Agricultural Films Market Analysis

Agricultural Films Market Deep Dive – PESTLE, Porter, SWOT

The Agricultural Films Market plays a key role in enhancing agricultural productivity and sustainability by providing essential solutions for crop protection, soil management, and resource conservation. As the demand for food continues to rise, driven by population growth and changing dietary preferences, the need for innovations in agricultural practices will continue to increase. Agricultural films, which include a wide range of plastic films used in applications such as greenhouse coverings, mulch films, and silage films, are essential for improving growing conditions, improving yield quality, and reducing the impact on the environment. This market is characterized by a wide range of products tailored to the unique needs of different crops and climates, reflecting the ongoing advancements in material technology and agricultural practices. In addition, the growing emphasis on sustainable farming and the adoption of precision agriculture are expected to drive the demand for agricultural films, making this market an essential and dynamic subsector of the broader agriculture industry.

PESTLE Analysis

• Political:
  In 2023, the government’s policy of increasing agricultural productivity has led to a boom in the agricultural film industry. In the United States, for example, the Department of Agriculture allocates $1.2 billion a year for research into the use of advanced agricultural films. In some countries, the government provides a subsidy of up to 30 percent for the cost of agronomic films that meet certain requirements.
• Economic:
  The market for agricultural films is influenced by the economic conditions of agriculture, which employs about 1.3 billion people worldwide. By 2023, the agricultural sector is expected to generate revenues of about $ 3.5 trillion, which will drive the demand for agricultural films that increase the yield and protect against external influences. The price of raw materials such as polyethylene, which rose by 15 percent in 2024 due to disruptions in the supply chain, also directly affects the cost structure of agricultural films.
• Social:
  The awareness of consumers with regard to sustainable farming is growing. Research has shown that 68% of consumers prefer products produced by means of a sustainable method. This change in the buying behaviour of consumers is putting farmers under pressure to opt for agricultural films that are biodegradable or recyclateable. In 2023, 45% of farmers used agricultural films that were biodegradable or recyclateable.
• Technological:
  In the field of agricultural films, the most recent technical developments have led to the development of products such as biodegradable and uv-resistant films. In 2023, it is reported, the use of smart films was introduced, in which sensors were built in to enable the farmers to monitor the moisture content of the soil in real time. The technology is expected to help increase crop yields. According to industry reports, by the end of 2023, about 20 percent of the farmers were using this technology.
• Legal:
  Agricultural films are regulated more and more strictly, particularly with regard to their impact on the environment. In 2023, the European Union imposed a new law requiring that by 2025 all agricultural films had to meet a specified degree of biodegradability. This ruled out about 60% of the market. For the manufacturers, the regulations are very important. Failure to comply can result in fines of up to 500,000 euros per offense.
• Environmental:
  There are many investigations on the effects of agricultural films on the environment. It has been calculated that annual waste from conventional polythene films is about 8 million tons. There is a growing trend towards more sustainable products and by 2025 biodegradable films are expected to account for 25 per cent of the total agricultural film market. In addition, measures are being taken to encourage the recycling and proper disposal of agricultural films. By 2023 it is expected that 30 per cent of agricultural films will be recycled.

Porters Five Forces

• Threat of New Entrants:
  Agri-films have medium entry barriers, including significant capital investment in equipment and technology. Also, the established companies benefit from brand loyalty and distribution networks that may deter new entrants. But new technology and increasing demand for sustainable farming practices are likely to encourage new entrants.
• Bargaining Power of Suppliers:
  Suppliers’ bargaining power in the agricultural film market is relatively low. The suppliers of raw materials, such as polythene and other polymers, are numerous. The producers can therefore easily switch from one supplier to another. This reduces the power of any single supplier to influence the price and the terms of sale.
• Bargaining Power of Buyers:
  The buyers in the agricultural film market, i.e. farmers and agribusiness companies, have high bargaining power because of the availability of several alternatives and the price sensitivity of the products. When they are looking for cost-effective solutions to increase the yield and protect their investment, they can negotiate more favorable conditions, which in turn affects the manufacturer’s profitability.
• Threat of Substitutes:
  The threat of substitutes in the agricultural films market is moderate, as there are alternative ways of protecting and enhancing crops, such as organic farming and other types of protective coverings. But the unique advantages of agricultural films, such as pest control and enhancing yields, limit the extent to which substitutes can be used.
• Competitive Rivalry:
  Competition in the Agricultural Films Market is High and there are many competitors. The companies compete on price, quality, and innovation. The companies compete on the basis of their marketing strategy and the development of new products.

SWOT Analysis

• Strengths:
  • High demand for agricultural productivity and efficiency.
  • Diverse range of applications including greenhouse films, mulch films, and silage films.
  • Technological advancements leading to improved film quality and performance.
• Weaknesses:
  • High initial investment costs for advanced agricultural films.
  • Environmental concerns regarding plastic waste and biodegradability.
  • Limited awareness and adoption in developing regions.
• Opportunities:
  • Growing trend towards sustainable and biodegradable agricultural films.
  • Expansion of precision farming techniques increasing the need for specialized films.
  • Government initiatives and subsidies promoting modern agricultural practices.
• Threats:
  • Fluctuating raw material prices impacting production costs.
  • Stringent regulations on plastic usage and environmental impact.
  • Competition from alternative materials and technologies.

The Agricultural Films Market in 2023 is characterized by high demand, primarily driven by the need for increased agricultural productivity and technological advancements. However, the market is hampered by high costs and growing concerns about the environment. Opportunities are created by the growing trend towards sustainable farming and the support of the government for modern farming methods. Threats are the high volatility of raw materials and the increasing regulatory pressure, which will require the industry to strategically adapt.