RESEARCH and development (R&D) expenditures on conventional crop protection have declined in Europe, paralleling a trend worldwide.
According to a new market study completed by agribusiness consultant Phillips McDougall and funded by the European Crop Protection Assn. (ECPA), "The share of global crop protection R&D focused on European markets has decreased from 33% in the 1980s to only 16% today (Figure). Moreover, the European market's share of total worldwide R&D expenditure for new product development in agricultural life sciences is just 7.7% today, compared to 33% in the 1980s."
Many factors have contributed to the decline in R&D dollars being spent on new agrochemical active ingredients.
Worldwide, the number of companies involved in new active research has declined from 35 in 1985 to 18 companies in 2012. The extreme cost of bringing a new product to market keeps small companies from succeeding and usually results in business acquisitions and consolidations, according to the report. Also, fewer companies involved in new product development means less competition.
The expense to bring a new crop protection product to market has also skyrocketed due to stringent regulatory processes and necessary attention to detail on safety. From 1995 to 2005, the cost for bringing a new active ingredient to market, on average, rose 68.4%, research costs increased 18% and development costs escalated 117.9%.
For the European market, the report notes, "The severe regulatory requirements, which now include an initial evaluation of hazard, leads to a situation where the risk to the R&D company in developing active ingredients for the European market is now suppressing innovation."
The major reason for a decline in investment in new agrochemicals is the shift in dedicated R&D dollars to seed traits. The leading agrochemical companies are also leading seed companies. Since 2010, R&D expenditures invested in genetically modified (GM) traits have exceeded money spent on agrochemicals.
Since the European Union does not allow GM technology, the focus on R&D dollars in the European market is no longer considered a good return on investment for companies.
"It's clear that Europe's challenging regulatory environment has led to a decline in R&D on products for use in the EU," said Friedhelm Schmider, director general of ECPA. "Agriculture and agrochemicals are global industries, but the EU has the most severe registration system for crop protection products, which includes a hazard-based assessment. When companies assess the risk involved in committing resources to R&D for new products, they are increasingly looking outside the EU."
For European farmers, meeting the demand to grow healthy and more affordable food will become more challenging with fewer new crop protection solutions available.