Georgian National Investment Agency - Enterprise...

April 2015

Georgian National Investment Agency

Chemical Sector Research

Group 24.2 -Production of Agrochemical products

© 2015 KPMG Georgia LLC, a company incorporated under the Laws of Georgia, a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity.

All rights reserved. 2

This report was commissioned by the LEPL “Georgian National Investment Agency” www.investingeorgia.org

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Table of Contents

Abbreviations 4Glossary of terms 5Agrochemical products 6




Abbreviations

AMD Armenian Dram

AG Aktiengesellschaft - corporation limited by share ownership

ASEAN Association of Southeast Asian Nations

AZN Azerbaijani Manat

bbl Barrel

BP British Petroleum

BVBA Private limited liability company

CAGR Compound Annual Growth Rate

CCPIA China Crop Protection Industry Association

CFR Cost and Freight

CIA Central Intelligence Agency

CIS Commonwealth of Independent States

COGS Cost of Goods Sold

EBIT Earnings Before Interest and Tax

EU European Union

EUR Euros

etc Et cetera

FAO Food And Agriculture Organization of the United Nations

FAT Free Agricultural Tax

FOB Free on board

FX Foreign exchange

GMO Genetically Modified Organisms

GmbHGesellschaft mit beschränkter Haftung, stands for company with limited liability

HAP Hazardous air pollutant

IFA International Fertilizer Industry Association

Inc. Incorporation

ITC International Trade Center

ITCI International Tax Competitiveness Index

K/mt Kilo metric ton

kg Kilogram, measurement unit of weight

m.t. Metric ton

m3 Cubic meter

MMBtu one million British Thermal UnitsLLC Limited Liability Company

LOA Lubricating oil additives

Ltd. Limited Company

N/A Not available

NAFTA North American Free Trade Agreement

nes Not elsewhere stated

NSSRA National Statistic Service of the Republic of Armenia

OECD Organization for Economic Co-operation and Development

OPEC Organization of the Petroleum Exporting Countries

o/t Other

p.a. Per annum

P/E Ratio of Price to Equity

PAG Polyalkylene glycol

PTA Purefied Terephthalic Acid

R&D Research and Development

s.a.r.l.Société à responsabilité limitée, it is a private limited liability corporate entity that exists in

s.r.l. The legal title of limited liability company

s.r.o.The legal title of a private limited company in Czech and Slovak.

Sp.z.o.o. The legal title of a private limited company in Poland.

t ton, measurement unit of weightUAH Ukrainian Hryvnia

UK United Kingdom

USA United States of America

VAT Value Added Tax

VOC Volatile Organic Compounds

WACC Weighted average cost of capital




Glossary of terms

b.o.e.Barrel of oil equivalent, is a unit of energy based on the approximate energy released by burning one barrel

Bar The bar is a metric (but not SI (International System of Units)) unit of pressure

°C Celsius, temperature measurement unit

Current Ratio Is calculated as current assets divided by current liabilities

EBIT margin Is calculated as earnings before interest and tax divided by total sales

Inventory Turnover Is calculated as total sales divided by inventory

NACENomenclature of Economic Activities, is the European statistical classification of economic activities

Net Income Margin Is calculated as net income divided by total revenue

Rare gases Helium, neon, argon, krypton, xenon and radon are called rare gases

Return on Assets Is calculated as net income divided by total assets

S.A.Type of corporation in countries that mostly employ civil law, it is equivalent to public limited company in common law jurisdictions

SG&A margin Is calculated as sales, general and administrative expenses divided by total sales

Total Asset Turnover Is calculated as total sales divided by total assets




Agrochemical productsGeneral overview

In general Agrochemical refers to any chemical used in agriculture, including chemical fertilizers and pesticides. In Georgian NationalClassifier SEK 001-2004 Group 24.2 – Production of Agrochemical products includes pesticides such as insecticides, rodenticides,fungicides, plant growth regulators, etc. and other agrochemical products. Group 24.2 – Production of Agrochemical products does notinclude production of mineral fertilizers and nitrogen compounds. World health association defines pesticides as ‘chemical compoundsthat are used to kill pests, including insects, rodents, fungi and unwanted plants (weeds). Pesticides are used in public health to killvectors of disease, such as mosquitoes, and in agriculture, to kill pests that damage crops.’

Insecticides - for killinginsects

Herbicides or weed killers

Fungicides - to kill mold orfungi

Rodenticides -to kill mice,rats, moles and otherrodents

Pesticides exists indifferent forms includingliquid, gel, paste, chalk,powder, granules, pellets,baits.

Our analysis includes all the above mentioned agrochemical productions.

Pesticides help to protect crops from various pests and increase agricultural productivity, preserve food and materials andprevent of vector-borne diseases (for example pesticides may be used in the prevention of malaria). However, pesticides aretoxic by design. Their mode of action is by targeting systems or enzymes in the pests which may be identical or very similar tosystems or enzymes in human beings and therefore, when handled improperly they may harm humans and other species andthe environment.

Genetically Modified Organizmes (GMO) and bio pesticides are also important segments of crop protection, however they areout of the scope of this analysis (not included in the Group 24.2). Generally in agro business the term GMO refers to the plants(seeds of plants), which have been genetically modified. One of the effects of genetically modification is that the plant gainsresistance against various pesticides so that farmers can freely use the pesticides to kill the pest while not harming the crops. Agood example is the genetically modified crops that are resistant to glyphosate (non selective herbicide).

Biopesticides are types of pesticides derived from natural materials. The use of biopesticides has increased in recent yearshowever they are still a small part of crop protection industry. Biopesticides are biologically-derived agents rather thanchemically and we have not included those in our analysis.

In Georgian National Classifier SEK 001-2004 Sub Group 24.20 includes

FungicidesHerbicides InsecticidesPlant

growth regulators

Disinfectants Other agrochemicals

Anti-sprouting products

Rodenticides




46 47.2

52.855.9

60.7

-5.7%

2.6%

11.9%

5.9%

8.6%

-8%-6%-4%-2%0%2%4%6%8%10%12%14%

0

10

20

30

40

50

60

70

2009 2010 2011 2012 2013

Bill

ion

US

D

Global Pesticides Sale Growth rate

The global agrochemicals demand and sale is drivenby food production requirements.

In 2013 the global sale of pesticides reached USD60.7 billion, which compared with 2012 increased by8.6%. In 2013 the total world import of pesticidesincreased by 10.2% compared with the previous yearand was USD 33,659 million. During 2009-2013 theCAGR of the world import of pesticides was 10.6%.

In 2013, herbicides, anti-sprouting products andplant-growth regulators accounted for 36.7% of theworld import of pesticides.

In 2013 the global sale of pesticides was USD 60.7 billion

The global sale value of pesticides is projected to reach USD 75.9 billion by 2019.1

Agrochemical productsMarket overview

Global Pesticides Sale in 2009-2013

The world import of pesticides 2009-2013Structure of the world pesticides import by main types in 2013

Source: PhillipsMcDougall

Source: ITCSource: ITC

36.7%

26.0%

24.8%

5.1%7.3%

Herbicides, anti-sprouting products andplant-growth regulators

Fungicides

Insecticides

Rodenticides and otherplant protectionproducts

Other

22,521 24,662

29,726 30,551 33,659

-10.6%

9.5%

20.5%

2.8%

10.2%

-15%

-10%

-5%

0%

5%

10%

15%

20%

25%

-

5,000

10,000

15,000

20,000

25,000

30,000

35,000

40,000

2009 2010 2011 2012 2013M

illio

n U

SD

Pesticides import Growth rate1. AgroPages - Market Insight




15.8

15.615.4

11.4

2.5Asia

Latin America

Europe

NAFTA

Africa/MidEast

23%

19%

13%

11%

9%

7%

18%

Syngenta

Bayer

BASF

Dow Agro

Monsanto

DuPont

Other

Global pesticide market is highly concentrated withseveral multinational companies controlling the worldmarket. In 2013 global top 6 pesticide (crop protection)companies accounted for approximately 82.5% of theglobal sales. Syngenta was the largest pesticidecompany in 2013 by sale accounting for 23% of thetotal global sales.

The most consumed types of pesticides are herbicides,fungicides and insecticides. Together they account for92% of the global sale of pesticides. Herbicides wasthe most consumed pesticide accounting for about48% of total pesticide sale (consumption) in the world.

Asia accounted for 15.8% of the global pesticide salein 2013, followed by Latin America and Europe.

The geographical breakdown of the pesticides sale was as follow:

Asia – USD 15.8 billion Latin America – USD 15.6 billion

Europe – USD 15.4 billion

NAFTA – USD 11.4 billion

Africa/MidEast – USD 2.5 billion

Agrochemical productsMarket overview

Global pesticides market players in 2013 (by sales)

Source: Equity Research - Chemicals

USD 60.7 billion

82.5% market share

48%

23%

21%

8%

Herbicides

Fungicides

Insecticides

Others

Source: Equity Research - Chemicals

Structure of the world pesticides market in 2013 (by sales)

Pesticide sale by the world regions

Source: PhillipsMcDougall




In 2013 top ten importing countries of pesticides accounted forabout 43% of world pesticides import. Brazil, France and Germanywere the top 3 importers of pesticides with share of 9%, 7% and 5%in the world import of pesticides. Meanwhile in 2013 top tenexporting countries of pesticides accounted for about 74% of worldpesticides export. Germany, USA and France were the top 3exporters of pesticides with share of 12.5%, 11.8% and 11.4% in theworld export of pesticides.

In 2013 the import of pesticides in South Caucuses (Georgia,Azerbaijan and Armenia) was about USD 45 million (6.9 thousandston), while the export was only USD 880 thousands. Among thecountries of South Caucasus Georgia was the biggest importer.

Germany was the top exporter of the pesticides accounting for around 9% (USD 3.5 billion) of global export value

Agrochemical productsMarket overview – import and export

Import of pesticides in 2013

9%

7%

5%

5%

3%

3%

3%

3%3%

2%

57%

Brazil

France

Germany

Canada

USA

Belgium

UK

Spain

Italy

Netherlands

Other

12.5%

11.8%

11.4%

11.3%6.5%

6.4%

4.8%

3.7%

3.2%

2.7%

25.7%

Germany

USA

France

China

Belgium

India

UK

Spain

Switzerland

Netherlands

Other

Structure of the world pesticides import by countries in 2013

Structure of the world pesticides export by countries in 2013

6,815

15,512

22,931

556,928

324,263

769,455

0 200,000 400,000 600,000 800,000

Armenia

Azerbaijan

Georgia

Russian Federation

Turkey

Ukraine

Thousands USDSource: ITC

Source: ITC

Source: ITC

Note: Structure of the international trade of pesticides are based on average trade results of countries in 2009-2013.




23%

9%

9%

8%7%6%

4%3%

3%3%

25%

China

Germany

USA

France

Belgium

India

United Kingdom

Argentina

Spain

Netherlands

Other

China46%

USA10%

Brazil8%

Argentina7%

Mexico3%

Ukraine2%

Other countries15%

France2%

Spain2%Italy1%

Germany1%

Other EU countries

3%

EU 289%

The total world export of pesticides was around4,747 thousand ton (included formulations: readyproducts) in 2013.

While being largest exporter of pesticides from theperspective of export value, Germany is secondlargest exporter from the perspective of volume(9% of global export) following China. Thisdifference is caused by the price differences. Forfurther analysis of the price difference please seethe price analysis section. China accounts forapproximately 23% (around 1 million ton ofpesticides) of the global export of pesticides fromthe perspective of volume of the product.

According to the latest data available in 2012 theglobal consumption of pesticides wasapproximately 4 million ton of active ingredients.Based on the estimates the largest consumer ofpesticides was China accounting for approximately46% of the global consumption of pesticide activeingredient.

According to the China Crop Protection IndustryAssociation (CCPIA) China is also the largestproducer of pesticide active ingredients accountingfor about 70% of the global production in 2013.The global production of active ingredients ofpesticides are estimated to be around 4.6 millionton.

The China is the largest producer, consumer and exporter of pesticides from the perspective of volume

India’s pesticide consumption is 0.6 kg/hectare versus 13.0 kg/hectare in China and 7.0 kg/hectare in the US

Agrochemical productsMarket overview – consumption and production

Structure of the world pesticides export volume by countries in 2013

Main consumer countries of pesticides

Source: FAOSTAT, Eurostat, KPMG research and analysis

Source: ITC

4,747 thousands

ton

Note: For estimating the share of different countries we used the latest available data publish by FAO and Eurostat




Agrochemical productsProduction cycle- general overview

Mixes active ingredients and inert ingredients to formulate various crop protection products.One or more active ingredients may be used to formulate the final product.Other (inert) ingredientshave number offunctions including toattract the pest, tostabilize the product andextend shelf-life, to helpthe pesticide stick tosurfaces like leaves andsoil, to help the pesticidespread over surfaces, tohelp the pesticidedissolve in water, toprevent caking orfoaming, etc.

The active ingredient isthe chemical substancewhich is used to kill,control or repel the pest.The same activeingredient may be foundin hundreds of pesticideproducts with differentnames.Active ingredients orlower concentrationformulationintermediates are sold tomanufacturers of Final(Formulated) PesticideProducts.

Wide variety ofchemicals/chemicalgroups are used inproduction of the activeingredients of pesticidesand hundreds ofdifferent active principlesof main ingredients ofpesticide groups.Main feedstock ofpesticides include:● Phosphorus

chemicals● Organic acids● Industrial gases

Agrochemical products are usually marketed through either distribution channels or in areas of large farms (Brazil).

Crop Protection Chemicals value chain

Main raw materials(Fine and specialty

chemistry)BlendingProduction Active

Ingredient Distribution




Majority of top selling active ingredients are introduced by market top participants. This can be explained by the huge cost of research and development which could not be afforded by smaller participants

Agrochemical productsProduction cycle

All globally leading companies in the industry are involved in active ingredient development and production, and alsodevelopment of final products for customers. Similar to the pharm industry in crop protection industry afterdevelopment of the active ingredients it takes about 3 years to obtain all necessary regulatory approvals beforecompany may launch mass production and use the specific active ingredients. Once approved the company getspatent for 20 years. While after 20 years the active ingredient can be openly used by other companies, however thesuccess of entering the market with 20 years gap is questionable.

Herbicides Insecticides Fungicides

Active ingredient Company Year of

launch Active ingredient Company Year of launch

Active ingredient Company Year of

launch

Glyphosate Monsanto 1972Thiamethoxam Sygenta 1999Azoxystrobin Syngenta 1997Paraquat Sygenta 1962 Imidacloprid Bayer 1991Pyraclostrobin BASF 20022, 4-D Dow,Nufarm 1945Chlorantraniliprole DuPont 2008Mancozeb Dow, UPL 1943Mesotrione Syngenta 2001Fipronil BASF 1993Prothioconazole Bayer 2004Metolachlor Syngenta 1975Chlorpyrifos Dow 1965Trifloxystrobin Bayer 2000

Acetochlor Monsanto 1985Lambda-cyhalothrin Syngenta 1984Copper Fungicides Many 1885

Atrazine Syngenta 1957Clothianidin Bayer 2002Tebuconazole Bayer 1988Glufosinate Bayer 1986Abamectin Syngenta 1985Epoxiconazole BASF 1993

Top 8 active ingredients for main type of pesticides in 2012* (by sale)

Source: Phillips McDougall, Morgan Stenley - Global Chemicals, KMPG research

* Latest available data at the date of research




Research and development of final active ingredient for pesticides may take as much as 10 years and cost around USD 260 million

Agrochemical productsProduction cycle

Research and development of final active ingredient for pesticides may take as much as 10 years and cost aroundUSD 260 million. Being one of the highest regulated industry in the world with increasing regulations and complexity ofthe legislation, introduction and registration of new ingredients becoming more time consuming and expensiveespecially in many EU countries. Only a few of 100,000 compounds are passing all the safety and efficiency tests.Around 30% of the cost of a new active ingredient is spent on product safety.

Development stages of new active ingredient in agrochemicals

Year

Chemistry- Synthesis- Formulation of productBiology- Research- Trials- Field development

Environment

Compounds

Toxicology

Environment

Registration

0 1 2 3 4 5 6 7 8 9

~ USD 80 million

~USD 85 Million

~USD 25 Million

~USD 70 Million

~USD 260 Million

Research optimization Early development Late development10

Source: CropLife International; Syngenta,

140.000 5.000 30 1-3 1 1 1 1 1 1




Agrochemical productsProduction cycle – cost structure and margin

As mentioned earlier in the report the pesticidesgenerally consist of an active ingredient and inertingredients.The concentration of pesticides varies from 2% up to80% of active ingredient and the cost of active ingradient and the inert ingredient makes up the bigpartition of the production cost of the final formulatedproduct. The cost of active ingredients may be as muchas 65% of the cost of the final product.The cost structure varies depending on the type of theactive ingredient and inert ingredient used and theconcentration of active ingredient in the product.

Cost structure of pesticides

Inert ingredient quantity x cost

Active ingredient quantity x cost (concentration 2%-80%)

Cost of formulated final product

Basic product (Specialtychemicals)

Active Ingredient Blending

The cost of active ingredients may be as much as 65% of the cost of the final product.

P/E 23.2x

Return on Assets % 5.0%

Gross Margin % 24.6%

SG&A Margin % 13.6%

EBIT Margin % 9.4%Net Income Margin % 6.8%

For getting the average profit margin in the development and preparation of formulated product we used theratios of the top 6 companies in the industry including Syngenta, Bayer CropScience, DuPont, Monsanto,BASF and Dow Chemical (market share of big six is 82.5% ). The 5 year average of the net profit margin oftop companies was around 10.25%.According to the FactSet Research Systems Inc. latest data the industry (NACE 24.2 Manufacture ofpesticides and other agro-chemical products) average net profit margin is 14.61%.While the development of active ingredient requires significant amount of investment there is a significantmargin in the formulating business. In some cases the gross profit margin of formulating can be as high as46%.

Source: Capita IQ, FactSet Research Systems Inc., KMPG research




Agrochemical productsRaw materials

Active ingredients of pesticides are generally synthesized in a laboratory mostly from hydrocarbons (organiccompounds, for further details please see the organic chemicals sector). Most pesticides also contain other elements,the type and number of which depend on the pesticide desired. Oxygen, nitrogen (please see ‘Industrial gases’ sectorfor more details regarding this raw material), sulfur, phosphorus (please see the ‘mineral fertilizers’ sector for moredetails), chlorine and bromine are most common.




Import ExportC

hlor

ine

Bro

min

ean

d flu

orin

e*

Chlorine and bromine are halides, a compounds containing halogen and classified as inorganic salts.In 2013 the global import of chlorine was around USD 190 million. The largest importer of chlorine was USA accounting for 32%of the global import. The largest exporter of chlorine was Canada accounting for 33% of global export.In 2013 the global import of fluorine and bromine was around USD 190 million. The largest importer was China accounting for29% of global import. The largest exporter was Israel accounting for 47% of the global export.

Agrochemical productsRaw materials – chlorine and bromine

32%

4%

4%3%3%3%3%2%

46%

USA

Belgium

Germany

Hungary

Switzerland

Chinese

Iraq

China

Other

33%

8%

6%5%4%4%3%

2%

35%

Canada

France

Germany

Japan

Mexico

South Africa

Jordan

Romania

Other

47%

23%

20%

5% 5%

Israel

Jordan

Belgium

United States ofAmerica

Other

29%

17%

6%5%5%

38%China

Belgium

France

India

United Kingdom

Other

Import and export of chlorine, fluorine and bromine by countries in 2013

Source: ITC

*Note: There was no available information for bromine trade separate from fluorine




We have used the unit value per ton of product (active ingredientof pesticides) to illustrate the price difference.

The pesticides exported from EU countries and USA are moreexpensive than the Chinese and Indian pesticides and thoseexported from Argentina.

The main factors that cause the price difference is the productioncost, environmental costs, regulations, domestic productionvolume, etc.

Another important factor that affects the global price is thedemand derived by global crop production.

During the period of 2007-2013 the unit export value of the main types of pesticides were fluctuating and some types (herbicides, anti-sprouting products and plant-growth regulators) are showing decreasing trend

Agrochemical productsPrice analysis

Insecticides Fungicides Herbicides, anti-sprouting products and plant-growth regulators

Disinfectants Rodenticides

China 4,041 5,195 3,144 1,528 2,837 Germany 11,452 27,071 18,729 3,035 3,438 USA 19,973 14,504 8,549 2,846 4,846 France 18,715 10,330 9,096 2,428 4,534 Belgium 19,869 13,206 10,799 2,998 2,547 India 11,723 4,689 7,952 1,559 7,067 United Kingdom 14,041 18,452 5,965 3,506 5,420 Argentina 3,819 18,484 3,793 1,721 5,173 Spain 13,058 10,271 7,716 2,732 2,292 Netherlands 14,390 14,296 11,390 1,662 3,253 World average export unit price 9,748 10,569 6,272 2,799 4,572

Export unit value (USD) per ton of active ingredient in by major exporter 2013

Source: ITC, KPMG analysis

Source: ITC, KPMG analysis

02,0004,0006,0008,000

10,00012,000

2007 2008 2009 2010 2011 2012 2013InsecticidesFungicidesHerbicides, anti-sprouting products and plant-growth regulatorsDisinfectants

Export unit value (USD) per ton of active ingredient in 2007 - 2013

Source: Data for some types of pesticides regarding the 2012 and 2013 export unit value were not available at the date of research




Agrochemical productsMarket overview – Production capacity and top 20 producers

1 Syngenta AG2 Bayer CropScience3 BASF4 Dow AgroSciences5 Monsanto6 Dupont

7ADAMA(formerlyMakhteshim Agan)

8 FMC9 Nufarm

10 Sumitomo Chemical11 UPL12 Arysta LifeScience13 Cheminova14 Wynca Group15 Huapont-Nutrichem16 Kumiai Chemical17 Ishihara Shangyo Koshi18 SipCam Agro19 Nanjing Red Sun20 Jiangsu Yangnong Chemical

Top 20 producers of agrochemicals in 2013

Source; CHINA AGROCHEMICALS September 2014

With glyphosate accounting for around 15% of totalagrochemical market and with global capacity of around 1million ton we estimated the global production capacity of thepesticides active ingredients to be around 6.6 million tonannually. The utilization of the production capacity is estimatedto be around 69%.




Agrochemical productsMarket overview – Top 20 Importers and exporters

Source: ITC

Importers Exporters1 Fernagut Univar2 Cadilhac S3 Strategic Sourcing Solutions, S.L.3 CRISTIAN GRUP S.R.L. Linegal Chemicals Sp. z o.o.

4 Chemia SA Przedsiebiorstwo Handlu Chemikaliami Cezal SA Centrum Zaopatrzenia Medycznego5 Deborel Maroc s.a.r.l. Deborel Maroc s.a.r.l.6 HOLOUBEK PROTECT a.s. HOLOUBEK PROTECT a.s.7 Eltachem Maroc s.a.r.l. IMPAG AG8 IMPAG AG Chungnam Province9 Islandwide Marketing Services (Pvt) Ltd Azelis France SAS

10 Marbar Chimie Manuel Riesgo, S.A.

11 Azelis France SASUNIUNEA NATIONALA A COOPERATIVELOR DE CONSUM

12 Ets Sous-Traitance et de Commercialisation Africaine Qingdao FTZ United International Inc.13 Manuel Riesgo, S.A. Uma Brothers

14BASF SE ( Germany ) Representation in the Republic of Belarus Challande & Fils S.A.

15 Challande & Fils S.A. Chemia-Lublin SA Przedsiebiorstwo Handlowe16 Pétrole du Maghreb IBIS Chemie International17 DuPont CZ s.r.o. MAREX S.A.18 Comptoir Agricole du Souss Julius Hoesch GmbH & Co. KG

19 Chemia-Lublin SA Przedsiebiorstwo Handlowe Russtail Trade Company20 Covirep Norbright Industry Co.,Ltd.




Agrochemical productsMarket overview – Top 20 Importer Countries

Global Top 20 Importer countries by value

EU (28 including Turkey)Top 20 Importer countries by value

CIS countries and Ukraine import by value

Country Import Value (USD, thousands) Country Import Value

(USD, thousands) Country Import Value (USD, thousands)

1 Brazil 2,999,751 1 France 2,467,138 1 Ukraine 769,4552 France 2,467,138 2 Germany 1,840,133 2 Russian Federation 556,9283 Germany 1,840,133 3 Belgium 979,451 3 Belarus 155,4424 Canada 1,546,166 4 UK 948,560 4 Kazakhstan 124,9305 USA 998,287 5 Spain 904,720 5 Moldova 61,4076 Belgium 979,451 6 Italy 883,807 6 Azerbaijan 15,5127 UK 948,560 7 Netherlands 822,288 7 Uzbekistan 13,0548 Spain 904,720 8 Poland 767,804 8 Kyrgyzstan 8,3649 Italy 883,807 9 Hungary 353,294 9 Armenia 6,815

10 Netherlands 822,288 10 Romania 324,488 10 Tajikistan 70211 Thailand 799,172 11 Turkey 324,26312 India 792,573 12 Czech Republic 300,71013 Ukraine 769,455 13 Denmark 275,32414 Poland 767,804 14 Austria 265,90915 Argentina 755,908 15 Greece 220,96616 China 692,919 16 Lithuania 167,36217 Australia 669,117 17 Bulgaria 162,27718 Mexico 598,650 18 Sweden 161,18519 Viet Nam 576,211 19 Portugal 156,05320 Russian Federation 556,928 20 Slovakia 143,488

Source: ITCNote: In 2013 Georgian import of pesticides was USD 22,931 thousands.




Agrochemical productsMarket overview – Top 20 Exporter Countries

Global Top 20 Exporter countries by value

EU (28 including Turkey)Top 20 Exporter countries by value

CIS countries and Ukraine export by value

Country Export Value (USD, thousands) Country Export Value

(USD, thousands) Country Export Value (USD, thousands)

1 Germany 4,140,918 1 Germany 4,140,918 1 Russian Federation 108,4422 USA 3,908,645 2 France 3,787,304 2 Belarus 82,2473 France 3,787,304 3 Belgium 2,153,405 3 Ukraine 20,0594 China 3,744,214 4 UK 1,601,303 4 Kazakhstan 1,8405 Belgium 2,153,405 5 Spain 1,209,165 5 Republic of Moldova 3926 India 2,133,217 6 Netherlands 896,701 6 Uzbekistan 1677 UK 1,601,303 7 Italy 764,024 7 Armenia 428 Spain 1,209,165 8 Austria 264,156 8 Kyrgyzstan 209 Switzerland 1,052,064 9 Denmark 257,947 9 Tajikistan 0

10 Netherlands 896,701 10 Hungary 245,847 10 Azerbaijan 011 Italy 764,024 11 Poland 212,81012 Israel 754,918 12 Portugal 100,03513 Argentina 555,908 13 Czech Republic 90,24314 Colombia 441,976 14 Ireland 85,08015 Japan 390,089 15 Romania 49,79316 Brazil 364,207 16 Slovenia 43,31317 Malaysia 357,070 17 Lithuania 41,40218 South Africa 319,821 18 Sweden 34,97219 Indonesia 317,445 19 Bulgaria 33,99020 Republic of Korea 272,871 20 Greece 30,046

Source: ITCNote: In 2013 Georgian export of pesticides was USD 838 thousands.




Pesticide import structure by countries, 2014

In 2014 the import of pesticides in Georgia decreasedby 5.8% and was USD 21.6 million. During 2010 –2014 the pesticide import recorded 21.8% CAGR.

In 2014 Switzerland accounted for 24% of the totalimport of pesticides to Georgia. Turkey was thesecond largest exporter of pesticides to Georgiaaccounting for 19% of the import.

In 2014 fungicides was the main type of pesticidesimported to Georgia accounting for 48% of the import.Herbicides, anti-sprouting products and plant-growthregulators were the second largest group (24%).

In 2014 Georgia imported USD 21.6 million of pesticides majority of which was fungicides

Agrochemical productsGeorgia - pesticide import

Import of pesticide in 2010 - 2014

Pesticide import structure by product type in 2014Source: ITC

Source: ITC Source: ITC

9.8

13.2 15.8

22.921.6

-24.8%

35.0%19.1%

45.3%

-5.8%

-30%

-20%

-10%

0%

10%

20%

30%

40%

50%

0

5

10

15

20

25

2010 2011 2012 2013 2014

US

D M

illio

n

Pesticide Import Import Growth rate

24%

19%

11%10%

8%

7%

5%

4%

3%2%

7%

Switzerland

Turkey

France

Germany

China

India

Italy

Austria

Spain

Ukraine

Other

24%

48%

20%

2%6%


Fungicides

Insecticides


Other




71%

18%

11%

Armenia

Azerbaijan

Belarus

Pesticide export structure by countries, 2014

In 2014 the export of pesticides from Georgiadecreased by 23.6% and was only USD 640thousand. During 2010 – 2014 the pesticide exportrecorded 21.5% CAGR.

In 2014 Georgia exported pesticides only to threecountries Armenia, Azerbaijan and Belarus.

Fungicides accounted for 46% of Georgian export ofpesticides.

In 2014 Georgia exported USD 640 thousands of pesticides

Agrochemical productsGeorgia - pesticide export

Export of pesticide in 2010 - 2014

Source: ITC

Source: ITC

Pesticide export structure by product type in 2014

Source: ITC

294.0368.0 515.0

838.0640.0

-10.1%

25.2%

39.9%62.7%

-23.6%

-30%-20%-10%0%10%20%30%40%50%60%70%

0

100

200

300

400

500

600

700

800

900

2010 2011 2012 2013 2014

Thou

sand

US

D

Pesticide Export Export Growth rate

17%

46%

12%

4%

21%


Fungicides

Insecticides


Other




Agrochemical productsGeorgia - pesticide production and consumption

No data was available regarding theproduction and consumption of agrochemicalproducts in Georgia. For estimating theconsumption of pesticides in Georgia wemade several assumptions:

The net import (import minus export) ofagrochemicals was consumed during theyear.

No domestic production of agrochemicalsoperates or the volumes produced inGeorgia, if any, are insignificant.

We neglect the availability of pesticidesinventory in the country.

In 2010-2014 the average annual net import of pesticides in Georgia was approximately 2,422 ton

2010 2011 2012 2013 2014Insecticides 236 316 354 521 459Fungicides 796 951 1,089 1,790 1,309Herbicides* 222 440 532 788 715Rodenticides 82 165 142 89 103Other 149 146 154 254 310

- 200 400 600 800

1,000 1,200 1,400 1,600 1,800 2,000

Ton

Source: ITC

Net import (negative trade balance) of pesticide in 2010 - 2014

According to the ITC data the trade balance of pesticides was around 2,896 ton in 2014 which compared with theprevious year has decreased by 15.9%. Having all the above assumptions made the estimated consumption ofpesticides in Georgia was around 2,896 ton (same as the trade balance) in 2014.





In 2013 the import of pesticides in Armenia decreased by7.6% and was USD 6.8 million. During 2009 – 2013 thepesticide import recorded 29.5% CAGR.

In 2013 China accounted for 35% of the total import ofpesticides to Armenia. Switzerland was the second largestexporter of pesticides to Armenia accounting for 16% of theimport.

In 2013 insecticides were the main type of pesticidesimported to Armenia accounting for 42% of the import.Fungicides were the second largest group (24%).

In 2013 only USD 42 thousands of insecticides wereexported from Armenia to Georgia.

In 2013 Armenia imported USD 6.8 million of pesticides

The export of pesticides from Armenia was only USD 42 thousand in 2013

Agrochemical productsArmenia - pesticide import




2.4

3.6 4.4

7.4

6.8

-16.2%

48.4%

23.3%

66.3%

-7.6%

-30%-20%-10%0%10%20%30%40%50%60%70%80%

0

1

2

3

4

5

6

7

8

2009 2010 2011 2012 2013

US

D M

illio

n


35%

16%11%

8%

6%

6%

3%

3%

3%1%

8%

China

Switzerland

Germany

France

Turkey

Russian

Italy

Greece

United Kingdom

Denmark

Other

13%

35%42%

1%9%


Fungicides

Insecticides

Rodenticides and otherplant protection products

Other




Agrochemical productsArmenia - pesticide production and consumption

According to Armenia Statistic office there was no organization registered and operating in the production ofagrochemical products.

According to the FAO (Food and Agriculture Organization of the United Nations) latest data regarding the use ofpesticides and our calculation 0.62 kg of pesticides per ha of arable land was used in Armenia in 2010. Assumingthat the intensity of use has not been changed the consumption of pesticides was around 278.5 ton in 2013 (448.2thousands ha. of arable land multiplied by 0.62).





In 2013 Azerbaijan import of pesticides increased by 2.2%and was USD 15.5 million. During 2009 – 2013 thepesticide import recorded 29.2% CAGR.

In 2013 Turkey accounted for 30% of the total import ofpesticides to Azerbaijan. United Kingdom was the secondlargest exporter of pesticides to Azerbaijan accounting for15% of the import.

In 2013 insecticides were the main type of pesticidesimported to Azerbaijan accounting for 39% of the import.Fungicides were the second largest group (21%).

In 2010-2013 no pesticide was exported from Azerbaijan.

In 2013 Azerbaijan imported USD 15.5 million of pesticides

Agrochemical productsAzerbaijan - pesticide import




5.64.6

13.3

15.2

15.5

-7.0%-17.3%

188.7%

14.1%2.2%

-50%

0%

50%

100%

150%

200%

0

2

4

6

8

10

12

14

16

18

2009 2010 2011 2012 2013

US

D M

illio

n


30%

15%

14%

9%

5%

5%

4%

3%

3%2%

10%

Turkey

United Kingdom

Switzerland

Netherlands

Germany

China

France

Belarus

India

Russian

Other

10%

21%

39%

18%

12%


Fungicides

Insecticides


Other




2009 2010 2011 2012 2013Insecticides 507 655 1,026 969 818Herbicides 192 93 221 230 241Fungicides 374 307 442 446 376Disinfectants 117 87 524 578 469Other 98 59 76 313 558

0

200

400

600

800

1000

1200

Ton

Agrochemical productsAzerbaijan - pesticide production and consumption

Our review of available official statistical databases and research through the public domain did not reveal anyinformation regarding the production of agrochemical products in Azerbaijan.

For estimating the consumption of pesticides inAzerbaijan we made the same assumptions as forGeorgia (please see the consumption section forGeorgia).

According to the ITC data the trade balance ofpesticides was around 2,462 ton in 2013 whichcompared with the previous year has decreased by2.9%. Having all the assumptions made the estimatedconsumption of pesticides in Azerbaijan was around2,462 ton (equal to trade balance) in 2013.

Source: ITC

Net import (negative trade balance) of pesticide in 2009 - 2013





In 2013 Turkey import of pesticides decreased by 2.2%and was USD 324.3 million. During 2009 – 2013 thepesticide import recorded 29.2% CAGR.

In 2013 Germany accounted for 22% of the total importof pesticides to Turkey. France was the second largestexporter of pesticides to Turkey accounting for 21% ofthe import.

In 2013 fungicides were the main type of pesticidesimported to Turkey accounting for 29.8% of the import.Insecticides were the second largest group (28.4%).

In 2013 Turkey imported USD 324.2 million of pesticides

Agrochemical productsTurkey - pesticide import




208.5

277.0360.8

331.6

324.3

-18.0%

32.9% 30.3%

-8.1%-2.2%

-30%

-20%

-10%

0%

10%

20%

30%

40%

0

50

100

150

200

250

300

350

400

2009 2010 2011 2012 2013

US

D M

illio

n


22%

21%

13%

7%

6%

5%

5%

4%

4%

3%

10%

Germany

France

China

USA

United Kingdom

Switzerland

Belgium

Spain

Italy

Japan

Other

27.9%

29.8%

28.4%

6.9%

6.9%


Fungicides

Insecticides


Other





In 2013 the export of pesticides from Turkeyincreased by 8% and was USD 82.1 million. Duringthe 2009 – 2013 the pesticide export recorded 9.7%CAGR.

In 2013 the largest importer of pesticides fromTurkey was Turkmenistan accounting for 13% ofTurkey export of pesticides. The second largestdestination for Turkey export of pesticides wasGeorgia (8%).

In 2013 the biggest group of pesticides export fromTurkey was insecticides accounting for 31% of theexport. The second largest group was fungicides(24%).

In 2014 Turkey exported USD 82.1 million of pesticides

Agrochemical productsTurkey - pesticide export


Source: ITC

Source: ITC


Source: ITC

56.764.3

72.0 76.0

82.1

-10.5%

13.5% 11.9%

5.6%

8.0%

-15%

-10%

-5%

0%

5%

10%

15%

0

10

20

30

40

50

60

70

80

90

2009 2010 2011 2012 2013

US

D M

illio

n


20%

24%

31%

3%

22%


Fungicides

Insecticides


Other

13%

8%

8%

8%

5%

4%4%3%3%3%

41%

Turkmenistan

Georgia

Iran

Azerbaijan

Cyprus

Romania

Iraq

Angola

Pakistan

Kenya

Other




In 2012 Turkey consumed around 23.1 thousands tonof pesticides (latest available data at the date ofresearch). Compared with the previous yearconsumption has decreased by 10.9%. During 2008 –2012 the Turkey pesticide consumption recordednegative 4.4% CAGR.

Herbicide was the most consumed pesticide in Turkeyaccounting for 67.1% of total pesticide consumption in2012.

According to Turkish statistical Institute in 2014 theproduction of pesticides in Turkey was around 10 ton.However, the statistical Institute of Turkey does notdisclose part of the data regarding the production ofvolume considering them confidential.

We used the total volumes of import, export, andconsumption to estimate the production volume(assuming that production = export + consumption -import). According to our estimates in 2012 theproduction was around 414 ton.

In 2012 Turkey consumed 23.1 thousands ton pesticides (active ingredient)

Agrochemical productsTurkey- pesticide consumption and production

Source: FAOSTAT

Pesticide consumption structure by product type in 2008-2012

2007 2008 2009 2010 2011 2012Insecticides 22,012 12,340 11,447 8,216 6,120 7,264Herbicides 6,669 6,177 5,961 7,452 7,407 7,351Fungicides 16,707 17,863 17,396 17,546 18,124 15,525Rodenticides 51 351 79 147 421 247

-

5,000

10,000

15,000

20,000

25,000

Ton

Insecticides Herbicides Fungicides Rodenticides





In 2013 Ukraine import of pesticides increased by 2%and was USD 769.5 million. During 2009 – 2013 thepesticide import recorded 29.9% CAGR.

In 2013 France accounted for 29% of the total import ofpesticides to Ukraine. Germany was the second largestexporter of pesticides to Ukraine accounting for 23% ofthe import.

In 2013 herbicides, anti-sprouting products and plant-growth regulators were the main type of pesticidesimported to Ukraine accounting for 51% of the import.Fungicides was the second largest group (28%).

In 2013 Ukraine imported USD 769.5 million of pesticides

Agrochemical productsUkraine - pesticide import




270.6

449.8650.7

754.6

769.5

-34.7%

66.2%

44.7%

16.0%

2.0%

-40%

-20%

0%

20%

40%

60%

80%

0

100

200

300

400

500

600

700

800

900

2009 2010 2011 2012 2013

US

D M

illio

n


29%

23%11%

6%

6%

5%

3%

3%

2%2%

10%

France

Germany

China

Spain

Russian Federation

Belgium

United Kingdom

Belarus

Israel

Italy

Other

51%

26%

20%

1%2%


Fungicides

Insecticides


Other





In 2013 the export of pesticides from Ukraineincreased by 26.4% and was USD 20.1 million. Duringthe 2009 – 2013 the pesticide export recorded 20.2%CAGR.

In 2013 the largest importer of pesticides fromUkraine was Russia accounting for 43% of Ukraineexport of pesticides. The second largest destinationfor Ukraine export of pesticides was Netherlands(12%).

In 2013 the biggest group of pesticides export fromUkraine was rodenticides and other plant protectionproducts accounting for 49% of the export. Thesecond largest group was herbicides, anti-sproutingproducts and plant-growth regulators (24%).

In 2013 Ukraine exported USD 20.1 million of pesticides

Agrochemical productsUkraine - pesticide export


Source: ITC

Source: ITC


Source: ITC

26%

3%

49%

15%

7%


Fungicides

Insecticides


Other

9.6 9.1 12.6

15.9

20.1

1.0%

-5.6%

39.2%

25.7% 26.4%

-10%-5%0%5%10%15%20%25%30%35%40%45%

0

5

10

15

20

25

2009 2010 2011 2012 2013

US

D M

illio

n


43%

12%

11%

9%

7%

3%

2%2%

2%2%

7%

Russian Federation

Netherlands

Republic of Moldova

Kazakhstan

France

Belarus

Georgia

China

United Kingdom

Germany

Other




2008 2009 2010 2011 2012Insecticides 8,522 5,903 8,906 11,150 12,406Herbicides 35,254 21,648 40,978 50,678 62,187Fungicide 8,112 6,528 9,615 12,480 11,754Other pesticides 2,192 2,365 3,036 5,184 4,467

-

10,000

20,000

30,000

40,000

50,000

60,000

70,000

Ton

Insecticides Herbicides Fungicide Other pesticides

In 2012 Ukraine consumed around 90.8 thousands tonof pesticides (latest available data at the date ofresearch). Compared with the previous yearconsumption has increased by 14.2% or around 11.1thousands ton. During 2008 – 2012 the Ukrainepesticide consumption recorded 13.8% CAGR.

Herbicide was the most consumed pesticide in Ukraineaccounting for 68.5% of total pesticide consumption in2012.

According to the State Statistics Service of Ukraine in2013 the production of pesticides was around 1,500ton. However, Ukraine State Statistics Service doesnot disclose part of the data regarding the production ofvolume of some pesticides including production volumeof herbicides, main type of insecticides, etc.considering them confidential.

We used the total volumes of import, export, andconsumption to estimate the production volume(assuming that production = export + consumption -import). According to our estimates in 2012 theproduction was around 1,600 ton.

In 2012 Ukraine consumed 90.8 thousands ton of pesticides (active ingredient).

Agrochemical productsUkraine - pesticide consumption and production

Source: FAOSTAT

Source: ITC

Pesticide consumption structure by product type in 2008-2012

Source: ITC




Pesticide import structure of the Central Asia by importer countries, 2013

In 2013 import of pesticides in Central Asia increasedby 5.4% and was USD 161.2 million. During 2009 –2013 the pesticide import recorded 0.5% CAGR.

In 2013 Kazakhstan was the largest importer ofpesticides among the countries of Central Asiaaccounting for 78% of the total Central Asia import ofpesticides.

In 2013 herbicides, anti-sprouting products and plant-growth regulators were the main type of pesticidesimported by Central Asia countries accounting for 51%of the import. Insecticides was the second largestgroup (17%).

In 2013 the countries of Central Asia imported USD 161.2 million of pesticides

Agrochemical productsCentral Asia - pesticide import




158.3

152.4

137.9

153.0

161.2

-10.5%

-3.7%

-9.5%

11.0%

5.4%

-15%

-10%

-5%

0%

5%

10%

15%

125

130

135

140

145

150

155

160

165

2009 2010 2011 2012 2013

US

D M

illio

n


78%

9%

8%

5% 0%

Kazakhstan

Turkmenistan

Uzbekistan

Kyrgyzstan

Tajikistan64%9%

17%

3%7%


Fungicides

Insecticides


Other





In 2013 the export of pesticides from the countries ofCentral Asia increased by 106.6% and was onlyUSD 2.1 million.

In 2013 the largest exporter of pesticides among theCentral Asian countries was Kazakhstan accountingfor 89% of the export of pesticides of the CentralAsia countries.

In 2013 the biggest group of pesticides export fromthe Central Asian countries was fungicidesaccounting for 42% of the export. The secondlargest group was herbicides, anti-sproutingproducts and plant-growth regulators (37%).

In 2013 the Central Asia countries exported USD 2.1 million of pesticides

Agrochemical productsCentral Asia - pesticide export


Source: ITC

Source: ITC

Pesticide export structure of the Central Asia by exporter countries, 2013

Source: ITC

37%

42%

16%

5%Herbicides, anti-sprouting products andplant-growth regulators

Fungicides

Insecticides

Other

0.5

3.3

2.4

1.0

2.1

-66.0%

606.6%

-27.6%-58.3%

106.6%

-100%

0%

100%

200%

300%

400%

500%

600%

700%

0

0.5

1

1.5

2

2.5

3

3.5

2009 2010 2011 2012 2013

US

D M

illio

n


89%

8%2% 1%0%

Kazakhstan

Uzbekistan

Turkmenistan

Kyrgyzstan

Tajikistan




663

267

350 313

365

198 202 205 207

- -

100

200

300

400

500

600

700

2008 2009 2010 2011 2012

Ton

Kyrgyzstan Tajikistan

Among the countries of the Central Asia Kazakhstan –is the most heavy user of pesticide. According to thelatest data published by FAO (2009 estimates)Kazakhstan used 0.6 kg of pesticides per ha. of arableland. Kyrgyzstan and Tajikistan used 0.2kg/ha and0.3kg/ha respectively.

Uzbekistan and Turkmenistan did not report anyinformation regarding pesticide use. And onlyTajikistan and Kyrgyzstan reported relatively recentdata regarding the use of pesticides.

According to the Kazakhstan Committees of Statisticsin 2013 Kazakhstan consumed around 8,738 ton ofpesticides which compared with the previous year hasincreased by around 1%.

The official statistics offices of the Central Asiancountries did not report information regarding theproduction of pesticide.

According to our research there is a number ofproducers (formulators) of pesticides in Kazakhstan.The producers in Kazakhstan do not produce activeingredients for pesticides, but formulate final productusing imported active ingredients.

In 2013 Kazakhstan consumed 8.7 thousand ton pesticides

Agrochemical productsCentral Asia- pesticide consumption and production

Source: FAOSTAT

Source: ITC

Pesticide consumption (active ingredient) by Kyrgyzstan and Tajikistan in 2008-2012

8,716

6,284

10,657

8,675 8,738

0

2,000

4,000

6,000

8,000

10,000

12,000

2009 2010 2011 2012 2013

Ton

Pesticide consumption by Kazakhstan in 2009-2013

Source: Kazakhstan Committee of Statistics




EU pesticide import structure by importer countries, 2013

In 2013 import of pesticides in EU increased by 7.5%and was USD 12.6 billion. During 2009 – 2013 thepesticide import recorded 11.1% CAGR.

In 2013 France was the largest importer of pesticidesamong the EU countries accounting for 19% of the totalEU import of pesticides. Germany was the secondlargest importer (15%) followed by Belgium (8%) andUnited Kingdom (7%).

In 2013 herbicides, anti-sprouting products and plant-growth regulators were the main type of pesticidesimported by the EU countries accounting for 39% of theimport. Fungicides was the second largest group(32%).

In 2013 the countries of EU imported USD 12.6 billion of pesticides

Agrochemical productsEU - pesticide import




9,362.4 9,554.811,951.7 11,768.7

12,648.2

-16.5%

2.1%

25.1%

-1.5%

7.5%

-20%-15%-10%-5%0%5%10%15%20%25%30%

0

2,000

4,000

6,000

8,000

10,000

12,000

14,000

2009 2010 2011 2012 2013

US

D M

illio

n


19%

15%

8%

7%7%7%

6%

6%

3%

3%

19%France

Germany

Belgium

United Kingdom

Spain

Italy

Netherlands

Poland

Hungary

Romania

Other

39%

32%

17%

5%7%


Fungicides

Insecticides

Rodenticides andother plant protectionproducts

Other




EU pesticide export structure by exporter countries, 2013

In 2013 the export of pesticides from the countries ofEU increased by 10.7% and was USD 16.1 billion.During 2009 – 2013 the pesticide export recorded7.8% CAGR.

In 2013 among EU countries Germany was thebiggest exporter of pesticides accounting for 26% ofEU total export of pesticides. France was the secondlargest exporter of pesticides (23%) followed byBelgium (13%) and United Kingdom (10%).

In 2013 the biggest group of pesticides exporter fromEU countries was herbicides, anti-sprouting productsand plant-growth regulators accounting for 33% of theexport. The second largest group was fungicides(37%).

In 2013 EU countries exported USD 16.1 billion of pesticides

Agrochemical productsEU - pesticide export


Source: ITC

Source: ITC


Source: ITC

33%

32%

21%

6%

8%


Fungicides

Insecticides

Rodenticides andother plant protectionproducts

Other

10,559.1 11,710.6

14,703.8 14,562.7

16,114.0

-21.5%

10.9%

25.6%

-1.0%

10.7%

-30%

-20%

-10%

0%

10%

20%

30%

0

2,000

4,000

6,000

8,000

10,000

12,000

14,000

16,000

18,000

2009 2010 2011 2012 2013

US

D M

illio

n


26%

23%

13%

10%

7%

6%

5%2%2%1% 5%

Germany

France

Belgium

United Kingdom

Spain

Netherlands

Italy

Austria

Denmark

Hungary

Other




23%

14%

12%10%

8%

4%

2%1%1%1%

24%France

Belgium

Germany

Spain

Italy

United Kingdom

Austria

Portugal

Denmark

Greece

Other

1,564.71,538.3

1,326.61,366.4

1,335.0

9.3%

-1.7%

-13.8%

3.0%

-2.3%

-15%

-10%

-5%

0%

5%

10%

15%

1,200

1,250

1,300

1,350

1,400

1,450

1,500

1,550

1,600

2009 2010 2011 2012 2013

Thou

sand

s to

n

Production Growth rate

EU pesticide production structure by countries, 2013

In 2013 production of pesticides in EU decreased by2.3% and was 1,335 thousands ton. During 2009 –2013 the pesticide production volume decreased be3.9% yearly (CAGR).

In 2013 France was the largest producer of pesticidesamong the EU countries accounting for 23% of the totalEU production of pesticides. Belgium was the secondlargest producer (14%).

In 2013 herbicides accounted for 37% of the totalproduction in EU. Rodenticides production accountedfor 25% of the pesticide production in EU.

In 2013 the countries of EU produced 1,335 thousands ton of pesticides

Agrochemical productsEU – pesticide production

EU production of pesticide in 2009 - 2013

EU pesticide production structure by product type in 2013

Source: Eurostat

Source: Eurostat Source: Eurostat

10%

37%

22%

6%

25%

Insecticides

Herbicides

Fugnicides

Rodenticides

Other




EU pesticide consumption structure by countries, 2012

In 2012 EU countries consumed 368.8 thousands ton of pesticides (latest available data at the date of research).

France was the largest consumer among EU countries accounting for 17.3% of the EU consumption of pesticides. Spainwas the second largest consumer of pesticides (16.9%) among EU counters followed by Italy (16.8%) and Germany(12.3%).

In 2012 fungicides was the most consumed pesticide accounting for 39% of total consumption of pesticides in EU.

In 2013 the countries of EU consumed 368.8 thousands ton of pesticides

Agrochemical productsEU – pesticide consumption

EU pesticide production structure by product type in 2012

Source: Eurostat Source: Eurostat

17.3%

16.9%

16.8%12.3%

5.9%

5.5%

3.4%

3.2%

3.1%

2.2%

13.3% France

Spain

Italy

Germany

Poland

United Kingdom

Portugal

Netherlands

Romania

Hungary

Other

39%

37%

7%

17%Fungicides

Herbicides

Insecticides

Other




Agrochemical productsProject pipeline

Company Country Investment Capacity Launch data Other details

Agro Chemical Georgia LLC Georgia USD 400,000 - - Project is implemented under the program

"Produce in Georgia".

ECOWIN Turkey - - -In cooperation with domestic companyECOWIN plans to open production facility inTurkey.

Bayer CropScience

Mecklenburg-Vorpommern,

Germany

EUR 18 million - 2016 Capacity expansion and expansion of research

and development activities.

KhimPlus LLP Kazakhstan USD 264 million - - Caustic soda, chlorine, phosphorus trichloride

and glyphosate production project.

*Hundreds of different principles of active ingredients exists for production of agrochemicals and wide variety ofchemicals are used. Developed fine and specialty chemistry in the specific region is very important for conductingresearch and development of active ingredients for agrochemicals.For regional overview of main feedstock for the production of agrochemicals including hydrocarbons (please see theorganic chemicals sector for more detailed information), phosphoric acid (Mineral fertilizer section) and industrial gases(industrial gases) please see the respective sections of the report.

Most expansion projects of pesticides active ingredients and final products are expected in Asia. Emerging markets withsignificant agricultural (crop) production and big domestic demand for agrochemicals such as Brazil, Argentina, Australia,China and India are the most attractive markets for opening new agrochemicals facility. All big international companiesare presented in developed markets and the growth opportunity for the sector is seen in the emerging markets.We summarized some major expansion projects expected in the near future in the region.

Source: KPMG research




Among the selected countries Kazakhstan was the largest exporter country (supplier country) of phosphorus

As mentioned before the active ingredient of pesticides are based on various types of hydrocarbons (organiccompounds). Type of chemicals used in the production of a certain active ingredients is based on the purpose of theingredient. For the detailed analysis of organic chemicals and specifically hydrocarbons (including acids and alcohols)please refer to ‘Other basic organic chemical‘ sector.

Other chemicals used in the production of pesticides included industrial gases, phosphorus, chlorine and bromine.

For measuring the availability of supply of the different raw materials such as phosphorus or chlorine we analyzed theexport of the countries in the region.

Kazakhstan was the largest exporter of phosphorus accounting for about 44% of the global export volume ofphosphorus. Phosphorus are derived from the phosphate rock (please see the ‘mineral fertilizers’ sector for moredetails).

Value exported in 2013 (USD thousand)

Trade balance in 2013 (USD thousand)

Quantity exported in 2013

Quantity Unit

Unit value (USD/unit)

World 567,571 48,241 168,265 Tons 3,373Germany 16,240 -67,133 4,640 Tons 3,500Poland 15,090 -57,391 4,125 Tons 3,658Other EU 6,876 -10,631 2140 TonsKazakhstan 227,736 227,736 74,321 Tons 3,064

Phosphorus export and import, export and import unit value

Value imported in 2013 (USD thousand)


Quantity imported in 2013

Quantity Unit


World 519,330 48,241 144,969 Tons 3,582Germany 83,373 -67,133 23,023 Tons 3,621Poland 72,481 -57,391 24,487 Tons 2,960Italy 21,201 -21,201 6,078 Tons 3,488United Kingdom 14,091 -13,975 3,845 Tons 3,665Other EU 7,124 -364 1,786 Tons n/aTurkey 156 -156 32 Tons 4,875Uzbekistan 109 -109 22 Tons 4,955Ukraine 83 -83 13 Tons 6,385Source: ITC

Agrochemical productsRaw materials in the selected Region/Countries




The largest exporters of chlorine (supplier countries) among the selected countries were EU countries




Quantity Unit


World 164,908 698,024 Tons 236France 13,201 9,761 65,008 Tons 203Germany 10,375 3,665 63,663 Tons 163Romania 3,564 3,359 42,246 Tons 84Poland 3,339 2,197 14,833 Tons 225Slovakia 2,075 1,552 12,862 Tons 161Other EU 8,785 -18,940 13,920 Tons n/aTurkey 1,776 1,743 4,878 Tons 364Kazakhstan 1,222 972 4,132 Tons 296Ukraine 169 -1,485 163 Tons 1,037Uzbekistan 31 -16 128 Tons 242

Chlorine export and import, export and import unit value

Source: ITC




Quantity Unit


World 190,747 699,890 Tons 273Belgium 7,892 -6,061 20,143 Tons 392Germany 6,710 3,665 30,561 Tons 220Hungary 6,335 -6,333 47,569 Tons 133France 3,440 9,761 9,433 Tons 365Italy 3,290 -2,330 16,703 Tons 197Other EU 15,815 -845 39,930 Tons n/aUkraine 1,654 -1,485 6,100 Tons 271Azerbaijan 1,420 -1,420 1,509 Tons 941Georgia 489 -488 640 Tons 764Armenia 285 -285 262 Tons 1,088Kazakhstan 250 972 513 Tons 487Kyrgyzstan 184 -184 208 Tons 885Uzbekistan 47 -16 19 Tons 2,474Turkmenistan 44 -44 26 Tons 1,692Turkey 33 1,743 54 Tons 611





The largest exporters of bromine (supplier countries) among the selected countries were EU countries




Quantity Unit


World 247,062 n/a n/a No quantity n/aBelgium 49,251 4,460 29,800 Tons 1,653United Kingdom 1,737 -11,737 648 Tons 2,681Spain 1,441 36 1,797 Tons 802Ukraine 971 971 157 Tons 6,185Other EU 1,864.00 (25,093.00) 188.00 Tons n/a

Bromine and fluorine* export and import, export and import unit value

Source: ITC*Note: There was no available information for bromine trade separate from fluorine




Quantity Unit


World 267,889 134,523 Tons 1,991Belgium 44,791 4,460 28,736 Tons 1,559France 15,713 -15,682 10,170 Tons 1,545United Kingdom 13,474 -11,737 6,843 Tons 1,969Other EU 14,079 -10,805 2,988 Tons n/aTurkey 119 -119 3 Tons 39,667Kazakhstan 73 -73 126 Tons 579Uzbekistan 43 -43 5 Tons 8,600

Among the selected countries Azerbaijan, Germany,Turkmenistan and Ukraine have operating minesproduction of bromine.

Bromine mine production and reserves in selected countries (m.t.)

Mine production Reserves2013 2014 (e)

Azerbaijan 3,500 3,500 300,000Germany 1,500 1,500 n/aTurkmenistan 500 500 700,000Ukraine 4,100 4,100 n/aWorld total 403,000 4411,000 LargeSource: USGS





Agrochemical productsMain factors of successful functionality of the factory

Main factors Description

Buyer power Customers for pesticides are generally large trading firms. The end users are farmers andgenerally have low power to influence the overall price. In some counters the buyers areagricultural unions so they have more power to negotiate the price

Raw materialsavailability (supplier power)

The suppliers of the main raw materials are agrochemical companies. Large agrochemicalcompanies are integrated vertically and have advantage of relatively low cost of raw materials.

Production scale Significant initial investments and fixed costs of production are required to establish a large scaleproduction. Strict environmental regulations also lead to additional capital expenditures.

Intellectual property Development of active ingredients requires significant investments. Small companies may buy the developed active ingredient and formulate the final product.

Degree of regulation Agrochemicals industry is highly regulated becoming more strict with rising environmentalrequirements.

Demand drivers Developments in the agricultural industry directly influence the demand and the price. With theincreasing use of genetically modified crops the demand for certain type of pesticides decrease.

Other factors There are sign the entrants to the business have to make significant amount of initial fixedcosts and capital & cash requirements for investments.

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