The Impact of Genetically Modified Crops on the Pesticide Industry

Authors: Xie Xinhong1, Zhao Ping2 (1. Economic and Technical Research Center, Sinochem Group Co., Ltd.; 2. State Key Laboratory for the Creation and Development of New Pesticides, Shenyang Sinochem Agrochemical & Chemical R&D Co., Ltd.)

Since 1996, when Monsanto began large-scale commercial cultivation of genetically modified (GM) crops in the United States and other parts of South America, the variety of GM crops has steadily expanded, their cultivation has spread to new regions, and their planted area has grown rapidly. In some areas, GM varieties have quickly supplanted conventional cultivars to become dominant. By 2018, the global acreage under GM crops (see Figure 1) had reached 192 million hectares, more than a hundredfold increase from the 1.7 million hectares recorded in 1996. GM crops are now grown in 26 countries, with South and North America serving as the most important regions for their cultivation. Major crops such as soybeans, maize, cotton, and rapeseed are widely planted, encompassing both herbicide‑tolerant and insect‑resistant varieties. Approximately ten GM crop species are cultivated, with soybeans, maize, cotton, and rapeseed accounting for over 99% of the total. GM traits fall into three main categories: herbicide‑tolerance genes (primarily glyphosate tolerance), insect‑resistance genes (including Bt genes), and stacked traits (typically combining herbicide tolerance and insect resistance). In 2016, crops harboring herbicide‑tolerance genes, insect‑resistance genes, or stacked traits accounted for 47%, 12%, and 41% of all GM crops worldwide, respectively.

Figure 1: Global Area Under Cultivation of Genetically Modified Crops

Since their large-scale adoption, genetically modified (GM) crops have not only reshaped cropping patterns in certain regions but have also had a significant impact on the entire agrochemical industry. However, the development of GM crops has now given rise to several new trends: the growth rate of GM‑crop acreage has slowed; the dominance of glyphosate‑tolerant GM varieties has weakened due to the emergence of glyphosate‑resistant weeds; and, most notably, the acquisition of the agricultural giant Monsanto by Bayer has effectively relegated the Monsanto brand to history. Consequently, it can be said that GM crops and their relationship with the agrochemical sector have entered a new phase of development, making it imperative to reassess the implications of GM crops for the pesticide industry.

As one of the industries most closely linked to genetically modified (GM) crops, the agrochemical sector has long been keenly attentive to the relationship between GM crops and pesticides. However, due to the inherent difficulties in compiling usage data and the paucity of relevant research, the precise nature of this relationship remains unclear. Drawing on the latest scholarly literature, this paper empirically examines the impact of GM crops on pesticide application volumes, industry consolidation, the evolution of business models among leading agrochemical firms, and the emergence of glyphosate as a dominant agrochemical product.

1. The Impact of Genetically Modified Crops on Pesticide Use

To examine the impact of genetically modified (GM) crops on pesticide use, it is necessary to collect data on pesticide application volumes; however, given the vast diversity of pesticide formulations, such data are extremely difficult to obtain. After reviewing an extensive body of literature, we identified only a handful of studies that address pesticide usage. Moreover, government‑level statistics on pesticide use are exceedingly limited. The U.S. Department of Agriculture conducts surveys of pesticide‑use data every few years, resulting in relatively more comprehensive information. As the United States was among the first countries to widely adopt GM crops, its pesticide‑use data are particularly representative and lend themselves to trend‑based analyses. Accordingly, this paper relies primarily on the comparatively limited available pesticide‑use data for its analysis.

1.1 The Relationship Between Herbicide-Tolerant Crops and Herbicide Application Rates

Previous studies on the impact of herbicide‑tolerant crops on herbicide use have yielded conflicting results; some reports indicate that glyphosate‑tolerant crops have led to a significant reduction in the application of herbicides other than glyphosate. Given that glyphosate‑tolerant genetically modified soybeans rapidly became the dominant crop in the United States after 1996, examining herbicide use in U.S. soybeans from 1996 onward provides valuable insights into the relationship between herbicide‑tolerant GM crops and overall herbicide consumption. By querying the USDA database online, we can access data on herbicide use for U.S. soybeans from 1994 to 2015 (see Figure 2). The data reveal that, between 1997 and 2004, as the acreage planted with glyphosate‑tolerant GM soybeans expanded—from 1.92 million hectares in 1996 to 25.87 million hectares in 2004—its share of total soybean acreage rose from 7% to 93%. During this period, total herbicide use increased only slightly, from 27,500 tonnes to 32,100 tonnes, a rise of 17%; by contrast, glyphosate use surged from 3,900 tonnes to 26,600 tonnes, an increase of 5.75 times, with its share of total herbicide use climbing from 14.3% to 82.9%.

Figure 2: U.S. Soybean Herbicide Usage and Glyphosate Share

Another study found that, compared with conventional corn and cotton, herbicide‑tolerant corn and cotton experienced a slight reduction in herbicide application per unit area in the years preceding the introduction of genetically modified crops, but herbicide use subsequently increased in the following years.

Thus, it can be seen that, in the early stages of GM crop adoption, the expansion of glyphosate‑tolerant crop acreage (see Figure 3) did not lead to a reduction in herbicide use; rather, it resulted in a shift in the herbicide portfolio, with glyphosate usage rising rapidly. After 2004, as the use of non‑glyphosate herbicides also increased, total herbicide application rose markedly—primarily due to the growing resistance of weeds to glyphosate, a phenomenon that will be discussed later.

Figure 3: U.S. Soybean Planting Area and Share of Genetically Modified Soybeans

1.2 The Relationship Between Insect-Resistant Crops and Pesticide Application Rates

According to reports, the global use of insecticides decreased by 10,500 tonnes in 2001 due to the cultivation of Bt cotton. Based on U.S. survey data, from 1996 to 2008, as the acreage planted with insect-resistant cotton expanded, the amount of insecticide applied per unit area declined markedly, falling from 1.80 kg/ha in 1996 to 0.63 kg/ha in 2008 (see Figure 4). The concurrent expansion of insect-resistant cotton acreage and the reduction in insecticide use suggest that, during this period, insect-resistant cotton contributed to lower insecticide consumption.

Figure 4: U.S. Pesticide Use for Cotton and the Proportion of Bt Cotton Planting Area

Another study found that, compared with conventional corn and cotton, insect-resistant corn and cotton both exhibit a significant reduction in the amount of insecticide applied per unit area.

According to reports, Chinese researchers have found that, in fields planted with insect-resistant cotton, the incidence and damage caused by non-target pests—such as cotton aphids, cotton red mites, and mirid bugs—are generally comparable to, and in some cases even exceed, those observed in conventional cotton. Additionally, other reports indicate that, after several years of cultivating genetically modified insect-resistant cotton, the application rates of pesticides used to control secondary pests have increased.

Therefore, the relationship between insect-resistant transgenic crops and pesticide use is more complex.

2 Genetically modified crops have driven consolidation in the global pesticide industry.

Beginning in the mid-1980s, as the development of new agrochemical products grew increasingly challenging, leading pesticide companies began to consolidate and collaborate, giving rise to a series of major corporate restructurings. With the advent of genetically modified organisms in the mid-1990s, this consolidation process gained further momentum, culminating in the early 21st century with a relatively stable landscape dominated by six major agrochemical giants: Syngenta, Bayer, BASF, Dow, Monsanto, and DuPont.

2.1 Surface-level reasons: The pesticide market has been sluggish for several consecutive years.

From 1996 to 2002, the global pesticide market contracted for six consecutive years, with its size shrinking by 14% (see Figure 5). During this period, international grain prices remained relatively low, and market demand was comparatively weak.

Figure 5: Global Pesticide Market Size, 1994–2004 (in billion USD)

2.2 Underlying Causes: The Promotion of Genetically Modified Crops Has Disrupted the Existing Pesticide Market

By the mid-1990s, as the acreage planted with genetically modified crops expanded rapidly, glyphosate captured a significant share of the herbicide market; at the same time, the rapid expansion of insect-resistant GM crop cultivation also exerted a certain impact on the insecticide market.

As the world’s largest pesticide market and one of the earliest adopters of genetically modified crops, the United States has been particularly affected. With lower‑priced glyphosate replacing higher‑priced alternative herbicides, the U.S. soybean herbicide market shrank by nearly 50% between 1996 and 2004, while the U.S. corn herbicide market contracted by roughly one quarter over the same period.

From the perspective of the insecticide market, as the acreage planted with genetically modified insect-resistant cotton expanded in the United States, the U.S. cotton insecticide market contracted by approximately 40% between 1996 and 2001.

As a result, agrochemical companies whose core business revolves around herbicides other than glyphosate have seen their financial performance decline, prompting a strong desire to restructure their operations.

2.3 Restructuring Process and Outcomes

During the period from 1986 to 1995, pesticide companies also underwent restructuring, but such mergers and acquisitions were predominantly among firms ranked below fifth place globally, resulting in relatively few changes at the top of the rankings. After 1996, cross‑acquisitions among the leading companies became markedly more frequent: in 1996, Ciba‑Geigy, then number one, merged with Sandoz, ranked ninth, to form Novartis, which ascended to the top spot; in 1999, Novartis combined with AstraZeneca, then fourth, to create Syngenta, which took over the No. 1 position; also in 1999, Hoechst, ranked fifth, merged with Rhône‑Poulenc, seventh, to establish Aventis, which moved into third place; in 2000, BASF, then tenth, acquired American Cyanamid, which was eighth, elevating BASF to fourth; and in 2002, Bayer, sixth, merged with Aventis, third, creating a new Bayer that climbed to second place. By this point, a stable six‑firm structure had emerged—Syngenta, Bayer, BASF, Dow, Monsanto, and DuPont—that would endure for more than a decade. Throughout this process, all six major players were shaped through successive consolidations; Syngenta and Bayer are particularly emblematic, while others like BASF and Dow also acquired significant pesticide assets. DuPont, by contrast, acquired comparatively fewer pesticide‑related assets (and its ranking remained at the bottom of the top six after the restructuring). Meanwhile, Monsanto did not pursue any major pesticide‑asset acquisitions during this wave of consolidation, yet its ranking rose from fourth in 1980 to second by 2000, eventually stabilizing around the fourth or fifth position.

By 2016, the agrochemical industry had entered another round of consolidation: Bayer acquired Monsanto, Dow and DuPont merged, and Syngenta was acquired by ChemChina, giving rise to a new quartet of industry giants—Syngenta, Bayer, BASF, and Corteva—which also marked a new stage in the development of genetically modified crops.

3. Reconstructed the business model of pesticide companies.

Before Monsanto successfully developed transgenic technology, agrochemical companies were typically either a business unit of chemical firms or spin-offs from them. Following the widespread adoption of transgenic technologies, in addition to forming strategic alliances for mutual support, agrochemical companies increasingly acquired seed‑related businesses, giving rise to a dominant industry trend: the “agrochemicals plus seeds” business model.

Monsanto, which successfully launched the commercial cultivation of genetically modified crops, originally began as a pesticide company. Following its breakthrough in GM technology, Monsanto acquired dozens of seed companies, including Jacob Hart, Corn States Hybrid, and Holden’s Foundations Seeds, gradually transforming itself from the world’s second-largest agrochemical firm in 1996 into the world’s largest seed company and the leading producer of GM seeds. In 2018, it was acquired by Bayer, which subsequently became the world’s largest seed company.

In 1999, DuPont acquired Pioneer, then the world’s largest seed company, and after 1996, Dow also made numerous acquisitions of seed firms. In 2017, DuPont and Dow merged, spinning off their agricultural businesses into Corteva, which became the world’s second-largest seed company. Syngenta, established in 2000, inherited Novartis’s seed business and acquired seed brands such as Garst, Funk, Rogers, Northrup King, Zeneca, Golden Harvest, and Advanta BV, making it today the world’s third-largest seed company. Although BASF did not have a seed business in the previous round of restructuring, it acquired Bayer’s divested seed operations in this round, becoming the fourth-largest seed company and establishing a combined agrochemical–seed business model.

At present, although the seed and pesticide businesses rank differently, the world’s top four seed companies are also the top four pesticide companies, and the integrated pesticide‑plus‑seed business model continues to be adopted by leading multinational corporations.

4. It gave rise to glyphosate, a giant agrochemical product.

The expansion of genetically modified crop acreage has had the most significant impact on the glyphosate market. Prior to 1998, atrazine held the top spot in the global herbicide market, with glyphosate ranking only fourth or fifth. However, since the introduction of glyphosate‑tolerant GM crops, glyphosate sales have steadily surged, transforming it into a dominant player in the agrochemical sector.

The research results indicate that, owing to its non-selective nature, glyphosate was initially employed primarily for non-agricultural purposes—namely, the eradication of green vegetation and preparation of fields prior to crop planting or harvest.

Post‑harvest weed control. However, following the introduction and rapid expansion of herbicide‑tolerant crops in 1996, glyphosate came to be widely used for post‑emergence weed management, leading to a sharp increase in its application rates. Today, approximately 90% of all glyphosate is applied in agriculture in the United States and worldwide. In 1974, U.S. farmers used 363 tonnes of glyphosate; by 1995, this had risen to 12,500 tonnes, and by 2014 it reached 113,400 tonnes. In 2014, U.S. and global glyphosate usage were 9.1 and 14.6 times the levels recorded in 1995, respectively. In 1995, glyphosate ranked as the seventh‑largest pesticide by volume in the United States; with the expansion of genetically modified (GM) crop acreage, it became the most heavily used and highest‑selling pesticide. In 2012, glyphosate applied to GM crops accounted for 56% of total global agricultural glyphosate use.

5 Recent Advances and Future Prospects in the Development of Genetically Modified Crops

5.1 The pace of development of genetically modified crops has slowed down.

Today, the development of genetic engineering has encountered several bottlenecks. First, in terms of cultivation scale, acreage has remained largely stable in recent years. In major agricultural exporting countries such as North America and South America, genetically modified crops—particularly soybeans, corn, cotton, and canola—already account for an overwhelming share of total planted area. Similarly, in India, China, and Pakistan, GM cotton represents a very high proportion of national cotton production. Consequently, any future expansion in the acreage of GM crops will depend either on existing GM‑producing countries diversifying into additional crops or on non‑traditional GM‑adopting nations embracing GM technology. At present, given the ongoing controversy surrounding GM crops in many countries, both the introduction of new crops and the entry of new adopting nations are likely to face significant challenges.

5.2 Decline in the weed-control efficacy of glyphosate

Glyphosate plays a central role in genetically modified (GM) crops, as GM varieties harboring the glyphosate‑tolerance gene account for more than 80% of all GM crops. The widespread use of glyphosate has led to severe weed resistance, prompting a continuous increase in application rates. For example, in U.S. soybean production, the number of applications rose from 1.1 per season in 1996 to 1.52 in 2014, while the amount applied per application increased from 0.7 kg/ha to 1.1 kg/ha. Between 2006 and 2012, as resistant weeds became increasingly prevalent in U.S. soybean fields, the use of herbicides other than glyphosate doubled, and glyphosate’s share of total herbicide expenditures declined accordingly.

Furthermore, in 2012, 96.8% of U.S. soybean acreage was planted with glyphosate‑tolerant genetically modified soybeans, and in 44% of these areas, the efficacy of glyphosate for weed control had declined. In 2006, U.S. soybean growers applied glyphosate alone to more than 20 million hectares; by 2012, this figure had dropped to 8 million hectares, primarily due to the increasing prevalence of glyphosate‑resistant weeds.

In recent years, Monsanto has continuously developed genetically modified crops that are tolerant to glyphosate combined with dicamba or other herbicides, underscoring that weed resistance to glyphosate has become quite severe.

5.3 Controversies over Glyphosate Safety and Changes in Regulatory Policies

In previous years, the safety of glyphosate was never a mainstream concern. It was consistently regarded as a relatively safe pesticide; however, in recent years, a series of developments has brought its safety into sharp focus. First, there was the controversy over glyphosate’s carcinogenicity: in 2015, the International Agency for Research on Cancer (IARC) classified glyphosate as a Group 2A carcinogen. Second, the U.S. litigation over glyphosate-related cancers reached 48,600 cases as of February 6, 2020, with Bayer recently agreeing to pay substantial sums to settle these claims. Third, several countries have either banned or imposed restrictions on glyphosate, including Vietnam, Austria, the Czech Republic, Italy, and the Netherlands. Meanwhile, many other nations and regions remain cautious, adopting a wait-and-see approach; they are expected to follow suit once regulatory policies in Europe and the United States become clearer.

5.4 Future Outlook

Genetic engineering once revolutionized the seed and pesticide industries. In its early years, the technology seemed unstoppable, conquering market after market. Yet after a decade of widespread adoption, issues such as weed resistance began to surface, and the limitations of glyphosate‑tolerant GM crops became increasingly apparent. To address this, Monsanto responded by continuously developing stacked‑trait GM crops that incorporate additional herbicides. As a result, the previously dominant “glyphosate‑tolerant seeds plus glyphosate” package ran into challenges, effectively reverting—albeit partially—to the pre‑GM era, when multiple herbicides were used to manage weeds. Consequently, the key advantages of GM technology—simplified weed management and the low cost of glyphosate‑based weed control—have gradually eroded—unless, in the future, a broad‑spectrum, low‑cost herbicide comparable to glyphosate is discovered, or significant progress is made in managing resistance.

In the future, genetic engineering may gradually come to be regarded as a routine technology, rather than the quintessential disruptive innovation it was at its inception, and its impact on the agrochemical industry is likely to be seen as relatively manageable. However, given the profound effects of GM crop development on the composition of pesticide portfolios, agrochemical and seed companies must closely monitor the latest developments in GM technologies and related regulatory policies—such as changes in national GM‑crop cultivation policies, shifts in the acreage planted with herbicide‑tolerant GM crops, and evolving regulations governing glyphosate—to effectively navigate emerging opportunities and challenges.

Source: Pesticide, Issue 9, 2020