China Price Index: Glufosinate Continues to Climb, But Many AIs Still Soft Amid Overcapacity, Shifting Demand

Editor’s note: Contributing writer David Li offers a snapshot at current price trends for key herbicides, fungicides, and insecticides in the Chinese agrochemical market in the slideshow above. Below he provides insight into how resistance, the need for multiple modes of action, and demand for softer chemistries have created a disconnect between manufacturers and the channel.

During the 2020 China Formulation Innovation Summit, Dow Chemical Asia R&D Director of Industrial Solutions Dr. Jeff Mu asked the question in front of attendees from the China agrochemical industry: “What is the sustainable development of China’s agrochemical industry?”.

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Sustainability was not the first time to be mentioned. But what makes me surprised is that sustainability is becoming a part of demand from global consumers and industry customers. As Corteva executive VP Rajan Gajaria said, “We don’t have a ‘sustainability strategy’, we have a business that is sustainable.” According to Corteva’s 2030 goal, sustainability is a kind of interaction between their production and solutions to society as a company strategy.

During the past decades, China is also facing challenges of sustainable development in agriculture. Along with the integration of arable land, China farmers need a more efficient way to have high efficacy of crop protection solutions. The marginal effect shows up since high-dosage application of agrochemicals and fertilizers do not result in much more value to farmers any more, especially amid weed and insect resistance to legacy chemistries.

Chart Sustainable Portfolio and SolutionThe invasive Fall armyworm showed resistance on many active ingredients including pyrethroid insecticides. Only the Rynaxypyr (chlorantraniliprole) shows very low resistance level below LC50 5 µg/ml. The similar case also can be found from ADAMA’s portfolio. For two years in a row, Cronnos (mancozeb + picoxistrobina + tebuconazole) has ranked as the best fungicide in the Soybean Rust EMBRAPA Consortium in Brazil, where soybean rust has resistance issues. The different modes of action help to manage the soybean rust resistance and bring sustainable yield guarantee to Brazilian soybean growers. Unfortunately we are also seeing resistance in Ecuador. There are more resistant weeds after application of glyphosate + 2,4-D. Only glufosinate has good efficacy on resistant weeds, but farmers need to evaluate the balance sheet to manage the cost of the herbicide. It is obvious that the sustainable business development relies on portfolio and solution sustainability.

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The pandemic has put more pressure on farm profitability. Traditional row crops intended for livestock pose significant problems as the future affordability and distribution of animal proteins are unclear, especially for international shipments. For example, COVID-19 was found on a package of food in the cold chain in China, prompting the China General Administration of Customs to request COVID-19 testing for imported food. Local farmers and their communities could benefit from this dynamic. CSA (Community Supported Agriculture) is diversifying crops to supply fresh vegetables to the nearby communities because they are closer to the consumers. New challenges are hitting the financing management of planting and food supply chain.

Due to the weak demand for exports, some prices of China agrochemicals are still on the low level in August 2020. Only companies like Lier can have better performance of net profit since the shortage supply of glufosinate. The total clethodim capacity in China can reach to more than 34,000 tonnes. But the global demand of clethodim active ingredient is currently around 10,000 tonnes. The generics supply will be over capacity in the next few years for several active ingredients. What is the best way to maximum ROI in the crop protection industry? It reminds us how insightful the question was from Dr. Mu.

For sustainable development, the key raw material providers need to replicate their customers’ strategies so the entire channel can grow together with shared goals based on current market realities. It’s basic economics: demand is the most powerful driver of price. Accordingly, there will be strong needs on “change leaders” to re-shape company strategies and create strategic links to internal innovation systems. Generic molecules are only one part of sustainable crop protection. Chlorpyrifos, glyphosate, carbendazim, mancozeb, 2,4-D, and other molecules are under regulatory pressure with heightened scrutiny on their impact on human health and the environment. It also pushes generic producers to be sensitive on sustainable portfolios and solutions.

The R&D in the crop protection industry is moving upstream with suppliers. We call it modular innovation. The collaboration between Corteva and Dow is a successful example for global agrochemical distributors. Built-in Colex-D Technology for Enlist Herbicides can help farmers to have ultra-low volatility and minimize drift with lower odor. The innovative sustainable portfolio stemmed from agronomic needs and demand from growers, not a delusion that more capacity and product will lead to additional pounds on the ground.

Editor’s note: See more from David Li at the 2020 Trade Summit Online Conference and Trade Show.

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