*

Switch to generics pressures brands like Bayer's Roundup

*

Bayer shares dive to 20-year low

*

Corteva ( CTVA ) and BASF may also face pressure

By P.J. Huffstutter and Heather Schlitz

Nov 14 (Reuters) - U.S. farmers struggling with slumping

incomes and depressed grain prices have been switching to

cheaper generic pesticides and fungicides as they plan for

spring planting next year, which market analysts said could hit

the bottom lines of agrichemical companies like Bayer.

Signs of these financial impacts are already emerging. Bayer

shares fell sharply to a 20-year low on Tuesday,

after the chemical company warned that weak global agricultural

markets and a slumping U.S. farm economy are likely to pressure

profits further.

Agrichemical competitors Syngenta, Corteva ( CTVA ) and the

agriculture unit of Germany's BASF could also face

challenges in the sector, analysts said.

Nearly one-third of all the pesticides and fungicides that

Paul Butler uses on his Illinois soybean and corn farm are

generic to help him cut costs in a tight year, he said.

Fellow Illinois grain grower Jeff O'Connor is doing the

same. "It's like if you grew up eating Fruity Pebbles and now

you go to Dollar General ( DG ) and get Fruity Bites," he said.

Despite the cost savings, farmers say there can be

drawbacks to downgrading. Manufacturers of generic chemicals

typically do not cover the cost of respraying if the product

does not work, said Caleb Hamer, an Iowa corn and soy farmer.

Still, Midwestern distributors and grain elevators say they

have seen customers cutting back their spring pesticide and

herbicide budgets.

Some farmers are shifting away from branded products, said

Matt Carstens, chief executive of farm cooperative Landus and

agricultural financing company Conduit. Others are investing in

equipment that targets and treats weeds and pests in their

fields - allowing them to buy less herbicides and pesticides

altogether, he said.

"It comes down to this: What does the farmer really need? Do

they need a name brand, with protection insurance and complaint

policies backing it? Do they need to pay for all of that?"

Carstens said.

OFF-PATENT CHEMISTRY

When it comes to chemistry, a farmer's buying decisions

often are rooted in the seed.

Farmers typically base their chemical purchases with

trait-specific seeds they want - such as ones that produce a

drought-tolerant crop or can withstand herbicide applications

that kill weeds without harming the plant.

If there is a generic option to brand-name herbicides, and

the seeds that a farmer purchases can tolerate it, then it can

makes sense to go with a less expensive product, said Mac

Marshall, founder of agriculture advising firm Balcony View

Consulting.

The number of generics available to farmers is growing. The

patent for glyphosate, the active ingredient in Roundup and the

world's most widely used herbicide, expired in 2000, according

to Rabobank agricultural analysts Owen Wagner and Sam Taylor.

More than two dozen active ingredient patents have expired

in the past five years - spurring a boom in off-patent use,

which now accounts for about 80% of the agrichemical market

share, they said.

Now, with farmers facing weak margins this spring, they're

more likely to look for cost savings among their fertilizer or

crop protection chemicals, Taylor said.