US farmers have been switching to cheaper generic pesticides and fungicides as they plan for next year’s planting due to lower incomes and reduced grain prices, according to a Reuters report.
The switch to generic crop chemicals could have an impact on agrichemical companies like German chemical giant Bayer, according to market analysts quoted in the 14 November report.
Bayer’s shares dropped to a 20-year low on 12 November, after the chemical company said that weak global agricultural markets and a slumping US farm economy were likely to put further pressure on profits, Reuters wrote.
Other leading agrichemical companies such as German chemical and biotech giant BASF’s agriculture unit, and crop protection and seed companies Corteva and Syngenta could also be affected, according to analysts.
While some farmers were shifting away from branded products, others were reducing the need for herbicides and pesticides by investing in equipment that targeted and treated weeds and pests, Matt Carstens, chief executive of farm cooperative Landus and agricultural financing company Conduit, said.
Increasing numbers of generics were now available to farmers – with more than two dozen active ingredient patents expiring in the previous five years – leading to a boom in off-patent use, which accounted for about 80% of the agrichemical market share at the time of the report, according to Rabobank agricultural analysts Owen Wagner and Sam Taylor.
With farmers facing weak margins in the season ahead, they were more likely to look for cost savings with fertiliser or crop protection chemicals, Taylor said.