CCM: Kingenta to benefit from Chinese government's promotion of controlled release fertilizers 03-31-2016

In early March 2016, at the 2016 China National Controlled Release Fertilizer Promotion Meeting that was held in Shandong Province, the Chinese government vowed to continue to promote controlled release fertilizers. As a leading company in the industry, Kingenta will be given preference in resources distribution and support, and its performance is expected to continue to increase.


 

On 1 March, 2016, the National Agro-tech Extension & Service Center (NATESC) of the Ministry of Agriculture of the People’s Republic of China and the National Engineering Technology Research Center for Controlled Release Fertilizer jointly held a 2016 China National Controlled Release Fertilizer Promotion Meeting in Linshu County, Linyi City, Shandong Province.


In the meeting the NATESC emphasized that, in response to the No.1 Central Document and the initiative of achieving zero growth in chemical fertilizer consumption by 2020, China should strongly promote soil testing and formulated fertilization, enhance the development of new fertilizers and optimize the existing fertilizer product structure. Controlled release fertilizers are representative of new fertilizers, so hastening its adoption will play a pivotal role in reducing the consumption volume of chemical fertilizers and improving the utilization rate of fertilizers.


Relevant data show that controlled release fertilizers can significantly increase corn yield. Farmers can have an average yield increase of 16.2% and an income increase of USD28.68 (RMB187.50) per mu (15 mu = 1 ha) when using controlled release fertilizers instead of traditional ones.


According to CCM’s research, the average annual growth rate in the capacity of controlled release fertilizer has surpassed 45% in China, and both the production and consumption of Chinese controlled release fertilizers have accounted for about 50% of the global total in recent years. In 2015, China promoted controlled release fertilizers in 25 provinces and built 83 testing and demonstration pilot projects.

 

China is vigorously promoting controlled release fertilizers. Given the circumstances, CCM believes that Kingenta Ecological Engineering Group Co., Ltd. (Kingenta), as a leading company in the industry, will be given preference in resources distribution and support, and its performance is expected to continue to increase.


According to a bulletin released by Kingenta at the end of Feb. 2016, the company performed well in 2015:

  • Total revenue: USD2.71 billion (RMB17.74 billion), up by 30.89% year on year
  • Net profit: USD169.76 million (RMB1.11 billion), up by 28.24% year on year


Such an outstanding performance can be attributed to Kingenta's vigorous exploration of the O2O business pattern in selling agricultural means of production. This ensured the stable growth of common compound fertilizer sales and nitro-compound fertilizers sales and boosted the sales volume of new fertilizers, such as controlled release fertilizers and water-soluble fertilizers.


Currently, Kingenta’s capacity of controlled release fertilizers has reached 1.70 million t/a. Its cooperation with the NATESC has extended to over 20 provinces and cities around the country with a controlled release fertilizer application area of over 13.33 million ha (200 million mu), essentially covering all the major production areas of field crops and industrial crops in the country and saving an accumulated production cost of USD11.32 billion (RMB74 billion).


For this, Wan Lianbu, president of Kingenta, disclosed that the company will continue to cooperate with the NATESC and further promote controlled release fertilizers in order to benefit more farmers and contribute more to the improvement and transformation of China’s chemical fertilizer industry, and also to achieve the goal of zero growth in the consumption of chemical fertilizers and to develop green ecological agriculture. Meanwhile, it will also accelerate its international development strategy so as to improve China’s controlled release fertilizers’ influence on the international market.

 

According to CCM’s research, since Jan. 2016, Kingenta has already put forward a series of controlled release fertilizers-related projects, which mainly include:


1. The establishment of Hubei Wolfertile Ecological Engineering Co., Ltd. (Hubei Wolfertile) and construction of a 800,000 t/a new fertilizer project


With a total investment of USD15.29 million (RMB100 million), Hubei Wolfertile was jointly built by Kingenta and its wholly-owned subsidiary Wolfertile Compound Fertilizer Co., Ltd. as well as Hubei Qianjiang Jinhuarun Fertilizer Co., Ltd. (Hubei Jinhuarun). In particular, Kingenta and its wholly-owned subsidiary hold 75% of shares in the new company between them.


Through this cooperation, Kingenta can take advantage of Hubei Jinhuarun’s existing synthesis ammonia production equipment to provide raw materials for its new fertilizer project which will help the company to reduce reliance on external raw materials and cut production costs.


2. Additional USD70 million investment in Kingenta (Hongkong) Investment Co., Ltd. (Kingenta (Hongkong))


On one hand, this will help Kingenta to further explore the international market by consolidating and improving product recognition and brand influence in foreign markets; on the other hand, this will help Kingenta to merge with and acquire foreign companies in the new fertilizer and agricultural service industries who could benefit the enrichment of its products.


3. The acquisition of core assets (production equipment, office facilities, brands, patents, inventories, etc.) of Ekompany Agro B.V. (Ekompany) through Kingenta (Hongkong) at EUR6.10 million


Founded in 2010, Ekompany is the biggest coated controlled release fertilizer company in Europe, with a capacity of 40,000 t/a, accounting for 45% of the total for the whole of Europe. It also has a bulk blend fertilizer production line (60,000 t/a).


This acquisition not only provides Kingenta ownership of patents, but also helps Kingenta to open sales channels for its controlled release fertilizers in the European market, further increasing its competitiveness in the international market.



About CCM:

CCM is the leading market intelligence provider for China’s agriculture, chemicals, food & ingredients and life science markets. Founded in 2001, CCM offers a range of data and content solutions, from price and trade data to industry newsletters and customized market research reports. Our clients include Monsanto, DuPont, Shell, Bayer, and Syngenta. CCM is a brand of Kcomber Inc.

 

For more information about CCM, please visit www.cnchemicals.com or get in touch with us directly by emailing econtact@cnchemicals.com or calling +86-20-37616606.

 

 Tag: Kingenta, fertilizer



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