Table 3: China’s Top 20 formulations exported to Eastern Europe in Jan.-Nov. 2019 (ranking by amount)
China’s export of pesticide to the Eastern European region was still dominated by TC. As many local companies invested more to their plants, the proportion of TC may further go up. Serbia is likely to become a new entrance to the European market. Furthermore, India is gradually seizing China’s cake in the trading market. Next, the author will provide a detailed analysis of India’s pesticide export. Please stay tuned.
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Survey on purchasing from China
At the end of 2019, AgroPages conducted an Annual Survey to companies globally who had business with China. The survey investigated the impact of China's pesticide production and export on their business, as well as the latest changes in procurement requirements.
The biggest challenges encountered in purchasing from China in 2019
Compared to previous years, the explosion in Xiangshui made the situation of Chinese procurement even worse. Almost all overseas buyers participating in the survey mentioned product shortages, high prices, and delayed shipments. In addition, the lack of registration documents and the stability of product quality are also one of the issues raised. The instability of international exchange rates has also disrupted their financial expenditure balance. Some businesses have suffered severely.
Respondent from East European (the following are abbreviated as respondents' nationality/region): The main challenges were: unpredictability of price trends, higher price level for certain materials, such as cyproconazole, azoxystrobin, tebuconazole, mefenpyr-diethyl, tribenuron-methyl as well deficiency of several active ingredients due to stop of the production: dimethoate, tribenuron, clodinafop, triasulfuron, etc.
Delays in shipping and even cancelling orders have severely affected the business of some overseas companies. For example, an respondent from a Vietnamese company mentioned that due to the sudden shutdown of the factory, the order they signed could only be cancelled. The situation for a Russian company is even worse.
Russian: No matter confirming order 3-4 months ahead with a 100% delivery we faced significant delays in shipment. As our company operates in Russia where agrarian season is just once a year in the very end such situation caused a big stock in our warehouses that we were late to sell in season time. Stock means frozen money in cargo as it led to the decrease in our purchase volumes for next 2020 year.
South America: Today to achieve security in deliveries and competitive prices, you must offer a volume and periodicity in the purchase. This situation favors great players and complicates the smallest. There are also mergers between Chinese companies and companies providing row materials and intermediaries have increased their strategic strength.
Changes in procurement requirements
Whether it is the European and American markets with strict regulations, or some less-developed regions such as Southeast Asia, finding new compounds that can replace high-toxicity and high-risk pesticides has become a very urgent need. The requirements for glyphosate
, paraquat, carbofuran, chlorpyrifos, carbaryl, copper oxychloride will be replacing by some new products, such as spirotetramat, fluopyram and sulfaxaflor. Some companies have put forward need for specific pest control, and many of our respondents have suggested that they want to find bio-pesticide and bio-fertilizer suitable for organic farming. Some companies with certain strength began to focus on the research and development of their own new products.
Germany: The regulatory situation in EU is nightmarish, we must look for more reliable options, for example substitutes for Neonics.
Vietnam: Government banned Carbendazim, Chlorpyrifos ethyl, Fipronil, 24D, Paraquat, Glyphosate. Our business has been greatly affected. We may use glufosinate as a new herbicide replacement.
East Europe: Countries in the CIS region was not affected by this trend as it happened in EU and the USA. There are many active ingredients which are banned in EU, however are still used at Russia, Ukraine, and Kazakhstan. We are looking for replacement of some neocotinoids like imidacloprid, thiametoxam and will replace it by acetamiprid.
Russia: Our R&D department is already carrying studies for finding efficient product substitutes of banned agrochemicals. Recently our team managed to find bio-herbicide based on nonanoic acid. Still for sure it's not a complete solution for ‘glyphosate problem’ that all world faces but still a small light in the end of dark tunnel. At least for small private farms it can be used efficiently.
Bangladesh: The banning or phasing-out of traditional agrochemicals will affect future business. We are looking for products to replace carbofuran against Rice Stem Borer, alternative to glyphosate and paraquate, and new insecticide molecules against borer pest/sucking pest.
The future trend of China's pesticide industry in the eyes of overseas buyers
There is consensus of some trends in China's pesticide development. In the industry as a whole, consolidation will continue, small scale manufacture closing down, and some production may be transferred to remote areas in northwest China or directly to foreign countries. At the enterprise level, some companies have stated that they will put more investment in R & D on new compounds. Exports will gradually shift from technicals to formulations.
In terms of product availability and its price, the unstable supply chains and more cost on environmental compliance will increase the price of agrochemical in general. More than half of the respondents also expressed pessimism.
Philippine: If ever the supply will normalize, I don't think the price will go down. Less competition means they can control the market and thus the price will just plateau over time.
South Africa: Agrochemical formulations supply will be a big challenge for the local producers in China in near future. Many of overseas customers already diverted their part of sourcing from China to India. Even many China producers are showing very much interest in come to India and investing with Agrochemicals producers in India now.
Malaysia: Many of China manufacturers will divert their activities to other countries in order to diversify the risk of solely produce in China. Big customers would like to work with manufacturer with risk management option. The cost of products will be increase due to high waste treatment cost. Manufacturer will find way to improve their technical knowhow to invent the method that would not generate too much of waste that need to treat.
Some interviewees expressed confidence in the future of pesticides in China. They believe that the industry will gradually adjust itself, represented by large enterprises. More companies will focus on developing innovative products. A Russian respondent also predicted that Chinese pesticide companies will enter the Russian market more and occupy a considerable market share.
Eastern European: The Chinese industry will slowly but surely adjust to the current governmental situation. Some larger and stronger companies will update their factories and restart the production. Small enterprises which cannot resist the environmental and administrative pressure will be probably shutting down.
Germany: Hopefully the situation will stabilize with upgraded manufacturing practices. This may take some time as the government is keen to ensure improved safety and environment.
Estonia: Chinese companies will focus most innovative products.
Russia: I believe that in coming 5-7 years in Russia local generic companies will almost disappear. The more and large Chinese factories are starting to be interested in Russian market. Some of them are even finishing their own registrations. And this trend will only continue. Within definite period of time this market will be divided between 3 strong groups of companies that will have almost equal market shares: multinationals, local manufacturers and Chinese (probably Indian) factories.