Taking place on 4th and 5th July, the 2019 China Pesticide Exporting Workshop (2019 CPEW) was successfully held in Hangzhou, hosted by AGROPAGES.
The workshop attracted around 500 delegates from over 20 countries and regions, including 50 overseas pesticide sourcing companies, as well as over 200 Indian and Chinese pesticide and intermediate manufacturers and trading companies.
The workshop’s 18 keynoted speakers came from Latin America, Europe, Africa, Indian and China, who represented growers associations, pesticide cooperatives and pesticide companies from every country and region. They also shared their views on the latest industry developments from different perspectives.
Are you ready to invest in India?
The Chinese pesticide industry has experienced various difficulties over the past few years while the external environment has become complicated, greatly impacting global pesticide sourcing. One of the main topics of discussion at the workshop was how Indian and Chinese agrochemical companies could create cooperation opportunities and overcome the difficulties facing the industry, as well as technical and management issues, to become new models of success and drive the development of the global pesticide industry.
In his report, Dr. Samir Dave (Secretary of Pesticides Manufacturers & Formulators Association of India (PMFAI)) explained the current status of the Indian pesticide industry, stating that India has pollution compliant free manufacturing capacity. From last six years indian manufacturing capacity are under utilized and not much new investment was made due to imports from China. So this provides opportunity for Chinese companies to utilize the available pollution compliant capacity and make new investments.
Dr. Dave noted that India has 221 pesticide registrations, which is less than other countries. The Indian government is currently promoting its “Make in India” initiative, which aims to encourage that production of equivalent products in India at lower costs and shorter timeframes. India also has a relatively advanced pesticide technical and formulation research capacity, which can be utilized by Chinese companies to gain more benefits from the Indian market.
Rohit Nagraj (Analyst at Sunidhi Securities) predicted a bright future for the Indian agrochemical industry. From 2018 to 2025, the market value of India's chemical industry is estimated to increase to US$304 billion from the current $163 billion at 9% CAGR, which is higher than the average growth rate of the global chemical industry. The industry is, therefore, expected to advance significantly in terms of environmental compliance, work safety and automation. At present, Japanese companies are active in technology transfer in India, attaining decent returns from their investments. There are also many cooperation opportunities between Chinese and Indian companies. India's four major chemical parks are trying to attract foreign enterprises, while the Indian government is improving local infrastructure facilities, to provide foreign investors with a more pro-business environment. Mr. Nagraj also highlighted the weaknesses of the Indian chemical industry, such as its research and development capabilities, horizontal and vertical industry integration capabilities, and its lack of major industry players.
In his report, Xiao Guoxiang (General Manager of Jiangsu Nongbo Bio-Technology) analyzed the pesticide intermediate production and supply situation in China. According to available statistics, in 2018, there were more than 800 intermediate varieties manufactured in China, with a total output of 4 to 5 million tons. The stock stayed at a high level in early 2019, but after the Xiangshui explosion incident, supplies of intermediates become low. However, the prices of most intermediates have now begun to rebound after hitting rock bottom. Many intermediate manufacturers have now moved to the west of China, due to stringent policies introduced over the last three years. Some have even moved to Vietnam, Cambodia and India.
India's chemical industry is highly dependent on China, as large scale production in India is still relatively underdeveloped, which encourages cooperation with Chinese companies. In particular, Mr. Xiao pointed out that a major advantage of India's basic chemical development may lie in bromine. China's brominated mining efficiency is low and costs are high, while India and the Bay of Bengal have many natural advantages, due to their fast and effectively cycling. Bromine’s derivative products will play a major role in enabling Chinese companies to succeed in the future global market. Chinese companies will need to think, plan appropriately, and develop strategies for such products.
Lu Jian (Senior Manager of the Procurement and Strategic Supply Department at Rotam CropSciences) shares the same opinion that the Indian market will provide Chinese companies with new development opportunities. India is an emerging pesticide production hub, while Vietnam, Indonesia and even Taiwan have gradually increased their global production, complementing the supply chain. However, Mr. Lu also analysed the disadvantages of the Indian market from a business operations perspective, such as the hidden costs of working with Indian companies. Although current basic labour costs are lower than in China, India's med-level to senior staffing costs are almost the same, considering that agricultural enterprises have to recruit more and more medium and high-level research and development staff and management personnel. Therefore, hidden costs are increasing in India. Other costs, such as land price, rent, water and electricity in India's chemical parks are also similar to those in China, while packaging and other logistical costs, as well as re-registration expenses, must be considered. With the growth of its economy, India will eventually adopt stringent environmental regulations, like those currently in China.
Developments to the agrochemical market with the greatest potential
The Latin American market, represented by Brazil, is a key location for agrochemical enterprises to achieve their global objectives. At present, Latin America is experiencing a series of changes that have attracted international attention. During the workshop, local enterprises, multinationals and Chinese companies discussed ways of confronting the issues affecting the Brazilian market and the basic requirements for market entry into Latin America, as well as relevant risk control measures.
CCAB Agro comprises 22 agricultural cooperatives from around Brazil, representing 55,000 farmers. CEO of CCAB, Jones Yasuda, analyzed the overall developments of the Brazilian agrochemical industry and how to confront related problems from market and business perspectives. Mr. Yasuda said that in 2018, 30% of pesticides exported to Brazil came directly from China. With the ongoing US-China trade war and the tightening of pesticide supplies, pesticide prices in Brazil are likely to rise further, and the higher volume of agricultural inputs will lead to higher priced agricultural products. Brazilian agriculture plays an important role in feeding the global population, but the shortage of pesticides will affect international food security.
Mr. Yasuda also expressed his concern about the risks posed by the increased supply of products from unknown sources. During China’s ICAMA (Institute for the Control of Agrochemicals, Ministry of Agriculture)’s visit to Brazil in this September, Chinese and Brazilian authorities will discuss this issue with producer associations.
Avgust is the largest agrochemical company in Russia, which entered the Latin American market nine years ago. The company has performed satisfactorily in Brazil, Colombia, Ecuador and Peru. In Brazil, almost all cotton products and 90% cotton plantations use defoliants supplied by Avgust. The company’s Latin American Market Director, Pavel Keverin, explained the market’s characteristics and the company’s market entry strategies to access Latin American countries.
In the major soybean production regions of Brazil, Argentina, Paraguay and Bolivia, farmers do not rely heavily on technical support, as they already have relatively good knowledge of pesticide application techniques. Their brand loyalties are, therefore, not high, and they focus more on prices. Demand in Peru, Chile, Mexico and Colombia is more differentiated, and these countries will need more technical support. New plant protection solutions have better chances of success in these countries.
Regarding the dream market, Mr. Keverin said that this type of business requires a lot of investment and considerable preparations against risks, such as varying exchange rates. This type of business needs to utilise financial management. In Venezuela, a unique competitive edge is required, and a direct sales model needs to be adopted to reach out to farmers.
With regard to the risk control measures in Brazil, Tu Zhan, the General Manager of Ningbo Jiangdong Yingnong Lide Trading Company, used his valuable experience of nearly 20 years of hard work, along with case studies, to explain the market changes and narrate the company's business stories. In the Latin American market, risk control is very important. Apart from the common concern over transactions on credit, all the political, climate and exchange risks are a cause for attention. The general elections in Latin America may lead to the release of radical policies, which are meant to attract votes, and elections may cause serious delays or even a suspension in the registration process, which will seriously affect business operations. Extreme weather conditions are increasing, and droughts are becoming frequent throughout Latin America. Weather fluctuations can affect the stock of goods. Furthermore, the change in the exchange rate caused by the open financial system in Latin America also requires adequate control measures to be put in place through a proper financial arrangement.
Advanced company philosophy and strategy
Environmental protection and work safety are issues of common concern all over the world. Moshe Ahimas, Head of the Global QHSE of ADAMA, shared ADAMA’s unique concept of environment protection and work safety. Currently, ADAMA is using its Israeli experience to complete the construction of the Sanonda plant in Jingzhou by introducing the highest level of pollution control facilities and technology. ADAMA will do its best to minimize the environmental impact caused by production activities and is committed to the speedy upgradation of production facilities in China so as to meet the highest international standards as early as possible.
Lawrence Yu, Head of the Asia Pacific Region of AMVAC, spoke about the establishment of the distribution channel and the company's acquisition strategy over the last few years. In the past few decades, the company has acquired brand products divested from manufacturers such as Corteva, Bayer, Syngenta and ADAMA. A further acquisition of Grupo Agricenter, which is a Central American distributor, has increased ADAMA’s presence in Latin America. The company is also expanding its product lines by acquiring complementary industry divisions. With regard to the selection of targets for acquisition, he said that the principle for acquisition is that the acquired companies should be digestible and manageable. Mr. Yu also stressed the importance of financial liquidity, which ensures the timely closing of acquisitions.
João Martins, the General Manager of Ascenza, spoke about the crop protection framework in the European Market with special emphasis on the regulatory environment and how it can impact the supply chain in particular the Chinese manufacturers. As far as Ascenza is concerned, the company has maintained a stable relationship with vendors, particularly Asian manufacturers with whom the longest cooperation has exceeded more than 20 years and have been the key lever behind the impressive growth in the latest years.
Mr. Martins also shared the main topics of Ascenza strategy to position this company as one of the benchmark players in the off-patent segment in the European and Brazilian markets. The audience also learned that Ascenza is part of an agrobusiness platform that with Tradecorp (Specialty Crop Nutrition) and Idai Nature (Biocontrol) enables a well-balanced agriculture in more than 70 countries worldwide.
The South African Market, which is an emerging market, has been growing rapidly over the last few years. Anup Chand, CEO of Curechem, and the Regulation Specialist, Chris Coetzee of BioScience Research of South Africa, respectively, introduced the development of the market in Southern Africa and the entry requirements, as well as registration procedures, thus providing useful information to companies wishing to access the market.
A professional platform for industry exchange
This is the third consecutive year that AGROPAGES helds China Pesticide Exporting Workshop, open to worldwide industry practitioners. The workshop has become a special platform dedicated to global exporters and sourcing companies and its influence is growing annually, expanding to extend to the entire industry chain to cover upstream pesticide intermediate manufacturers and downstream crop protection companies, which have expressed interest and participated in the workshop.
This year, the Chinese pesticide export situation appears uneasy and this might be one of the reasons that this year's workshop has attracted a record-high number of participants from Chinese and overseas enterprises. It is visible from the representatives of Chinese enterprises that they generally have anxiety about this situation.
At the workshop, Director Wu Houbin from ICAMA explained the worrying situation using a set of Chinese pesticide export and import indicators of H1 of 2019, which was firstly publicized by AGROPAGES at the workshop. Until June 30, 2019, China's total pesticide exports in H1 was US$4.178 billion, 2.6% up year-on-year, reflecting a continued declination of Chinese pesticide exports over recent years, as compared to the 8% average increase witnessed last year and the double-digit increases in the previous years.
Since the launch of the workshop, the number of overseas participants has increased annually and the participating countries have been expanding, proving the close attention and strong interest of global buyers towards Chinese pesticides, as well as the rise in India’s production.
After the workshop, AGROPAGES spoke to participants from home and abroad. Chinese domestic participants, in general, expressed that while the industry is currently not so stable, it would be necessary to connect industry stakeholders via such a communication platform to share market information and promote market development. It helps enterprises alleviate worries and think about the right methods of development according to their own orientation of development.
Overseas participants at the workshop focused their attention on understanding the Indian and Chinese agrochemical development trends and locating new suppliers. These two purposes were adequately fulfilled at the China Overseas Agrochecmial Company Business Exchange Meeting held on the evening of July 3, and also during the two-day discussions at the workshop. Dr. Dave, Secretary of PMFAI, said to AGROPAGES, “This is a wonderful and well managed event. To be truthful, I never imagined it would be such a large event and see such participation from overseas delegates. ”
Mao Jin, the Area Manager of SDS Biotech, lauded the benefits the workshop provided and suggested that Japanese agrochemical companies may also need to think about organizing such an event to promote industry exchanges between Japan and other parts of the world.
Jean-Guillaume Delpierre from Certis Europe has participated in this workshop twice and said he would attend it again next year due to his high regard for it.
During the workshop, AGROAPGES received invitations from overseas counterparts asking for such an event to be held overseas. Anup Chand from CureChem of South Africa invited AGROPAGES to organize such a workshop in South Africa, and said they are happy to provide help and assistance. Sandy Chong of Kenso, Malaysia, also proposed such a workshop in Malaysia.
Call for papers at 2020 CPEW
So far, preparations for 2020 CPEW are underway. AGROPAGES has begun asking for workshop reports from worldwide agrochemical enterprises. If you are a prime local agrochemical enterprise and have rich experience, if you have unique and profound industry insights, we welcome you to apply to become a keynote speaker at the 2020 CPEW, interact with 500 industry practitioners from all over the world, and enjoy free publicity via AGROPAGES.
You can participate CPEW via:
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Attend the 2020 CPEW
If you wish to join the international exchange platform of 2020 CPEW, please contact: firstname.lastname@example.org