Increasing Demand for Controlled Release Agents to Enhance the Crop Production Is Accelerating the Growth of Microencapsulated Pesticides Market

Microencapsulated pesticides are chemical compounds that include insecticides, herbicides, fungicides, and others that are used to protect crop plants from various diseases such as fungi and kill pests that damage crops. Microencapsulated pesticides are used in agriculture, furniture, turf, horticulture sector, aquatic, and others to prevent insect attacks which are estimated to drive the market growth. The growing crop production coupled with rising food demand is one of the major factors driving the demand for microencapsulated pesticides globally. Further, the availability of limited arable land which is creating pressure to have a higher yield to meet the ongoing demand is another factor supporting the consumption of microencapsulated pesticides. Microencapsulated Pesticides market size is forecast to reach US$520.9 million by 2026, after growing at a CAGR of 8.3% during 2021-2026.

Microencapsulated Pesticides find applications in various activities ranging from agricultural purposes to non-agricultural purposes such as the use of termiticides, algaecides, fungicides, and bactericides in residential buildings, commercial buildings, public places such as swimming pools, hospitals, and other infrastructures. Globally, major companies are indulging in strategies such as acquisitions and product launches to keep up with the increase in demand for microencapsulated pesticides products. For instance, in June 2021, ADAMA Agricultural Solutions Ltd acquired the manufacturing facilities of Huifeng Agrochemical Co. Ltd which significantly bolstered the presence of ADAMA Agricultural Solutions Ltd in China. During the forecast period, extensive growth of the agriculture industry and growing adoption of new technologies in pesticides is expected to drive the demand for microencapsulated pesticides.

The COVID-19 outbreak wreaked havoc on the microencapsulated pesticides market, owing to significant economic concerns. As a result of the government's severe measures to slow the spread of the coronavirus, pesticides production output growth decreased, causing widespread restrictions and financial difficulties for the microencapsulated pesticides. The COVID-19 outbreak led to major economic problems and challenges for agriculture and non-agriculture industries. Decline in business for at least five months during 2020 coupled with lower demand from a few major markets had put pressure on the profitability of microencapsulated pesticides manufacturers and vendors. Microencapsulated pesticides importers were trying to keep a condensed output, shrink product inventory, and keep their feedstock consumption at low levels. Some companies even delayed their feedstock shipments, while many others minimized their spot purchases. Also, the demand for microencapsulation pesticides remained unmet in the COVID-19 scenario due to an excess surplus of agricultural produce that remained in warehouses perished due to a lack of logistical support and commercial demand from hotels, restaurants, and other businesses as the economy remained closed. Farmers' problems were exacerbated by a labor shortage. In addition, various regions went under lockdown to curb the coronavirus, which resulted in microencapsulated pesticides supply chain and logistic disruption, owing to which the microencapsulated pesticides industry growth slowed down causing widespread concern and economic hardship for the microencapsulated pesticides manufacturers and suppliers. Thus, amid the COVID-19 pandemic, the functioning of the microencapsulated pesticides market was hindered. However, the revival of the industry is expected to follow as the markets go back to normal. Furthermore, governments are taking initiatives to promote organic farming, owing to which the outlook of the microencapsulated pesticides market in 2021-2022 is set to gradually gain momentum.

Europe holds a major share of the microencapsulated pesticides market owing to the increasing crop production in the European regions such as the United Kingdom, Germany, Belgium, and more, which is accelerating the demand for microencapsulated pesticides in the region. For instance, according to the Organization for Economic Co-operation and Development (OECD) and Food and Agriculture Organization (FAO), in the United Kingdom, rice production was increased in 2020 as compared to 2019. The total production of rice was 4.0 thousand tons in 2019 and increased to 6.6 thousand tons in 2020. According to the European Commission, the production of cereals is rapidly increased in Germany during 2018-2019. The total production of cereals (including wheat & spelled, rye & muslin, barley, oats, maize, other cereals) was increased from 4913 million (US$5,802.03 million) in 2018 to 6189 million (US$6,928.43 million) in 2019. According to the European Commission, in Belgium, cereals production was increased to euro 378 million (US$423.16 million) in 2019 as compared to euro 368 million (US$434.59 million) in 2018. Thus, it is anticipated that with the increased crop production in Europe, the demand for crop protection chemicals will also gradually rise, which will then boost the microencapsulated pesticides market growth in the region during the forecast period.

Microencapsulated pesticides play an important role in providing crops with the nutrients they need to grow and enhance crop yield while being less toxic than conventional pesticides, owing to which there is an increasing demand for microencapsulated pesticides over conventional pesticides. The production of primary crops is on an upsurge globally. For instance, according to the Food and Agriculture Organization (FAO), the production of primary crops was 9.2 billion tonnes in 2018, around 50% more than 2000. According to United Nations World Population Prospects 2019, the medium-variant projection indicates that the global population will grow to around 8.5 billion in 2030, 9.7 billion in 2050, and 10.9 billion in 2100, up from an estimated 7.7 billion in 2019. With the global population steadily growing, enough crops must be produced each year to provide enough food to people, owing to which crop production is rising. In recent years, agricultural growth has accelerated remarkably, but most of this growth has been driven by increased yield per unit area rather than by expansion of the cultivated area. Looking towards 2030, to meet the demand for grain and to feed the growing population on the available arable land, it is suggested that annual crop production and yield should be increased annually within the same area of arable land. To improve the crop yield within the same area of arable lands and provide crops proper nutrients, pesticides are being extensively utilized during crop production. According to the Food and Agriculture Organization (FAO), global pesticides use increased during the period 2000–2018 by about one-third, to 4.1 million tonnes in 2018. This increase can be attributed to the growing crop production within the same area of arable land. Thus, with the increased crop production the demand for microencapsulated pesticides will also eventually increase, which will drive the market growth during the forecast period.

Toxins found in biological organisms are used to make biopesticides, which are poisonous to pests that attack plants. They have no negative impact on the plant and help to reduce soil pollution and erosion. As a result, biopesticides are required for good crop production in organic farming. The application of microencapsulated biopesticides to organic farming is a promising low-toxicity alternative to other control methods, as microcapsules may prolong the release of the toxic agents. Organic farming activities are increasing at a lucrative rate globally. According to The Research Institute of Organic Agriculture (FiBL) statistics, the area under organic cultivation across the globe was 58.1 million hectares in 2016, which has increased by 24.4% and reached 72.3 million hectares in 2019. Organic farming activities are increasing, owing to the continuous support from various governments. For instance, the Indian government has launched programs such as the National Program for Organic Production (NPOP) and National Project on Organic Farming (NPOF) to accelerate organic farming in the country. The USA government has launched programs such as Organic Agriculture Research and Extension Initiative (OREI) and the Organic Transitions (ORG) programs to boost the country’s organic farming sector. In 2019, the French government established two ambitious goals for organic products: 15 percent of agricultural lands to be grown using natural methods by 2022, and 20 percent of organic foods in all collective catering. Such government initiatives coupled with the advantages of using encapsulated biopesticides are set to post relatively solid growth for the encapsulated pesticide industry in various regions during the forecast period.

Researchers and companies are heavily investing in the research and development of microencapsulated pesticides to increase their applications. For instance, in October 2019, Friedrich Alexander University, Germany, started research on effective pesticides for organic wine growing with the help of the microencapsulated principle to tackle the problem of downy mildew, a serious fungal infection that affects vines. This research and development activity gained a total of US$ 7.05 million (EUR 6.3 million) from the Federal Ministry of Food and Agriculture (BMEL), Federal Republic of Germany. The growing research and development activities in the microencapsulated pesticides market are contributing to the growth of the microencapsulated pesticides market and will further grow during the forecast period.

The major companies in the microencapsulated pesticides market include Syngenta AG, Bayer Crop Science LLC, Adama Agriculture Solutions, BASF Chemical Company, FMC Corporation, Corteva Agriscience, UPL Chemical Industry Company, Insecticides India Limited, Nufarm Chemicals Company, McLaughlin Gormley King Company, Reed Pacific Specialty Chemicals, and MikroCaps. The key focus of the companies has shifted towards product launch and acquisition.

In May 2019, BASF launched Seltima® CS, an innovative fungicide that supports the efficient production of high-quality rice, for farmers in Thailand. Seltima's unique encapsulation technology ensures that its potent active ingredient is released in a controlled manner directly onto the plant leaf surface. In January 2020, Corteva acquired Eden’s Sustaine encapsulation technology and various formulations in biological seed treatment applications.