the first biological insecticide introduced, Bt, but this has come about through the widespread adoption in insect resistant crops containing that gene. In the US, resistance is estimated to cost $10bn a year in terms of lost production.  Overall more than 550 arthropod species have demonstrated some form of insecticide resistance.

Increased usage

In the herbicide sector resistance has been found to every product mode of action apart from one newly introduced one[10]. The widespread adoption of GM crops with tolerance to glyphosate has resulted in use of that product beyond its initial burn-down market, enabling its use in-crop and across crop rotations. This significant increase in use has also led to a rapid increase of glyphosate weed resistance with more than 40 species now known to be resistant. This is a particular problem in North and South America where glyphosate tolerant crops have a high penetration in maize, soybeans, cotton and canola. For this reason, new herbicide tolerant traits are being introduced, conferring resistance to products with different modes of action, notably dicamba and 2,4-D. The development of new traits such as these can give old products a new lease of life and illustrates how important it is not to ban or withdraw products unnecessarily when they might be needed at some future date to address to as yet unforeseen problems. However, without proper strategies for resistance management[11] it is likely that resistance to these products will rapidly evolve too.

In the fungicide domain a significant recent example of resistance is evident in the case of Asian Soybean Rust in Brazilian soybeans where widespread resistance to triazole products has developed.

According to Dow (now Corteva) in 2017 there was some level of resistance to products accounting for 86% of herbicide sales, 40% of insecticide sale and 31% of fungicide sales, although in some cases the levels of resistance may be relatively low.

Managing resistance

There are various strategies for managing resistance

• Introducing products with new modes of action through innovation in the industry
• Using products with different modes of action in mixtures or combination programmes
• Creating refuge areas in the planting of GM crops

The concept of integrated pest management (IPM) was developed in part to address the issue of resistance, as well as to reduce the amount of crop protection products being used. IPM has been around for several decades but its adoption has been partly constrained by the fact it is a more complex approach than conventional pest control programmes. The boom currently being witnessed in the introduction of biological products (see below) could provide farmers with more options for their IPM programmes. The revolution in digital farming (see below) could also expedite the adoption of IPM programmes which are inherently more data-intensive than conventional approaches.

The industry has always been on a treadmill, trying to keep one step ahead of resistance by introducing new products.  However as the rate of innovation slows (see below) this is becoming increasingly difficult.  The loss of some major products through de-registration and bannings is exacerbating this situation. That is one of the main drivers for the increasing use of biological products with different modes of action, even though these products remain very small in terms of market penetration.

Through its Molecular Diagnostics Laboratory CHAP can identify markers for resistance associated with the development of pesticide resistance in weed, pathogen and insect pests of arable crops and plants. This, in turn, will enable downstream development of diagnostic techniques that can be used in the lab and field to identify pesticide resistant populations quickly.

The incidence and intensity of pest infestations is not only impacted by resistance but also by other environmental factors which can lead to shifts in pest populations. This has been seen recently in the spread of fall armyworm across Africa and Asia and the locust plagues which started in the Middle East and rapidly spread beyond. Here CHAP can help with its International Pest Horizon Scanning capability and National Reference Collection of biotic crop threats, both in association with CABI.

Industry restructuring

Increasing regulatory pressures and escalating costs of introducing new products are two factors which have driven consolidation in the CP industry. Another is the declining rate of innovation. Whereas in the 1980s, 1990s and 2000s an average of 10-12 new active ingredients were introduced into the market each year, by the 2010s this rate had fallen to around five, despite the leading companies continuing  to invest around 7% of sales in R&D, which is high by the standards of most other industries. This declining rate of innovation has in turn led to an increase in the share of the market garnered by off-patent manufacturers (which invest significantly less in basic R&D, and focus on maintaining registration and cheaper manufacture of off-patent products), and resulting downward pressure on agrochemical prices and margins).

Between 2017 and 2019 the top 12 CP companies became the top nine with Dow and DuPont merging their crop science businesses into Corteva, Bayer acquiring Monsanto, BASF acquiring the majority of the former seed business of Bayer, ChemChina (owner of Adama) acquiring Syngenta, and UPL acquiring Arysta. However, although the number of companies has declined, anti-trust authorities’ requirement to divest products where there is significant overlap means that the product choice the farmers have is not significantly impacted by these mergers and acquisitions. Another beneficial outcome of the remedies required by the anti-trust authorities was in the R&D area where the EU insisted that DuPont not only divest certain commercial products but also divest its relevant R&D resources and projects to FMC. This was to avoid a significant decline in the industry’s R&D base which is so essential to finding products to replace those lost due to regulatory and other pressures and with new modes of action to combat resistance.

Growth in biologicals

While the focus of this piece has been on chemical crop protection, a major trend in the industry is the increasing number of biological products being introduced into the market. This is a direct consequence of the drivers discussed above – regulatory pressures and resistance – as well as several others such as the pull from the food industry for products which have no residues and can be used right up to the point of harvest. In some jurisdictions, though not yet in the EU, biological products can be registered more easily than conventional CP products. By providing alternative modes of action they are also an important component of resistance management strategies.

There are now more than 1000 biological products available on the market and their number is rapidly expanding. This compares with around 600 conventional CP products. All the major CP companies are increasing their investment in biologicals and putting their R&D and marketing muscle behind them. There are also hundreds of smaller companies and start-ups operating in this space. While biologicals are still a niche sector and concentrated in fruit and vegetable crops, they are growing rapidly and beginning to break into broad acre crops. CHAP is contributing towards innovation in the biologicals area through its Fungal Biopesticide Development Laboratory in which it tests and screens for potential new fungal biopesticide isolates to treat existing and emerging pests and diseases affecting crops, including oil seed rape grown in the UK and beyond.

Digital agriculture

Another major area of increasing investment in the industry is digital agriculture[12]. This is also being driven by a combination of smaller companies/start-ups and increasing engagement from the ‘majors’. The potential benefits are seen as reduced costs, increased productivity and reduced environmental impact as a result of more targeted use of products. While R&D investment in conventional CP has been stagnating, it has been increasing for both biologicals and digital agriculture and is part of a wider ongoing agritech boom. CHAP’s offers in the digital farming space include CropMonitor Pro, a state of the art sophisticated decision support platform which has been developed in partnership with FERA, and its Field Scale Precision Equipment, which allows it to work on variable rate application of fertilizers and crop protection products, among other things.

Finally, with BASF’s acquisition of the Bayer seed assets, all the leading proprietary crop protection businesses are also now players in the seeds and traits business where there is greater potential for innovation, including herbicide, insect and disease resistances bred and engineered into crops. Some generic crop protection businesses have also invested in seeds e.g. UPL and Nufarm. These companies have increasing options to introduce new resistance traits, including genetic modification (GMO), gene editing and marker assisted breeding. This further adds to the potential for innovation and the toolbox on offer to growers to protect their crops, alongside traditional crop protection chemistry.

Conclusions

The number of conventional products available to farmers is declining in the EU as the rate of product withdrawals exceeds that of new product introductions. Depending on what happens in other regions this trend could also be seen elsewhere. This could result in making it increasingly challenging for farmers to manage the growing level of resistance, which is being exacerbated by the widespread adoption of GM crops with input traits. This is a major driver leading to the introduction of an increasing number of biological products that can be used as part of resistance management programmes.

But every threat is also an opportunity and with fewer products available, and increasing resistance, the rewards for new products will become correspondingly greater and could stimulate more innovation, reversing the recent decline. New technologies such as data analytics and AI could also help in this regard by increasing the efficiency and effectiveness of research.

Even if there are fewer ‘winners’ in the future as the industry consolidates and even if the rate of innovation continues to decline, the industry remains vital to contributing to the sustainable intensification of agriculture, with all the economic and environmental benefits which that provides.

Notes

[1] Fast moving consumer goods

[2] For example by developing novel formulations and mixtures

[3]  ‘The Cost of New Agrochemical Product Discovery, Development and Registration in 1995, 2000, 2005-8 and 2010-2014.  R&D expenditure in 2014 and expectations for 2019’, Consultancy Study for CropLife International, CropLife America and the European Crop Protection Association, Phillips McDougall March 2016

[4] Although exposure is still a key part of the risk assessment

[5] A candidate for substitution will not be re-registered if a safer alternative is available

[6] A non-selective herbicide kills all vegetation it come into contact with, compared to selective herbicides which will not kill the crops for which they have been developed

[7] Under Maximum Residue Level (MRL) criteria

[8] A typical spray programme in the US involved 6 sprays or more

[9] In this case use of a relatively old OP product – Actellic, which provides an alternative mode of action to pyrethroids – has been promoted by the WHO as a means of combating resistance

[10] Luximo, introduced by BASF in 2019 has received the first new mode of action classification from the Herbicide Resistance Action Committee (HRAC) since 1985

[11] Resistance management strategies include the use of two or more products with different modes of action in a spray programme, the use of refuge areas for insecticide resistant crops and crop rotation

[12] The term digital agriculture, or digital farming can be seen as an evolution of the concept of precision agriculture, which has been around since the 1990s. and embraces a broad suite of technologies such as variable rate application of fertilizer, seed and CP products, remote sensing, field mapping, farm management software and robotics

By Jonathan Shoham, Freelance consultant for the agri-food chain, Consulting Analyst for Phillips McDougall and Advisor to The Syngenta Foundation for Sustainable Agriculture

For more information on our Crop Protection Solution and related Capabilities, go to https://chap-solutions.co.uk/solutions/data-diagnostic-insights/