South African Market for Agriculture Chemicals

    Mar. 23 2012   Pages: 0   Language: English   Price: $8000

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      The research was carried out to provide a comprehensive analysis of the South African market for agriculture chemicals and determine the market trends of the four major market segments, which included fertiliser chemicals, crop protection chemicals, animal health products and animal feeds and additives. An analysis of the market structure, as well as an evaluation of the opportunities, drivers and restraints for agriculture chemicals suppliers and manufacturers in the total and segmented market was provided. Additional analysis was provided through strategic recommendations and conclusions.

      Market Overview

      Economic Recession Presents Both Challenges and Opportunities

      The South African market for agriculture chemicals is currently facing numerous challenges due to the current economic recession. Nevertheless, there are a number of strategies that the agricultural industry can adopt in order to convert these challenges into opportunities. The initiative to create such opportunities will need to come from the South African Government. However, market participants involved in the supply chain need to adopt these strategies in their business plans. Opportunities exist as participants seek vertical integration with complementary businesses, as well as buy out smaller competitors.

      "The South African agriculture chemicals market is anticipated to grow in the long-term due to increasing pressure on farmers to boost the production of crops and livestock," notes the analyst of this research. "There is also a mounting trend in protein consumption and changing dietary patterns which are poised to promote demand for agriculture chemicals." These growth opportunities are set to have a positive long-term impact on the market. The animal feeds and additives segment is projected to experience the highest opportunity growth in the future, reaching nearly $660.0 million by 2015. The agricultural industry in South Africa is potentially in a good position to attract investors, since the new government has split the Agriculture and Land Affairs departments. This has been regarded as a positive step, particularly since the focus can be on improving primary agriculture as well as rural development. Both these sectors are set to drive the growth of the agriculture chemicals market, especially in terms of spending and enhancing infrastructure.

      Acquisitions Represent Key Strategy for Competitive Success

      Despite optimistic projections, there are numerous challenges such as escalating food and input costs. There is also a high risk factor for investment that contributes to the chances of failure, as the industry has high debt levels and requires a sizeable capital outlay. "Due to the economic recession, companies are reluctant to invest capital into their business for growth purposes, and this is further aggravated due to the high input costs and volatile commodity prices," explains the analyst. "Consumers are unwilling to pay for expensive products, and the market has also been restrained due to the rising number of low-cost, imported products such as frozen chickens."

      Notwithstanding the challenges in the agricultural sector, many opportunities still exist. Good government policies and increased spending on the agriculture sector underscore the vital role played by the government. Other opportunities such as the promotion of sustainable development are also essential for the long-term success of the market. "One of the easiest ways for companies to survive the economic recession is for larger companies to buy out smaller competitors, as well as to integrate the business with other complementary businesses," advises the analyst. "For instance, Country Bird Holdings recently acquired a significant 13.4% share in Sovereign Food Investments, and there are numerous market shifts as companies compete to gain a competitive share." 

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