Globally, there has been a rapid increase in resistance toward the use of pesticides due to their ill-effects on human health and the environment. That said, they have become almost indispensable to the Agricultural world as the industry strives to meet the global demand for food. For this reason, the Global Chemical Distribution Market remains healthy with an overall value of over US$170 billion and forecasted to continue rising at a CAGR of 9.69 percent for the period 2012-2016
Nevertheless, as optimistic as these numbers are, they are conditional on vendors’ capacity to first overcome some big challenges outlined below:
1.Regulatory Barriers
Chemical distributors have to consider a lot of factors during their operations, including the safety of their personnel and the impact on the environment. Several new policies, legislations, and regulations are in effect globally, and distributors’ operations are monitored closely by regulatory bodies due to the increase in concern over health and the environmental effects of toxic chemicals.
The distributors who import chemicals from other countries are facing difficulties due to changing rules and regulations and a rise in compliance costs. Specifically, in the European Union, REACH has put pressure on chemical distributors to maintain dossiers on chemicals and the hazards they pose to human health and the environment. Moreover, the cost of obtaining toxicological information from suppliers of imported substances, have added to the expenditure of chemical distributors.
2.Economic Barriers
The following economic barriers have a huge impact on chemical distributors and agrochemicals vendors:
- Rising oil prices
- Increased transportation costs
- Significant capital investments for health and environment regulations
- Rising need for investment in blending, formulation, and VAS.
As a result of these factors, there is a huge high entry barrier to agrochemical market newcomers, and many already-existing smaller companies have either been forced to drop out of the race, or merge with larger firms.
3.Lack of Skilled Professionals
The Chemical Distribution industry is often perceived as dull and uninteresting and therefore fails to attract young talent. Hiring and retaining skilled staff is one of the major challenges faced by the chemical distribution market. Being an industry where people are the main asset, it needs professionals who are multitalented, self-motivated, and energetic which can be difficult. That said, many firms have developed training and personal development programs to appeal to young talent.
Fortunately, a few key trends are emerging which are likely to offset any negative impact that these challenges will have on the market—namely, an increase in mergers and acquisitions, and an increase in focus on sustainability by chemical distributors. And what’s more, as we mentioned above, with the global demand for food as high as it is, there’s virtually no way to avoid the need for chemicals like fertilizers and pesticides. With all this being considered, we’re confident that the Global Chemical Distribution Market is guaranteed to see big profits for the time being, and the years to come.
For more information, view our 2012-2016 Global Chemical Distribution Market report.
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