According
to the president of the CCPIA, China’s pesticides industry will prosper again
in 2017, after facing some setback in exports 2016, where both quantity and
value of exports declined. The reasons are the policy of China’s government
regarding planting and crop protection as well as environmental protection and
consumer needs.
Source: Pixabay
Market
intelligence firm CCM has summed up the outlook of Sun Shubao, the president of
the China Crop Protection Industry Association (CCPIA), in terms of the
pesticides industry in China for the year 2017. Sun Shubao predicts a rebound
of China’s pesticides exports, which amount to 50% of all pesticides sales. The
strengthened exports are the main drive for China’s pesticides manufacturers to
experience improvements in 2017.
China
Pesticide export data 2011-2016
Source:
CCPIA
Five
main factors will push the pesticides industry in China for the next years and
back up the positive development of it.
Change of planting areas
China’s
government is changing the plans for planting areas of several crops. This
includes providing more area for rice and wheat to meet the domestic demand and
become independent of grains imports. However, the planting area of other crops
will be adjusted to occurring market trends. Since China is importing a huge amount
of cheap gen-manipulated corn, the domestic planting area will be reduced
accordingly and replaced by plants like soybeans. This will keep the demand for
pesticides high.
The
environmental protection efforts are another factor in reconstructing the
pesticides industry in China. Due to stricter inspections and regulations. Outdated
production as well as small and medium-sized companies are likely to withdraw
from the market, leaving a tighten supply and hence increasing prices. This
trend is supported by the same situation for upstream products of pesticides
like glycine.
Reducing crop protection companies
Speaking
of environmental protection, China’s
government is aiming for reducing the total amount of crop protection companies
by 30% to fulfill the goals of environmental protection. Following this plan
are promotions and encourages of mergers and acquisitions for Chinese
manufacturers. According to CCM, no new pesticides company was established in
China in the last two years. The strategy is supposed to enhance production
variety and innovation.
M&As
As
mentioned beforehand, China’s government is supporting M&As to reduce
domestic pollution and strengthen innovation. CCM believes, that this strategy
will help the big manufacturers with enough money for investments to develop in
a healthy and sustainable manner. However, domestic M&As are barely
recognized and do not have the wide-sweeping effect than multinational acquisitions.
In addition, acquisitions of Chinese manufacturers have the benefit to get
their product line into global markets by using the Sales channels of the mother
company and utilize the knowledge and experience for marketing and sales
purposes. Hence, China’s manufacturers will become for competitive in the
global market.
Export tax rebates and safety
According
to Sun Shubao, currently the export rebate for pesticides formulation is
smaller than the one for pesticide technical. This situation should be
reversed, by giving formulation a higher export rebate than technical.
The
incorrect use of pesticides is still a huge problem in China, which mostly
occur on farms, whose farmers are not informed about the correct use of
pesticides. The most common mistakes are overuse of pesticides or some misuse.
Hence, the CCPIA is increasing efforts to educate farmers about the use of
pesticides, by turning small producers into service providers, who can guide
farmers in the best use of pesticides. Also, the efficacy of pesticides in
general should be improved, while setting the focus on bio pesticides.
GM
The
last factor is regarding to gen-manipulated corn in China. China is currently
spending a huge amount of money into the research of GM corn, to lower the dependence
on pesticides usage in general. However, despite from one successful
implemented GM corn in China, most of the GM crops have not successfully
implemented into the market yet. This also collides with the demand of Chinese customers,
who are still very skeptical towards GM crops like soybean.
About CCM
CCM is
the leading market intelligence provider for China’s agriculture, chemicals,
food & ingredients and life science markets.
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