The Future Of The US Agrochemical Industry

May 27, 2021

Agrochemicals constitute an important part of the US chemical industry. The market involves chemical products like fertilizers, pesticides, hormones, and plant growth regulators. Being one of the most industrialized and commercialized markets in the USA, the growth and changes in the market significantly influence the chemical industry and the economy as a whole. 

The Pandemic

The COVID-19 pandemic has led to an increase in demand for edibles. This has resulted in farmers being encouraged to use more agrochemicals to facilitate better yields to keep up with the market demand. Apart from that, consolidation of farms is anticipated to occur after COVID-19 in the United States. The agrochemical market may see a boost due to the potential increase in investments in biologicals, caused by a high emphasis on food security and sustainable crop production.

Other than the pandemic, US agrochemical market growth in the forecast period was also boosted by an increased need for crop protection chemicals due to frequent pest attacks on crops. The attacks caused considerable losses during the season. The erratic weather pattern witnessed also contributes to the growth. Despite causing higher rainfall, The La Niña weather phenomenon resulted in an uneven distribution of rainfall and crop productivity across the country, resulting in the need for agrochemicals to stabilize yields. 

Environmental Concerns

Rising concerns regarding the excessive use of chemicals in agriculture and its harmful effects on the environment act as a market restraint. Experts now agree that excessive use of agrochemicals leads to soil pollution, water contamination and can cause over-exploitation of natural resources. Thus, the US's market growth will depend on the land productivity of agriculture fields while keeping intact the soil health. The development of agrochemical formulations that are less harmful to the ecosystem is also essential. 

Growth Prospects

A recent report titled "US Agrochemical Market Outlook to 2025" by Ken Research has suggested that the US Agrochemical Market is further anticipated to grow in the coming years primarily due to the entries of several foreign players to the domestic market. The country's agrochemical market is predicted to reach a positive six-year growth rate of 2.3% for 2019-2025. The report also notes that the increasing use of integrated pest management activities and bio-pesticides will be the key drivers of the sector's growth. 

The productivity per acre of the sector has grown steadily because of greater penetration of effective and efficient farming technologies, including mechanization techniques, improved land preparation methods, planting, crop protection, harvesting, and storage. These improvements have also resulted in a flourishing food and beverage sector, giving a boost to the growth of the agrochemical industry. The chemical distributor companies that provide the raw materials for agrochemicals, including N-P-K manufacturers (nitrogen, phosphorus, and potassium being the three primary macronutrients required for the production of pesticides), will see a boost in growth. 

In the context of concerns about the environment, it would benefit the chemical supply companies, in the long run, to invest more into research and development of eco-friendly variants of pesticides, herbicides, and other agrochemicals. Since the demand for agricultural produce will not decline anytime soon, the forecasts for agrochemical markets remain high despite the market restraints. 

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