Source: Baidu

Currently, Chinese pesticide enterprises are still competitive in producing pesticide technical; however, almost all the pesticide products required advanced technology are manufactured by foreign pesticide giants.

Dilemma: Too many low-end products but few high-end pesticides

China is the biggest consumer of pesticide in the world. Over 1.4 million tonnes of pesticide are used in China every year. According to China’s Ministry of Agriculture (MOA), among the pesticides, most of them are chemical pesticides which accounts for one third of the total use of chemical pesticide globally. In China, fifteen kilogram of pesticide would be applied in one hectare of fields, twice more than the usage in developed countries.

In fact, the unreasonable and over use of pesticide in China is caused by the lack of niche products and crop protection technology, according to analyst CCM.

As the biggest pesticide producer in the world, it seems that China never runs out of pesticides. In 2015, 2,232 Chinese pesticide manufacturers registered at least 34,000 products, according to Institute Control of Agrochemicals, Ministry of Agriculture (ICAMA). 

However, homogeneity among all the products is a problem that cannot be neglected. According to ICAMA, there are up to 1,047 registered products contained glyphosate and even 123 registrations of pyraclostrobin products with its patent just expiring for a year. That almost all the pesticide enterprises producing one specific product at the same time has led to intense competitions among the same product and overcapacity in the industry. Some of the products became non-profitable after the vicious competitions. For instance, the average ex-works price of 95% glufosinate-ammonium TC fell to USD19,488/t in the first half of June 2016, down more than 50% compared to the average price in 2015.

Though there are too many products of staple pesticide in China, there is few pesticide for controlling some unusual diseases and insect pests. With some highly toxic pesticides being banned and limited in China, it would be more difficult for farmers to prevent and control diseases especially on nematodiasis, bacteriosis, virus diseases, drug-resistant pests and weeds.

Due to considerations of pesticide cost, lack of niche pesticides and crop protection knowledge and skills in China, some farmers are still using illegal pesticide, which causes the unreasonable use of pesticide in China.

To break through dilemma

In order to improve the efficacy in China pesticide industry, some Chinese pesticide enterprises have already devoted themselves to developing niche pesticides and focused on the service of pesticide spraying for farmers.

Qingdao Hailir Pesticides & Chemicals Co., Ltd. (Qingdao Hailir), one of the earliest pesticide enterprises in self R&D in China, invested a lot on its pesticide development. Relying on its advanced technical technology, Qingdao Hailir has a whole product series covering acaricide, insecticide, fungicide, herbicide and crop nutrients and provides farmers with a package of service in controlling and preventing diseases in cultivation. Besides the non-patent pesticides, Qingdao Hailir has even developed some new compound chemicals with independent intellectual property rights, which are in the process of registration.

Besides the innovation of pesticide products, the development on crop protection equipment also matters.

Due to the shortage of labor in the countryside and hard condition in applying pesticides, it has become a big problem for large growers to find people to apply pesticides in peak season. The development of crop protection drones has helped farmers to better cultivate.

Relying on its efficient crop protection equipment and technology, Guangxi Tianyuan Biochemistry Co., Ltd. (Guangxi Tianyuan) has formed a crew to spray pesticide for the farmers, changing from “selling pesticide to farmers” into “spraying pesticide for farmers”.

Modern efficient crop protection equipment is the main method to improve the crop protection service, said Li Weiguo, CEO of Guangxi Tianyuan. In the USA, there are about 10,000 companies which provide crop protection service, with the total sales value of USD7 billion annually.

The crop protection companies purchase pesticides directly from manufacturers and dealers, then offers technical service for the farmers in pesticides spraying. These sucessful cases in the USA could be really learnt from, said Li.

Merger and acquisition: to improve the industry concentration

In 2015, the sales value of top 10 Chinese pesticide enterprises accounted for 10% of the total sales value in China and that of the top 20 captured 15.6%, while the sales value of top 6 multinational agrochemical corporations, including Bayer, DuPont, BASF, Monsanto, Syngenta and Dow AgroSciences, captured 76.5% of that in the world, according to analyst CCM.

With too many small-scale pesticide producers in China, the China pesticide industry is with low industry concentration. Without a giant as a leader, China’s pesticide industry is far away from competitive. Thus, forming a large-scale pesticide corporation in China is vital to improve the industry competitiveness.

When talking about the future of China pesticide industry, Zhang Wei, president of Fuhua Tongda Agro-chemical Technology Co., Ltd., stated: “Acquisition and merger is a way to save the agrochemical industry in China.”

“It has been hard for the agrochemical industry both at home and abroad in these two years. The price of glyphosate fell 40% in 2015. If everyone still expects the price rise for glyphosate like 2008 and 2012, and keeps expanding their capacity on the same product, the whole industry would be in much trouble.”

“At the end of 2015, two global agrochemical giants - DuPont and Dow AgroSciences announced to combine. They are hoping that after the integration of their products and sales channels, their combination would help them perform better in the market.”

“Earlier, ChemChina taking over Syngenta with a huge amount of money actually gives a signal to the pesticide industry – acquisition and merger helps enterprises to survive in the bleak agrochemicals market,” said Zhang.

To tackle environmental issues

In the past two years, the Chinese government pays more and more attention on environmental pollution and food safety. To tackle the pollution from the pesticide productions, the Chinese government has released environment protection laws and regulations and emission standards on air, water and solid waste, which has given a lot of pressure on all the Chinese pesticide enterprises.

On 21 May, Shenzhen Noposion Agrochemicals Co., Ltd. announced that its subsidiary - Jiangsu Changlong Agrochemicals Co., Ltd. was sued by two environment organizations, including Friends of Nature Environmental Institute in Chaoyang Beijing and China Biodiversity Conservation and Green Development Foundation, because of its environmental pollution.

“Environmental issue cannot be avoided in the agrochemicals industry,” said Li Zhonghua, secretary general of China Crop Protection Industry Association (CCPIA).

“Strict environmental measures in China could help eliminate the inefficient capacity and small-scale enterprises.”

The production of pesticide is different from other productions. Emissions from some enterprises are highly toxic with complicate contents. For example, some chemicals contained phosphorus, benzene, phenol and mercury are difficult and expensive to deal with.

In addition, a pesticide enterprise would produce various kinds of pesticides in a year and producing different pesticides emit different pollutions, which makes it harder to deal with the wastes.

Currently, most of the environmental protection companies provide only chemical enterprises but few pesticide producers with service on dealing with wastes, which is also a problem to be faced by the pesticide producers in environmental protection.

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.

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