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″Today, there are lots of variables and uncertainties in the agrochemical industry. In the face of difficulties, enterprises should stay focused on their own path, just like a racing driver, while performing one’s own duties in management, innovation and industrial upgrading on a long-term basis, hence, toward the commercial success in the future,″ said Du Hui, Deputy General Manager of the Crop Protection Division of Qilu Pharmaceutical Group and Board Chairman of Huaxing Chemical (Wholly owned subsidiary of QiLu), at the 7th China Pesticide Exporting Workshop (2023 CPEW), which was organized by AgroPages along with Zhejiang Crop Protection Industry Association.
As a senior industry expert with rich industry background who has worked at Dow Chemical for 15 years, Du Hui emphasized in his report that the global crop protection market is still a promising market, where new crop protection technology tends to be more and more mature. In his speech, he encouraged industry practitioners to carry on with the industry development toward the promising future.
Du Hui, Deputy General Manager of the Plant Protection Division of Qilu Pharmaceutical Group and Chairman of Huaxing Chemical
The overall pesticide industry status since first half of 2023
In the past 2021-2022, the agrochemical industry stayed in its boom period, where leading enterprises enjoyed the benefit of the boom period, revealing growth in both revenue and profit. Since the first half of 2023, the Chinese agrochemical industry has experienced unprecedented difficulties, which have posed many challenges and have caused widespread anxiety in the industry in the first half of the year, as being reflected by the following:
The volume and value of overseas procurement have significantly decreased;
A big year-on-year domestic market price decline, with a significant decrease in market value;
High inventory in domestic and international markets, start of operation of domestic technical material production capacity, imbalance between supply and demand (Production capacity of chlorantraniliprolel to reach 80,000 tons);
The extreme competition in domestic market being conducted to overseas market;
Increased cost resulting from environmental compliance pressure, costs of standardization of enterprise management, HSE and R&D;
Government’s involvement in production operation up to sales management, having resulted in strict and strengthened management;
Significant changes in agricultural forms (MAP, delegated operation and drone application);
The reduction of number of distributors and the beginning of sales directly to large farms have shortened distribution channel;
India is striving to establish an agrochemical industry chain to grasp the opportunities of production transfer for geopolitical reasons, which is an adverse impact on the Chinese agrochemical industry;
The great uncertainty caused by the conflict between China and the United States;
And more ...
China’s 2-year exportation has covered 3-year overseas demand, at a value over 5-year total value in the past
According to ICAMA census, from 2011 to 2020, China’s average annual export volume of pesticides was 952,000 tons, with an export value of 52.96 billion yuan. In 2021, due to the energy shortage, coupled with the Covid-19 impact, as well as the Russia-Ukraine war in 2022, China’s pesticide export in 2021 and 2022 hit a record high in both volume and value, among which the export volume in 2021 was 1.53 million tons and export value was RMB110.3 billion yuan while in 2022 the export volume exceeded 1.6 million tons and export value reached RMB151.6 billion yuan. From 2021 and 2022, China’s pesticide export (3.12 million tons) exceeded the total export from 2018 to 2020 (2.92 million tons), whilst the export value arrived at four times of the average export value of the previous three years.
-Continued pesticide price fall in 1H 2023
In recent years, with the increase of the world population and the continuous occurrence of plant disease and insect pest, the global crop protection market size has continued to increase. Agbio Investor predicts that the global pesticide industry will still grow from 2020 to 2025 to 2035. The crop protection industry is a rigid market and a steady market in terms of total volume.
According to Phillips McDougall data, the global crop protection industry had a market value of US$74.1 billion in 2022, which is expected to break through US$90 billion by 2030, at an annual growth rate of 2-3%. Among the pesticides, herbicides remain the largest category, which is the largest segment of the global agricultural chemical market (around 40%), whilst plant growth regulators are expected to have a significant increase to reach US$5.4 billion by 2030.
Rigid demand remains strong, how to sell my product?
Mr. Du stated that for agricultural chemical enterprises, on the one hand, not only they should maintain their base market, but also need to go out, go to the right place. On the other hand, enterprises need to select good products and right products.
-Go out, go to the right place
China supplies 65% - 70% of global crop protection products, with Brazil, the United States, India, Argentina and Canada being the major international market destinations. According to Phillips McDougall forecast, among the top 15 global crop protection countries in 2022, China maintained its third rank in 2017. However, according to prediction, Brazil will still maintain its largest crop protection market status up to 2027, whilst China may overtake the United States to become the world’s second largest crop protection market. The annual compound growth rate of the global crop protection industry in the next five years may be around 2-3% while in China it would be 4-5%.
-To select good products and right products
As shown by the changes of the top 10 pesticide sales from 2017 to 2027, glyphosate, as the most widely used herbicide in the world, accounts for more than 30% of the global herbicide market share. Following glyphosate, glufosinate has rapidly grown into the second largest herbicide. With the promotion of herbicide-tolerant GM crops in China and other countries, the growth of glyphosate and glufosinate is expected to continue, which will further increase the overall growth of the market. In terms of insecticides, the patent of the world’s largest insecticide chlorantraniliprole already expired in 2022, whilst the localization process is being accelerated. The product is expected to have a significant growth in the coming five years. In the circumstance of the global pesticide restriction, it is expected that mancozeb may be delisted from the top 10 fungicides.
-To stick to innovation-driven crop protection
As an enterprise, in face of challenges and downward pressure, innovation would be still an important task at this time. In formulating innovation strategy and tactics, consideration should be given to various areas of innovation, including agricultural chemicals, biopesticides, RNA interference and nanotechnology, which are of good future development prospects. In the long run, the maturation of these crop protection technologies will have a profound impact on the entire crop protection industry, which is worthy trying by enterprises in their innovation practices.
In 2017, the global market value of biopesticides reached US$3.3 billion. According to the industry think tank Transparency Market Research, biopesticides are expected to reach a market value of US$9.5 billion by 2025 and will continue to grow at an average compound annual growth rate of 15% - 18%, which leads the growth among the crop protection market. By that time, pesticide export is expected to take up 10% of the global crop protection market.
The continuous innovation of technology will bring about significant efficiency improvement to the agricultural production, whilst digital agriculture will become the next source of agricultural growth in the future. According to data, the scale of the digital agriculture market in 2020 was RMB71.9 billion yuan. It is predicted that the global market size of digital agriculture will grow at a compound annual growth rate of 12.8%, thus reaching RMB245 billion yuan by 2030. At present, the production forecast and the relevant hardware equipment take up the highest proportion in the total market size. Among many other technologies such as aberration rate technology, booting technology and remote sensing technology, aberration rate technology is predicted to be the major source of growth in digital agriculture.
In 2022, the mergers and acquisitions by multinationals have been basically completed, which end up in formation of the ″top four″ over the past ″top six,″ to the benefit of synergistic effect. The launch of new products has accelerated, technological monopoly has become more obvious, the layout of digital agriculture and biotechnology has accelerated. Compared with multinationals, the Chinese enterprises are falling behind in respect of business scale, revenue and profitability. However, growth potential does exist behind the gaps. There are 11 Chinese enterprises out of the top 20 global enterprises, which is promising.
At present, China’s manufacturing industry is quite strong, but the added value of the industry is at a low side. Going forward, the Chinese pesticide industry ought to make effort in high value-added industrial chain development such as research and development, design and brand marketing. Lots of companies such as Rainbow have already started to go global to expand their international market, having gradually established independent product brand while research and development are already on the way. To become a leading manufacturer, Chinese companies need to make an all-round breakthrough and innovation, covering software to hardware, technology to business model, and from thinking to mindset.
Qilu’s crop protection product and technical reserves
The Crop Protection Division of Qilu Pharmaceutical Group is a major taskforce for development of green biopesticides within Qilu Pharmaceutical Group. At the beginning of 2022, Qilu Pharmaceutical Group restructured Huaxing Chemical, which completed the strategic layout of the group’s three major business sectors, having also achieved the group’s coverage of raw material up to formulation. The restructuring of Huaxing Chemical has accelerated its full chain green pesticide development, which is a further promotion of Huaxing’s technical innovation and market expansion.
For Qilu Crop Protection, on the one hand, Qilu Crop Protection lays stress on strengthening of its existing technical material capacity while innovation, research and development will remain the core competitiveness of the company. On the other hand, based upon the domestic market, Qilu Crop Protection is endeavoring to get through the upstream-downstream collaboration while actively exploring and expanding the international market. Adhering to the principle of providing technologically advanced, high-quality and differentiated products (such as abamectin, emamectin benzoate, spinosad, spinetoram and more…), Qilu Crop Protection serves heartedly the agricultural production in China and the world.
-Spinosad
Spinosad is a pollution-free and efficient macrolide biological insecticide extracted from Saccharopolyspora spinosa. Spinosad has a fast-killing effect on target pest, as effective as chemical pesticides. It has the properties of low toxicity, high efficiency and low residue which are properties of biological pesticides, being also very safe for crops. The global spinosad market value is around US$300 to 500 million, with a great future prospect and broad application potential in the future.
Many Chinese domestic enterprises have been working on spinosad. Qilu Pharmaceutical has been the first in China to achieve technical breakthroughs. After more than 10 years of research and development, Qilu Pharmaceutical (Inner Mongolia) Co., Ltd succeeded in development and commercialization of spinosad in 2017, becoming the world’s second commercialized manufacturer and supplier of spinosad, which enables the company to be an industry leader in technology innovation, production and supply of the product. With the Hulunbuir project becoming operational, the production capacity of spinosad exceeds 1,500 tons, being ranked as the world’s largest spinosad producer.
The content of spinosad produced by Qilu Pharmaceutical Group reaches as high as 93%, which is up to the veterinary drug standard, with less impurities, being more suitable to product formulation. Meanwhile, the product has a higher α value, which ensures a better effect of formulation products.
-Abamectin
The abamectin produced by Qilu Pharmaceutical has the highest content B1a in China (B1a: B1b>90:1). Qilu Pharmaceutical uses high α value technical material for production of abamectin. Compared to other manufacturers, Qilu Pharmaceutical’s abamectin products have at least a 10% efficacy raise at the same dosage, being available in various type of formulations such as 10% SC, 5% SC, 5% ME and 5% EC.
According to information, Qilu Pharmaceutical has an annual production capacity of 5,000 tons of abamectin, being a global leading supplier of abamectin.
-Emamectin benzoate
Qilu Pharmaceutical is the largest emamectin benzoate manufacturer in China, capable of producing high-purity and high α value emamectin benzoate. It is reported that Qilu Pharmaceutical’s annual 2,000-ton emamectin benzoate upgrading project was already put into operation in June of this year, which, after reaching full-load run, will become the world’s leading production base, with newly added annual sale of RMB1.3 billion yuan.
One of the key products is emamectin benzoate 5% ME, registered for control of rice leaf roller, with specifications of 100ml and 1000ml. This product is a high α value technical material, with a much higher efficacy at same dosage, being formulated with nano technology, free of whitening and faster penetrative when mixing with water.
As the world’s largest supplier of botanical crop protection products, Qilu Pharmaceutical not only possesses the world’s largest capacity of raw materials including abamectin, spinosad and emamectin benzoate, but also builds up an upstream-downstream formulation synergy, which plays a solid foundation for its leading position status in the industry. In the meantime, Qilu Pharmaceutical could maintain its innovative reserves of crop protection technology. For example, in the past two years, the application of RNA interference technology in crop disease and pest control has become a hot subject. For nucleic acid interferon, Qilu Crop Protection has cooperated with Chinese Academy of Sciences and Bayer in joint development of RNA interference technology, having achieved considerable research results. It is highly probable that with the continued research and development, the commercialization of RNA pesticides such as the nucleic acid interferon will not take too long.
The data and content in the above articles are edited from the expert’s speech of 2023 CPEW conference. Click to view: 2023CPEW
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