Vice President of Syngenta Group China: Prices of pesticide technicals still staying high in 2022, globalization of Chinese enterprises to accelerate

Date:02-11-2022

The year 2021 was the first year of the business operation of Syngenta Group China’s plant protection business unit. How was the team building and business development of Syngenta Group China this year? As an industry leader, what are the prospects for the plant protection market in 2022 in the eyes of Syngenta? 

During a recent interview, An Liru, Vice President of Syngenta Group China and President of Plant Protection Business Unit, addressed Syngenta Group China’s market deployment in the country and trends in the Chinese plant protection market. 

Syngenta Group China’s plant protection business increased 21% in 2021

The year 2021 was the first year of the business operation of Syngenta Group China’s plant protection business unit. Through business integration, a dynamic and highly collaborative team was formed to solve major agricultural issues and provide farmers with efficient, low-toxic and low-residue plant protection products.

In 2021, Syngenta Group China’s plant protection business increased by 21% in terms of sales and 22% EBIT year-on-year. As a leading enterprise in the Chinese plant protection industry, Syngenta’s plant protection business operations have contributed considerably to China’s pesticide-use zero-growth initiative, crop quality improvement, yield increase and farmers’ income rise. In 2021, the star product, “sweet series,” was promoted for application on 18 million mu of cropland (1 mu = 1/15 hectare). According to statistics, the sweet series reduced pesticide use by 70% compared to similar gibberellic disease control products. The average wheat yield per mu also increased by about 50 kilograms over conventional pesticides, generating an additional economic value of Yuan1.8 billion for farmers.

In 2022, Syngenta’s plant protection business unit will focus on energy conservation, emission reduction, safety of production and green production. It will also continue its innovation and development of new technologies, launch novel products, create new partnership, build new sites of applications, explore new business models, and continue its industrial upgrading and digital transformation, to speed up the development of its high quality production bases.

Prices of technicals will remain high in 2022, globalization of Chinese enterprises to accelerate

In 2021, the prices of herbicides, insecticides and fungicides rose sharply, especially glyphosate, triazoles, pyridines and pyrethroids. The rapid rise in the prices of technicals posed major challenges to the cost of procurement. Meanwhile, shipments became uncertain due to the impact of global logistics problems. 

At the start of 2022, the rising prices of some technicals began to fall back while the range of price rises decreased, but the overall prices of technicals are staying high, which are being passed on gradually to end pesticide prices for farmers, adversely affecting the cost of procurement and cost of application for farmers.

On the supply side, the fourth quarter of a year is usually the peak season for pesticide procurement, but current stock levels are quite low, especially in terms of some bulk products found in short supply. Meanwhile, as required by the carbon peaking and carbon neutrality initiative, resulting energy conservation, emission reduction and capacity cutdown measures will continue. For these reasons, pesticides and fertilizers required for the spring sowing could be affected by the short supply to certain extent. For some pesticide varieties, especially bulk products, there may be a serious lack of supply. 

In 2022, the demand for pesticides will be stable and may increase slightly, while production load is not high. Inventory levels are, in general, declining. The global pandemic is also still ongoing, which is affecting production, and the prices of technicals remain high, but the levels of price rises are not expected to hit the surge experienced in 2021. 

The depressed cash crop market resulting from the COVID-19 pandemic has cased some concerns and focused attention towards plant protection products used on field crops, while intense competition is accelerating the development of differentiated market segments, which will create more opportunities for small and medium-sized enterprises that focus on characteristic products and services. Increasingly stringent laws and regulations are also creating a fairer competitive environment. From a global perspective, the features of China’s complete agrochemical industry chain and satisfactory control of the pandemic will enhance the global influence of Chinese enterprises in the areas of research, production and marketing of chemical intermediates, technicals and formulations, which will accelerate the globalization of Chinese enterprises.

First Year of Carbon Neutrality: Promoting transition of agriculture to green, low-carbon development 

Carbon peaking and carbon neutrality were the hot words in 2021, which even referred to as the “First Year of Carbon Neutrality.” The objective of carbon peaking and carbon neutrality complies with the requirements of sustainable development, being conducive to creating a green and low-carbon cyclic economy, which will promote the development of a green production model and a green lifestyle. Agriculture is a leading source of greenhouse gas emissions. In view of China’s large population, food security and sustainable development issues, considerable pressure has been placed on the agricultural production, in parallel with rural carbon peaking and carbon neutrality, for which more research into carbon sequestration and emission reduction must be conducted as a matter of urgency. Further efforts should also be made to encourage industrial collaboration to explore overall regional solutions. 

Formulating rational farmland management measures and increasing the organic carbon soil pool are vital to grain yield assurance and greenhouse gas emission reduction, and are key to encouraging the transformation of agriculture to green and low carbon development. 

In 2021, Syngenta Group China, the UNDP and the General Station of Agricultural Ecology and Resource Conservation of the Chinese Ministry of Agriculture and Rural Affairs jointly launched a “land-soothing program,” forming an integrated straw-conservation tillage model tailored to targeted regions, plating a leading role in popularizing and promoting climate-smart farming and paving the way for the agricultural production, under the carbon peaking and carbon neutrality concept. Moreover, Syngenta Group China also focuses on key areas of agricultural emission reduction, such as reducing emissions of rice methane and nitrous oxide from farmland, having established a new soil health-oriented model to improve carbon sequestration. Syngenta Group China is continuously investing in low-carbon development innovation and has gradually adopted low-carbon technologies to build low-carbon farms, while working together with farmers and food value chain partners to jointly combat climate change.

After mergers among giants, assets optimization and new business model build are still the challenges the face

In the past year, major companies completed some merges and acquisitions, which were followed by the optimization of assets after their completion. After the mergers, the maximization of business scale and expected synergies depend largely on the operational modes of the merged companies or their future planning of development strategies, which are still considerable challenges facing many companies after the completion of mergers. 

Moreover, relevant Chinese enterprises have continuously cooperated and are prepared to coordinate in brand development and new industry sectors. For example, Wynca acquired some shares in Nutrichem, Limin Chemical purchased the mancozeb assets of Corteva, and Grand Holding acquired Shaanxi Microbe to increase its investment in biopesticide development. 

In the coming years, Syngenta Group China will not only focus on technical investments in conventional agricultural inputs, but it will also investment in the biostimulant and biopesticide industry sectors.