China Continues to Impact the Crop Protection Market

It would be hard to understate China’s impact on crop inputs. To paraphrase the old joke: When China sneezes, the industry gets a cold. The government of that country’s focus on shutting down factories and fining executives in violation of environmental regulations is just one example of the country’s activity that sends ripples through the industry.

The proposed SinoChem-ChemChina merger also has many people talking. Senior Writer Jackie Pucci suggests, “It’s the ultimate move in a rush of consolidations that President Xi Jinping’s administration has pursued to shake up debt-laden state enterprises.”

Advertisement

She also raises some interesting questions about the proposed merger: With the acquisitions of Adama and Syngenta, what are the strengths and weaknesses of this new mega company? What will the market look post-Chinese M&A and how can companies navigate the volatile sourcing environment?

AgriBusiness Global Advisory Board members also shared some insights on the supply chain situation in China. Let’s just say they’re not, overall, optimistic. As one advisory put it: “I don’t believe that the central government will go back with their policy soon, generating less offer of products and in consequence, higher prices.” But it’s not all bad news. “It is an opportunity for India and other countries to regain (or to gain) market share,” he continued.

Prices are expected to go up over the next few years as access to AIs becomes more strained. But that doesn’t mean all prices have gone up. Our report from David Li, Business Manager with Beijing-based SPM Biosciences Inc., shares historical data on some of the most popular products on the market. Also, check out the pricing trends from December 2017 through January of this year beginning.

It isn’t just environmental regulations that influence the changing crop inputs space. As any manufacturer knows, the regulatory environment has become considerably more challenging in the past decade.

For example, since the start of the 21st century European farmers have seen a decrease in the number of active ingredients available to them. In 2001, there were 905 products on the market. By the start of 2019 there were only 388 active ingredients registered in the EU. And it’s not likely to get any easier over the next few years.

Not only will the regulatory environment get more challenging, the situation in China complicates sourcing. As Jackie writes, “Many companies are now looking at supply chain to reduce dependence on China, with an eye on India as an alternative, which is helpful for the final stage of production, but in many cases the Indian manufacturers are reliant on the intermediate and building blocks from China.”

Our coverage of China’s influence on the crop inputs industry continues. Here we list the Top 30 Chinese manufacturers based on export sales from 2017. The data comes courtesy of CCPIA and was pulled from customs and The China Agricultural Ministry.

All eyes are on China and will continue to be for the next several years. There are opportunities for India and other countries to replace some of the lost production, but it won’t come easy. Crop protection should prove a very interesting place to operate over the next few years.