2024 ACE observation: Is industry at a singular point or a turning point?

″In the 20-30 years of my career, there have never been such a downturn like today. In the past, there were market fluctuations of only certain products, but today more than 90% pesticide varieties have fallen close to or even below cost, which is a situation of negative profitability for almost all manufacturers.″ This is a comment from lots of industry players.

Among the major pesticide varieties, the price of avermectin remains high which generates considerable amount of profit. Although other products are in short supply, the prices still remain low, which lead to a profit margin of less than 3%, as being experienced by a large number of technical manufacturers. In the context of the declination of food grain prices, pesticides, as an important component of agricultural production materials, may be affected earlier and more severely due to their lower weight than fertilizers and seeds.

This year, the overseas demand for formulations has increased. Hence, the domestic market demand has been relatively stable where formulators have generally received sufficient purchase orders which are being processed for urgent delivery. Meanwhile, the market appears in a decentralized manner. Due to the impacts of COVID-19, the intensification of climate change and the anti-globalization trending, all countries have become concerned about the food security, backing up the total demand for pesticides.

A number of formulation companies have achieved increase both in quantity and pricing, but their profits have continued to shrink. From large mechanical equipment, to small aluminum foil packaging, the procurement cost is put under further control. In addition, no small number of manufacturers have accelerated their process of technical-formulation integration, as shown by the lively crowds at the machinery exhibition area.

Overseas buyers say that the agricultural production in all countries is relatively stable, but the prices of farm products are not desirable while the downstream payments are not made timely. The overseas buyers are mostly coming for the purpose of visit and establishment of business relations, rather than placing orders.

A lot of new faces also show up at this event, with certain enthusiasm and an imperceptible feeling in their eyes, forming a contrast with the slightly tired and low-spirited eyes of some of the senior industry players. Everyone seems to have formed a tacit understanding to maintain the stability of the industry or protect the dignity of buyers and sellers or to stick to the principles, waiting together for something – A singular point or a turning point?

At the singular point, all traditional laws are faced with failure as the traditional operating methods are no longer effective and everything in the future becomes unpredictable while the system in the past cannot being running correctly. The revolutionary technology will break out at some point in the future, for which a completely new model needs to be established. In case of a turning point, the future of pesticides is still predictable by judgment of the periodic features of each cycle of development. As pesticides are serving farming and are the necessities of agricultural production, the pesticide industry is bound to rebound over time. At the show, most people hold this view, but with different opinions of the time of recovery, which can be either 1-2 years or 3-4 years.

It is impossible to tell accurately whether the present is a singular point or a turning point. What can be done is to follow the industry’s ″first principle″ - Pesticides ultimately serve farmers, farmers grow food crops to serve humans; farmer’s benefits are the benefits to the whole industry chain upstream and downstream. 

It is suggested that industry practitioners upstream and downstream all get deep into farming and take new initiatives to get through this difficult period.