Q3 2024 Crop Protection & Seed Earnings Themes, Highlights and Analysis
A breakdown of the third quarter for crop protection and seed companies.
Over the last month, I have read dozens of earnings call transcripts along with quarterly crop protection and seed earnings results, working to synthesize the themes, trends and key takeaways across the crop protection manufacturers segment of the agriculture industry.
This report is an aggregation of those materials and includes:
one financial comparison chart of major crop protection and seed companies
three macro areas of emphasis from Q3 2024, highlighting executive quotes and insights from earnings calls:
LatAm, Pricing, Maintaining Share and Generic Pressure
Biological Growth and Differentiated Products
Software, Hardware and Digital Initiative Round up
Nufarm
Syngenta
Corteva
Bayer
five other notable insights and takeaways from Bayer, FMC and Nufarm
highlights and key takeaways from ten crop protection and seed manufacturers.
Corteva
BASF
FMC
Syngenta Group
ADAMA
UPL
Bayer Crop Science
AMVAC
Nufarm
Bioceres
Upstream Ag Insights Q3 Company Comparison
FMC, of the companies where net profit was reported, was the only Crop Protection company to produce a positive bottom line in Q3 2024.
Between Bayer Crop Science, Corteva, UPL and FMC the net losses for the quarter equated to more than $5 billion USD— much of this contributed to by the write down of Bayer totalling over $4.5 billion USD.
Macro Comments
1. LatAm, Pricing, Maintaining Share and Generic Pressure
Destocking, which has been a theme for more than a year has generally subsided in North America and Europe. However, challenges remain in Brazil for crop protection and seed manufacturers. Challenges in Brazil have been experienced across equipment manufacturers, with an exclamation mark for Brazillian ag retailers like Lavoro and AgroGalaxy— from destocking remaining and delayed distributor purchasing, to weather to commodity volatility. The issues in LatAm have put increased pressure on crop protection companies and further exacerbated the challenges against generics and managing pricing.
The Syngenta Group press release stated the following:
Sustained price pressure, particularly in the commoditized segments of the crop protection portfolio (and notably in Latin America), and reduced grower profitability had an impact on demand.
Robert King, EVP of Crop Protection for Corteva shared more detailed insight:
Specific to Brazil and price we finished up the quarter down 10% on price. Brazil was down about 18% for the quarter. But we're going to finish up the year back to that mid-single digits for the company.
When you think about why, there's a lot of competition going on in Brazil. And in a flat market or a flat to down market. A lot of competition for volume coming from all areas, trying to find growth. And so we play. We're trying to hold share. We do the things we need to do that makes sense for our products.
Pierre Brondeau, CEO of FMC stated similar on pricing action:
We believe we are only a couple of quarters away from a more normal market situation, we decided to take pricing actions to maintain our market position. In fact, about 2/3 of the total company price decline in the quarter came from Brazil and Argentina. The rest of the regions performed at or above expectations. While conditions are improving, it is clear that Latin America has not yet emerged from the down cycle as distributors and growers continue to manage their inventories carefully.
Pierre Brondeau went on to emphasize the following at the end of the earnings call surrounding generics:
Generic pressure is here. It’s always here, but there is nothing which has fundamentally changed the last couple of quarters versus where it was before. It is truly positioning of pricing against our peers, competitors also technology-based where we think we’ve lost ground from a volume standpoint because of a more aggressive pricing strategy, we need to reset.
UPL’s CEO Mike Frank talked about de-stocking nearly complete, which is relatively consistent with the FMC comments of “a couple quarters away”:
With destocking nearly complete, we are now seeing normalized ordering patterns; however, price pressure continues to weigh on the overall market, in part due to overcapacity issues in China and tight grower margins, specifically in global row crops. Finally, we continue to do well in maintaining and growing our market share in most regions. This is demonstrated by the customer preference to our offerings and our higher-than-industry volume growth in our first half of this year.
Corteva CEO Chuck Magro shared similar on crop protection purchasing patterns:
When I think about the CP market, the third quarter, I think, took another positive step towards full stabilization of this industry. We're not out of the woods yet, but we like what we saw in the third quarter. And when you step back and you think about that, North America is actually seeing some strength. I'd say Europe and APAC are operating normally. Brazil is still, I think, one of the most unstable markets that we're operating in right now when it comes to CP.
Nufarm CEO Greg Hunt shared more detail on pricing, and is notably forecasting an improved 2025 (Nufarm does not have much business in LatAm):
We are now saying to you that prices have stabilized over recent trading. The stabilization of prices is an important reason why we're saying that the outlook for ‘25 looks to be better than it was in ‘24. The second issue was that as distributors were reducing inventory, their requirement to reorder was naturally lower than it normally would be.
And there was still stock being held by Nufarm and clearly by our competitors. And that situation led to higher levels of price competition than we would normally experience. And you can see from our inventory result and many in the industry that those legacy inventory balances have now largely been cleared.
Bayer AG CEO Bill Anderson on LatAm:
LatAm is a big business for us, and we expected big contributions from the region in the second half of the year, similar to what we saw last year. Weather challenges and disease pressure have led to corn acreage decline in Argentina and Brazil, compounded by soft commodity prices and generic crop protection pricing pressure.
Bayer Crop Science CEO, Rodrigo Santos went on to state the following, emphasizing generic pressure beyond LatAm:
The factors are well known across the industry. There are weather challenges, reduced commodity prices levels, and generic pressure in crop protection that started in Europe and North America in the first half of the year, and has continued into Latin America now in Q3, where it has been compounded by a material acreage reduction in corn in Argentina and in Brazil. Soybean pressure in Brazil has also accelerated, with lower commodity price. For 2025, we see prolonged soft commodity prices that will continue to challenge on-farm profitability and generic pricing pressures in crop protection will remain.
Much like the Equipment manufacturing companies forecasting a challenging 2025, Bayer is suggesting similar for 2025, which signals that just as de-stocking is easing for CP companies, there is a risk of lower demand for differentiated products and increased competition from generics.
2. Biological Growth and Differentiated Products
Biological growth was consistent for Crop Protection companies in Q3, along with emphasis on differentiated product growth.
UPL’s CEO Mike Frank stated the following on differentiated product growth:
Importantly, we continue to improve our product mix towards our differentiated and sustainable segment with approximately 37% of the first half revenue in this financial year coming from these higher-value offerings.