Agricultural Chemical Manufacturing Industry Profile

The US agricultural chemicals manufacturing industry includes about 700 companies with combined annual revenue of about $32 billion. Large companies include divisions of Dow, DuPont, and Monsanto, as well as specialized producers such as CF Industries, FMC, and Mosaic. Many smaller companies are involved in mixing purchased raw materials to produce customized fertilizer compounds with special characteristics.

The US industry is highly concentrated. The eight largest producers of fertilizers generate around 70 percent of segment revenue. Likewise, the eight largest producers of pesticides generate about 75 percent of revenue for that segment.

Major agricultural chemical companies based outside the US include Bayer and BASF (Germany), Potash (Canada), and Syngenta (Switzerland). All have operations in the US.

COMPETITIVE LANDSCAPE

Demand for agricultural chemicals depends mainly on demand for various crops, which in turn depends on crop prices. The profitability of individual companies is linked to efficient operations and marketing. Big producers have large economies of scale in production. Smaller companies can compete effectively by making specialty chemicals or fertilizer mixtures for local markets. The industry is capital-intensive: annual revenue per employee is about $1 million.

International trade in fertilizers is large, because phosphate rock and potash are available in only a few countries. The high product value makes bulk shipping costs relatively unimportant. The relative cost of natural gas (for nitrogen fertilizers) has a large effect on trade.

The US is usually a net importer ...