By: Dr. Nomman Ahmed | Dr. Bob Fairclough, Kleffmann Group
For the first time in years the Chinese crop protection (CP) market is expected to experience negative growth in 2016. In 2015, positive volume growth compensated for the overall loss of value. As a result the market remained flat with slight growth of some 1.5% year-on-year. Channel loading for a number of years in light of positive market growth for a continued period led to surplus stocks that were partly consumed in 2015 and 2016.
Growers in China followed a rather cautious approach with their agchem purchases as a result of the pressure on their incomes exerted by continuously low commodity prices for key agricultural produce. Although global price movements only slowly transition into single country markets, domestic producer prices in China followed the general trend. This paired with higher than usual stock-to-use ratios for key commodities such as corn and rice created additional doubts in grower’s minds, leading to a slower paced de-stocking of inventories lower down the retail chain. Consequently, this demand “recession” was passed on upstream to the other links of the distribution chain, leading to the negative performance of the major industry players across the board.
On average in the first half of 2016 — comparing industry sales figures to 2015 for the same period — average growth of the leading agchem market multinational players stood at -6.86%. Emerging and tier 2 players such as FMC achieved growth figures of +7.86% in contrast.