The Chinese pesticide industry has, in general, appeared to pick up since 2016. However, agrochemical enterprises still face many challenges with policy, environmental and market issues. This paper addresses the general development of Chinese agriculture as well as future trends among Chinese pesticide manufacturers.
Imbalance between food security and resources
China has a population of approximately 1.34 billion, which is predicted to peak at about 1.5 billion by around 2033. China’s population accounts for 22 percent of the world population, while its cultivated land accounts for only 7 percent of the global total. The country's urbanization rate was 51 percent in 2015, and this is expected to grow in the coming years by 1 percent annually, indicating that 10 million people from rural areas move into cities every year. After moving to the city, their lifestyle changes significantly. Cooking oil consumed by the rural population averages around 12 kilograms per year; this rises to 18 kilograms after they move to a city. The demand for food grain in China is thus still rapidly increasing. Chinese government is very aware that staple food grain like rice and wheat must be produced by itself and capacity has to be guaranteed.
Chinese agriculture output
| Crop | Total Production Rank | Per Unit Yield Rank | Proportion（%） | Per Capita Amount（Global Per Capita Amount is 1） |
| Wheat | 1 | 23 | 16.7 | 0.86 |
| Corn | 2 | 39 | 21.8 | 1.13 |
| Rice | 1 | 12 | 28 | 1.45 |
| Soybean | 4 | 34 | 5.6 | 0.29 |
| Sugarcane | 3 | 39 | 6.4 | 0.33 |
| Pork | 1 | - | 46.8 | 2.42 |
| Poultry and Eggs | 1 | - | 40.4 | 2.09 |
China’s per capita cultivated land is 1.3 Mu, while it is nearly 4.2 Mu globally. The country's per capita fresh water resources amount to about 2,200 cubic meters, while the global volume is 7,342 cubic meters. The world’s total crude oil output was 3.9 billion tons in 2016, while China consumed 560 million tons, having imported 380 million tons. Once an exporter of oil, China has now become an oil importer. Integrated statistics have revealed severe shortages of resources in the country.
On crop imports, in 2016, China imported some 84 million tons of soybeans, 22 million tons of food grain (rice and wheat), and 10.45 million tons of oil. The country also imported meat, dairy, cotton and sugar for consumption. Thus, the total volume of imported crops reached 123.83 million tons. Based on a crop to land conversion calculation, the production of such a huge amount of crops would require 800 million Mu of cultivated land. As a result, China’s food production has become a structural issue rather than simply a shortage of resources. At present, it appears there are no problems with either rice or wheat. Further, there will be no problems with corn after GM corn is launched in the coming years, as it will lead to a significant increase in output. The global staple crop market is expected to see a downward trend in prices. Moreover, China’s crop planting costs are far higher than those of the United States and Canada. This lower production efficiency will reduce the competitiveness of Chinese food grain in the world market.
Chinese economy vs agrochemical industry status
The Chinese economy was fast-growing from 1978 to 2010, switching from a market facing shortages to one seeing a relative surplus. The difficult market of the agrochemical industry is due to supply exceeding demand. The annual reports of 25 listed companies show that their net profit margin on average after deducting non-recurring items was as low as 2.85 percent in 2015 and 1.68 percent in 2016, with a slight improvement up to 4.85 percent in the first quarter of 2017.
Agriculture is the foundation of a country's national economy. Although it is a strategic industry, its contribution to China's national economy remains insignificant. In 1950, the industry GDP accounted for 74 percent of the total, while its contribution in 2016 dropped to 8 percent.
Status, trends, challenges and opportunities of the agrochemical industry
In 2015, the value of global agrochemical sales was $56.5 billion (roughly 389.9 billion yuan). The top six multinationals took a 75.5 percent market share, and their sales value was, on average, $7.1 billion (48.3 billion yuan). Chinese agrochemical enterprises took a 13 percent market share with a market value of 50 billion yuan. They included 2,200 agrochemical enterprises, each achieving sales of only 23 million yuan, on average. As regards the net profit margin, the top six multinationals had a net profit margin of around 15 to 20 percent, while China’s top 25 listed companies had a net profit margin of around 2 to 3 percent. A large gap exists in terms of sales, profitability, product quality and business operations.
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2015 Global Crop Protection Market
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Company
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Sales($ billion)
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Market Share(%)
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BCS+Monsanto
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14.1
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25.0
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Syngenta
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14.0
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24.8
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Dow+Dupont
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8.0
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14.1
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BASF
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6.6
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11.7
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Total of the Top 6
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42.7
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