By Han Yongqi, Jiaodong Industrial Research Center

Opportunities and challenges of China's pesticide industry

1. Building an agricultural powerhouse brings new opportunities to China's pesticide industry

Accelerating the building of an agricultural powerhouse is inseparable from the strong support of pesticides. As an important means of ensuring agricultural harvests, pesticide has become an indispensable and special means of agricultural production in agriculture and made immeasurable contributions to disaster prevention and relief, agricultural harvest protection, etc. In the long run, pesticide will still play a pivotal role in the building of an agricultural powerhouse.

Accelerating the building of an agricultural powerhouse will bring rare historical opportunities for the development of China's pesticide industry. In particular, a new round of 50 billion kg of grain production capacity improvement action cannot be implemented without the support of agricultural materials such as pesticides. Pesticide is an irreplaceable supporting factor for implementing a new round of 50 billion kg grain production capacity improvement action and ensuring food security. The action of increasing the production capacity by 50 billion kg of grain will surely bring a golden opportunity for the development of the pesticide industry.

Inspired by the great benefits of accelerating the building of an agricultural powerhouse, China's pesticide industry will enter a new era of high-quality development. Since entering 2023, the development of the pesticide industry has stepped into a new stage of boosting confidence and looking ahead to the future. According to the survey to the situation of 55 domestic pesticide companies by the author, 45 pesticide companies have full confidence in the development of pesticides this year, and they are optimistic about the prospects of the pesticide market and the growth of corporate income. It is generally believed that the building of an agricultural powerhouse will drive the growth of the pesticide industry and increase the market supply and demand, the prosperity of pesticides will continue to improve, and the pesticide companies will maintain a good development momentum. It is estimated that the sales of pesticides in the first half of 2023 will be better than the same period in previous years.

2. Building an agricultural powerhouse brings challenges to China's pesticide industry

For a long time, China's pesticide industry has been large but not strong, and some problems existing in the industry are difficult to adapt to the new requirements of building a strong agricultural country. The disadvantages of China's pesticide industry in terms of scale, structure, technology, variety, quality, and formulation have seriously affected the high-quality development of China's pesticide industry.

First, the structure of pesticide products needs to be optimized urgently, with relatively low proportion of high-end and green pesticides and lack of brand power. Building a strong agricultural country will inevitably require the pesticide industry to develop toward high-end structure, branding, and greening. Although China's pesticide product structure has been greatly improved in recent years, there are still many shortcomings compared with developed countries, such as unreasonable product structure, insufficient high-end and green products, and low brand power. The quality or quantity of some varieties cannot meet the demand, and there are few varieties of formulations, and the main products are insecticides; the main insecticides are organic phosphorus, which cannot meet the high-end demand of agricultural production and environmental friendliness in the future. Some pesticide products lack brand cultivation. Although there are many brands in the Chinese pesticide market, their brand values are not high. Most domestic brands are limited to regional market competition, unable to compete with international famous brands, lack of market competitiveness.

Second, lack of innovation capacity and difficult in formulating new products. There are very few self-innovated varieties of pesticides in China, and most of them are imitations. Although the two pesticide research and development centers in the north and south of China have begun to take shape after years of construction, laying a good foundation for the transformation of China's pesticide research and development from imitation to innovation, there is still a big gap compared with developed countries. Due to factors such as financial resources, China's pesticide industry is seriously insufficient in the investment of new products. Coupled with the shortage of high-level scientific and technological talents, it is a great difficulty to develop new varieties. There is a big disparity in achieving a strong agricultural country in the scientific and technological innovation capability of the pesticide industry, especially the independent innovation capability.

Third, diseconomies of company scale. Building a strong agricultural country will inevitably require the pesticide industry to seek benefits from scale, and eventually move towards a new stage of scale economy development. However, most China’s pesticide companies are small in scale, poor in intensive management and weak in competitiveness. At present, there are nearly 600 technical pesticide manufacturers in China, but less than 200 technical manufacturers with a production capacity of 2 000 t/a, even fewer with an output of more than 10 000 t/a, and 85% below 2 000 t/a. The average production capacity of technical companies is very low, and some of the same product are produced by more than a dozen or even dozens of companies, resulting in the serious excess of production capacity and output, which directly affects the economic benefits of the company and the development of the industry.

Fourth, serious issue in intellectual property rights. Building a strong agricultural country will inevitably require the pesticide industry to have innovations with independent intellectual property rights, but Chinese pesticide companies have little investment, weak research and development technology, and lack of independent intellectual property rights. Developing new pesticides has high cost and big difficulties, causing intellectual property issues in the pesticide industry to continue to emerge. This has led to insufficient development capabilities of Chinese pesticide companies than that of foreign countries, and greater fluctuations in product quality, which limits the application scope and level of pesticide products.

Fifth, a large national unified market and a fair competition environment have not yet been formed, the market order is not standardized, and labeling and quality problems are serious. Pesticide market is in chaos, and fake brands, counterfeit and unqualified products and other problems constantly happen despite repeated prohibition, posing a great threat to the building of a strong agricultural country. These are incompatible with China's building of a high-standard market system and a strong agricultural country. In addition, problems like unreasonable use of pesticides, crops chemical injury and pesticide residues exceed the standard happen occasionally, and the problems in ecological, safety, green, low-carbon, digital, intelligent and other issues still exist, all of which will seriously affect the role of China's pesticide industry in contribution to agricultural powerhouse.

Thoughts on the development of China's pesticide industry under the building of a strong agricultural country

Accelerating the building of a strong agricultural country is a strategic deployment made by the Party Central Committee. As an important means of production in agriculture, pesticides must follow the strategic deployment of the Party Central Committee, implement the spirit of the Central Rural Work Conference, and enable pesticides to play an important role in accelerating the building of a strong agricultural country.

The development of the pesticide industry must obey and serve the goal of building a strong agricultural country, and must focus on the word “strong”, so as to realize the transformation from big to strong, and relying on innovation to become strong. Under the building of a strong agricultural country, China's pesticide industry must transform to green, new, strong and branding.

First, we must adhere to the word “Green" and accelerate the transformation of traditional products into green products. Ecological agriculture and green agriculture are the part and parcel of the efforts to build a strong agricultural country. The pesticide industry should serve the development of ecological agriculture and green agriculture, accelerate the pace of transformation from traditional pesticides to green pesticides, and adapt to the general trend of green agricultural development. With the rapid development of pollution-free ecological agriculture, and people’s increasing attention to the pollution of highly toxic and high-residue pesticides to the environment, farmers are having increasing demand for new types of pesticides with high efficiency, low toxicity and pollution-free and the highly toxic organophosphorus insecticide will gradually fade out of the market; the demand for various microbial pesticides and botanical pesticides will rise. To this end, pesticide companies should pay close attention to the adjustment of product structure and update pesticide products around green agriculture.

Second, we must adhere to the word "New" and accelerate the transformation from traditional imitation to independent innovation. At present, China's pesticide innovation capability has been greatly improved, and there have been many new pesticide varieties with independent intellectual property rights. However, as a matter of fact, most pesticide manufacturers have insufficient investment in technological innovation due to small scale, fierce competition, and low profit. Therefore, pesticide manufacturing enterprises, on one hand, should continue to cooperate with scientific research institutes, on the other hand, they should pay attention to improving their own innovation capabilities, increasing investment, and developing new varieties with independent intellectual property rights and in line with national new pesticide technology standards. Only in this way can we occupy a place in the fierce market competition. The whole industry should speed up the pace of developing new varieties of pesticides with independent intellectual property rights, and introduce new convenient, efficient, safe and practical formulations.

Third, we must adhere to the word "Strong" to promote the transformation of the pesticide industry from large to strong. In accordance with the arrangement of the “14th Five-Year Plan” for the pesticide industry, it shall further strengthen the rational allocation of resources, promote the joint and reorganization of enterprises and realize the scale economy of the pesticide industry, which will make China transform from a big pesticide country to a strong pesticide country, and eventually change the current industry situation of "large but not strong" in China.

Fourth, we must adhere to the word "Brand" and promote the transformation of Chinese products into Chinese brands. For a long time, there have been big problems in the brand management and operation models of domestic pesticide companies. In the actual brand building, pesticide companies have insufficient investment in brand promotion, problems in scattering brands and multiple brands, which weakens the strength of brand building. Therefore, Chinese pesticide companies should concentrate their energy, manpower and financial resources on cultivating, protecting and developing competitive leading brands.