2017 plant and animal genomics - thermo fisher scientific...2017 plant and animal genomics presented...

2017 Plant and Animal Genomics

Presented By:

Tom Scott, CEO

Informa Economics IEG

January 16, 2017

Thermo Fisher Scientific and Informa agribusiness insights and outlook: Challenges and opportunities in agribusiness—an economic perspective on global and technological factors transforming and impacting agribusiness

Informa Economics IEG | Agribusiness Intelligence 2

Agenda

‣Macro Drivers

‣Political and Policy Drivers

‣Population and Demographics

‣Global Crop Production

‣Agricultural Commodity Price Outlook

‣Drivers of Acreage and Production

‣Industry Changes

3 Informa Economics IEG | Agribusiness Intelligence

Macro Drivers:

How do they impact agriculture?


Have Commodity Markets Bottomed?


Political and Policy Drivers:

Are they changing? Impacts?


Trade and Regulations

Will Trump’s Strong Words on Trade Soften? What Regs will Change and How Fast?

• Trump is NOT anti-trade, just recent

agreements

• NAFTA: Canada, Mexico agree to

‘modernize’

• TPP: No vote likely in Congress until after

2018 elections

• China: uncertainty. US ambassador to China

was governor of Iowa (Big Ag state)

• Mexico. Trump has threatened double-

digit tariffs, but... Takeaway: uncertainty on

specifics to Agriculture

• Further Trade Agreements. No more multilateral deals. Expect new bilateral deals but that will take ~2+ years to achieve.

• Fewer new proposed regulations and eliminating many Obama-proposed regulations made via executive order or directives.

• Farm Bill will be negotiated under Republicans house/senate

• More likely for large M&A deals to be approved (e.g., Bayer-Monsanto); however EU remains a barrier.


Energy/Biofuels and Immigration/Labor

Positive for conventional Energy; Neutral for

Biofuels

Immigration reform to Impact Labor Costs in

Agriculture

• Renewable Fuel Standard (RFS): Potential

neutral in terms or RFS expansion. Issue

will see oil & rural interests jockey for position

ahead of 2022.

• China is growing market for ethanol

• Energy: Great support for energy

independence, support for crude oil, natural

gas exports, energy prod.

• Climate change regulations. Less support

than current status – may push states to

accelerate state level renewable standards

like California, Oregon, New England.

• Worst than current via shortage of farm labor.

• Impact on F&V, meat packing and dairy – not much direct impact to major row crops

• Farm labor costs inflation – too soon to tell the magnitude of it.

• Reduction of immigrate labor to also impact food service costs


China Demand and Biofuels in Context


Population and Demographics: Are the drivers still in place that got us where we are now?


Population Growth Expected to Slow

• Population forecast to grow at a CAGR of

0.96% between 2016 and 2025, versus

1.14% the previous decade.

• Still adding 9.6% more people in the next

decade.

• India to become largest country ~2026


Aging Population, but Divergent Trends in Key Countries

• Share of global population 65 & older is projected to double by 2050. Still,

dependency ratio is declining in India, Pakistan and most of Africa.

• Aging population has a different diet profiles – less protein; health foods, etc.

China Working Age Population Follows Japan

Sources: World Bank, Informa Economics IEG Sources: United Nations, Informa Economics IEG

Aging Global Population


Urbanization & Middle Income Class Expansion will Continue with China, India and Sub Saharan Africa Leading the Way

• Increased urbanization impacts food

consumption patterns, distribution systems, farm

consolidation and technology use and innovation.

• As incomes rise and the middle class expands,

per capita meat consumption goes up, although the

growth rate slows at higher per capita GDP levels.

Sources: World Bank, Informa Economics IEG


China is Dependent on Soybean Imports

• China continues to grow more dependent on imports to meet soybean demand.

• Demand growth in China helps support increased production in the rest of the world.

0

20

40

60

80

100

120

140

160

Mill

ion

To

nn

es

China Soybean Imports and Use

Soybean Use Net Soybean Imports


Global Crop Production: Regional Differences and Changes Over Time


Crop Area is Concentrating into Soybeans, Corn, and Wheat

0

50

100

150

200

250

Mill

ion

Hec

tare

s

Area by Commodity

1993-1995 2003-2005 2013-2015 2023-2025 Soybean production is projected to increase by 30% in 2025 to help meet growing vegetable oil and meal demand.


Crop Area to Increase the Most in South America and Africa

Global harvested area to increase by 3% over the next 10 years. Compared to 12% over the last 20 year.


Production Increase Lags in Africa Despite Area Increase

Lower yields account for the discrepancy between large increase in are and relatively small increase in production in Africa.

Yields in Africa are 1/4th that of North America, but are projected to grow faster.


Ag Commodity Prices:

What is the long term outlook?


Baseline Prices Projected to Remain Low

Surplus supplies due to favorable weather will keep pressure on prices in the near term.

Currency impact In the longer term prices

will recover some. Weather impacts remain

the big flag.

$3.00

$5.00

$7.00

$9.00

$11.00

$13.00

$15.00

$/B

ush

el

Corn Soy Wheat


Acreage & Production: What are the Drivers?


Without Input and Farming Practices Innovation, More Farmland Would Be Needed


The Need for Innovation in Agriculture


Industry Changes:

A Time of Consolidation


Crop Protection and Seed: Key Trends

• Greater pest resistance Growing problem with potential impact to farmers (e.g., what if there is not a better

product; weed resistance to glyphosate).

• Greater regulatory pressures Increased complexity/cost of developing and registering new pesticide active

ingredients in EU/US.

Approvals from other countries (e.g., China) becoming more critical.

Restrictions/prohibitions for specific “big-name” pesticides

Develop case studies (e.g., neonics, atrazine) showing impact of banning a product

on farmers.

• Biologics for crop protection – a growing market

• Consolidation as a catalyst to realize the value of data analytics • Data analytics will have transformational impacts in 2, 5 or 10 … years

• How fertilizers will play a role? And what alliances or new M&A will play in the future


Consolidation of Crop Protection and Seed


Impact of Latest M&As on Agrochemical Industry Structure

Post Consolidation Market shares of Leading Agrochemical Companies

24%

22%

13%

11% 4%

3%

3%

3% 3% 1%

12%

Bayer/MonsantoSyngenta/AdamaDow/DuPont

BASF

FMC

Nufarm

SumitomoChemicalUPL

Platform

Albaugh

17%

17%

11% 8% 7%

5%

5%

4%

3%

3% 3% 16%

Syngenta

Bayer

BASF

Dow

Monsanto

DuPont

Adama

FMC

Nufarm

Current Market shares of Leading Agrochemical

Questions?

2017 Plant and Animal Genomics

Presented By:

Tom Scott, CEO

Informa Economics IEG

January 16, 2017

2017 plant and animal genomics - thermo fisher scientific...2017 plant and animal genomics presented...

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