Crop protection under pressure: rising costs meet limited price gains
After a recent China visit, companies warn rising costs and weak price pass-through are increasing pressure across global agriculture.
The global crop protection market is entering a phase of heightened tension, according to insights gathered during our recent visit to China and meetings with leading industry companies, where a consistent message emerged: costs continue to rise, but the market is not absorbing price increases, putting pressure across the entire agricultural value chain. This dynamic is already affecting both the United States and Latin America, where farm margins are increasingly under strain.
Rather than a visible crisis, the industry is operating in a fragile balance. Executives and manufacturers acknowledged that many companies are maintaining production not for profitability, but to sustain operations. Estimates shared during discussions suggest that nearly 80% of Chinese plants are currently operating at negative margins, continuing production at minimal profitability while waiting for market conditions to improve.
One of the most notable shifts is geographic. Latin America has emerged as the primary demand driver, with strong participation from buyers in Brazil, Mexico, Peru, Chile, and Colombia. In contrast, U.S. presence in international procurement activity appears more limited, while Europe is losing ground as a major purchasing region. The trend is clear: growth in crop protection demand is increasingly concentrated in emerging markets.
At the same time, cost pressures are intensifying. Rising energy prices, driven by geopolitical tensions in the Middle East, are affecting the entire supply chain-from chemical feedstocks to key products such as glyphosate and 2,4-D. Unlike previous cycles, these increases are not driven by strong demand but by supply-side constraints.
Manufacturers indicated they can absorb cost increases of 10-15%, but beyond that threshold, orders are being rejected or renegotiated. This creates a critical bottleneck: costs are rising, but prices cannot follow, especially as farmers are already facing higher fertilizer expenses.
India's situation highlights the growing uncertainty. Companies reported increasing difficulty securing key raw materials such as phenol, bromine, and organophosphorus intermediates, with some suppliers unwilling to provide price quotes at all. This limits production planning and raises the risk of contract defaults.
China retains a structural advantage based on its industrial scale and energy flexibility. However, government-imposed restrictions on fertilizer exports are aimed at stabilizing domestic prices, while simultaneously tightening global supply. This adds further pressure on importing regions, particularly in Latin America.
In this environment, the greatest challenge shifts downstream to the farm level. Costs are rising across the value chain, but farm incomes are not keeping pace, creating a growing bottleneck. Distributors are still working through elevated inventories, while farmers resist further price increases-leaving crop protection caught in the middle.
For the United States, this scenario raises concerns about farm profitability amid ongoing volatility. In Latin America, where demand remains strong, the impact could be even more immediate: tighter input availability, higher financing costs, and more conservative production decisions.
The outlook emerging from industry discussions in China is clear: the global crop protection market is entering a structural adjustment phase, where rising costs, shifting demand patterns, and geopolitical tensions are redefining the balance of the sector.
