Chinese government encourages mergers and acquisitions in pesticide industry, manufacturers’ resettlement in west China required to observe local environmental protection regulations

Since pesticide production licensing was delegated to the Chinese Ministry of Agriculture and Rural Affairs, it has shouldered the responsibility of managing the transformation, upgrading and optimization of the pesticide industry towards a high-quality green development goal.

On 16th December, the ministry held a national pesticide administration conference in Beijing. Zhang Taolin (Vice Minister) explained the key tasks assigned to pesticide administrations at all levels.

The ministry has initiated the preparations for the “14th Five-Year Plan pertaining to Pesticide Industry,” which focuses on the world-class development of pesticide production, industry deployment, capacity, product structure and supportive policies.

With regards to industry deployment, in recent years, many enterprises in the provinces of Jiangsu and Zhejiang have been transferring their production lines to the central and western region of China. Under these circumstance, all local regional governments need to pay attention and take precautions to manage the transfer of these production lines.

However, local governments should also help enterprises solve their relocation-related problems while enterprises to be resettled should meet environmental protection requirements in the central and western regions of China and strictly comply with environmental regulation to prevent a situation of "built and demolished.”

In response to the issues posed by major pest control and high-toxic pesticide substitution, the ministry aims to encourage the development of several high-efficiency, green and low-risk (low toxicity and low residue) pesticides and formulations, optimize the new pesticide production process, integrate a number of pesticide quantity reduction and efficiency enhancement solutions, and draft several new pesticide standards to support pesticide production and applications.

To ensure that effective supplies are available in the pesticide market, agricultural and rural affairs departments at all levels are requested to improve their monitoring of pesticide production, marketing and application, to be well informed of developments to pesticide production, sales and applications so they can predict and proactively deal with supply gaps, abnormal price fluctuations and safety risks. At the same time, resources should also be committed to tracking international pesticide applications and administrative measures, as well as the use and administration of pesticides at risk or in dispute, to provide proactive analysis, ensure that early warnings can be given when phasing out outdated pesticides, and being in a better position to eliminate the outdated capacities of pesticide enterprises.

To solve the current problems of small scale and decentralized production, overcapacity and unreasonable product structure, the necessary support in terms of product registration, production licensing and project financing should be provided. Support will also be given to industry mergers and acquisitions and efforts to eliminate outdated capacities, to help enterprises grow larger and stronger, as well as to establish competitive large and medium-sized enterprises during the period of the plan.

The central government decided to phase out ten types of highly toxic chemical pesticides, including phorate and isocarbophos, which will be phased out over the next five years. This difficult phase-out program involves over 180 enterprises, and concerned provinces need to implement supportive policies and measures to help enterprises complete the process. They must also encourage enterprises to take their own initiative and actively cooperate in the process.

With regards to the development of the pesticide industry, the relationship between domestic markets and international markets must be prioritized. At present, Chinese pesticide exports account for over 60% of total output, which has brought considerable pressure on ensuring compliance to environmental regulations and pesticide industry supervision. Therefore, the comprehensive analysis of relevant advantages and disadvantages needs to be made to properly handle the relationship between domestic markets and international markets while taking into account the economic benefits and resource preservation benefits. Priority must also be given to fulfilling the demand from domestic markets. Studies on pesticide exportation need to be carried out as soon as possible, and must be followed by the drafting of policies and measures to optimize administration and services that support exports.