Pesticides Developed Steadily


In 2005, the pesticide sector in China had an unprecedented
achievement in the readjustment to industrial distribution,
product distribution and the improvement of economic
performance. Main economic and technical indexes all reached the
best level in recent years. The total output of pesticides was
1.039 million tons (usually referring to pure pesticide
technical), an increase of 19.4% over 2004. The sales revenue
was RMB62.45 billion, an increase of 30.2%. The after-tax total
profit was RMB3.32 million, with an increase of 46.5%.


Rapid output growth


The output of pesticides in China grew rapidly in 2005. The total
output reached 1.039 million tons, an increase of 19.4% over 2004.
The output of insecticides was 434 thousand tons, an increase
of 2.1%. The output of fungicides was 105 thousand tons, an
increase of 15.4%. The output of herbicides was 297 thousand tons,
an increase of 29.1%. The product distribution became more
rational. The output growth of insecticides was slowed down and
the proportion in the total pesticide output also had a gradual
reduction. The output growth of fungicides and herbicides was
further accelerated and the proportion in the total pesticide
output also had a gradual increase.


Remarkable improvement in economic performance


Pesticide producers in China faced with unfavorable factors such
as the price rise of raw materials, energy and freight in 2005,
but they still had outstanding achievements in the tapping of
internal potential, the conservation of energy, the reduction
of consumption, the improvement of process technology, the
intensification of internal management and the expansion of both
domestic and overseas markets. The economic performance of the
entire pesticide sector had a remarkable improvement.


Sustained increase in export


While satisfying the needs in the agricultural production in
China, pesticide producers increased export in 2005. The export
amount of pesticides reached 429 thousand tons (physical
quantity including formulations) in 2005, an increase of 9.4%
over 2004. The export value was US$1.4 billion, a rise of 17.6%,
and accounted for around 18% of the total sales revenue. The
export of herbicides held a leading position. Major export
varieties included glyphosate, paraquat and acetochlor. The
export amount of herbicides reached 204 thousand tons,
accounting for 47.6% of the total. The export amount of
insecticides was only 148 thousand tons and the export amount
of fungicides was 10.3% higher than 2004. Due to restrictions
put by the "PIC Convention" on the 5 high-toxicity
organophosphorus pesticides (methamidophos, parathion, methyl
parathion, monocrotophos and dimecron), the export amount of
insecticides will have a gradual reduction in future.
   The import amount of pesticides in China in 2005 was 33%
higher than 2004. Import varieties were also mainly herbicides
and fungicides. Owing to the readjustment of the planting
distribution in China, there are more crop varieties today.
Pesticide varieties are somewhat insufficient and a moderate
import has to be made in order to meet the needs in the
agricultural production.


Increase in fixed asset
investment


There were a total of 306 projects in the pesticide sector in
2005, an increase of 16.35% over 2004. 223 projects were newly
launched, an increase of 31.95% and 133 projects were completed,
an increase of 11.76%. The actual investment was RMB7.26 billion
in 2005, an increase of 58.34% over 2004 (data based on projects
with an investment of over RMB5.0 million).
   After the State Council approved the application submitted
by the National Development and Reform Commission and the
Ministry of Agriculture for reducing the production and use of
the 5 high-toxicity organophosphorus pesticides at the end of
2003, pesticide producers started to accelerate the development
and production of substitutes for these high-toxicity
organophosphorus pesticides. By the end of 2005, relevant
departments including the National Development and Reform
Commission arranged 29 projects for the shift of products and
the production of substitutes with a total investment of
RMB2.255 billion. Among the total, the fixed asset investment
was RMB2.041 billion. After the completion of these projects,
the rate of the substitution for high-toxicity organophosphorus
pesticides will reach 77.5% and the sales revenue will be RMB1.42
billion. The proportion of these 5 high-toxicity
organophosphorus pesticides in the total pesticide output will
be reduced from 25% to 10% and the product distribution will have
further improvement.


Favorable factors for
development


     (1) The Chinese Government formulated a series of policies
in 2005 to mobilize the initiative of farmers in farming. The
input made by farmers in the purchase of chemical fertilizers
and pesticides was higher than previous years. The sales of
pesticides were promoted and pesticide producers also reaped
benefits.
     (2) The readjustment of planting distribution led to
changes in the demand of pesticides. With the development of cash
crops, the demand of fungicides and herbicides had a gradual
increase. A group of new products with high added value were put
in the market. Not only the needs in agriculture were satisfied,
the economic performance in pesticide producers also had a
remarkable improvement.
     (3) Pesticide producers conscientiously implemented the
scheme approved by the State Council for reducing high-toxicity
organophosphorus pesticides and gradually cut down the
production of high-toxicity pesticides. The Chinese Government
also allocated special funds to support the development of
substitutes.
     (4) In making readjustments to the product distribution,
pesticide producers strengthened enterprise management,
practiced energy conservation and consumption reduction and
improved production process. The quality of many pesticides
approached or reached the level of similar foreign products and
the product sales ratio also had a remarkable increase.


Sustained demand growth in 2006


In 2006 China will continue to improve and fortify various
agriculture-aid policies, achieve a stable increase of grain
output and a sustained increase of farmers' income and promote
an overall development of the rural economy. Owing to the
increase of farmers' income, their input in crop disease/pest
control will have further increase.
   According to the projection made by the National Agricultural
Technology Dissemination Center, the total demands of
pesticides will reach 299.6 thousand tons (based on effective
ingredients) in 2006, an increase of 6% over 2005. The demand
of insecticides will have a sustained increase and reach 142.5
thousand tons. The demand of high-toxicity organophosphorus
pesticides will have a drop of around 33%. The demand of
fungicides will have a slight growth and reach around 75.4
thousand tons, an increase of around 3.1% over 2005. The demand
of herbicides will have a further increase to around 69.3
thousand tons, an increase of around 3.2%.


Table 1  Output of Pesticides in China in 2005
Product          Output (thousand tons)  over 2004 (%) &nbs