Recently, the China Pesticide Industry Association President Sun Shubao accepted the Agrow magazine Han Shuyou reporter interview, President Sun summed up the situation of the pesticide industry in 2016, the industry merger and reorganization, environmental protection inspectors, pesticide zero growth, transgenic and R & D and other questions answered the reporter's questions。He said that although pesticide exports declined in both amount and quantity in 2016, the worst downturn in the industry has passed, and industry confidence is gradually building in 2017。

记者：Please summarize the current situation of pesticide industry in China？

孙会长：China is the world's largest producer of generic pesticides, according to statistics, China has more than 2,600 pesticide production enterprises。原药生产企业600家左右。农药生产超半数为出口。Although exports dominate pesticide production in China, the pesticide industry is greatly influenced by foreign market demand。

　　The pesticide industry has declined again since the second half of 2014, and I think the most important reason is the decline in food and crude oil prices。Farmers are more sensitive to falling food prices and are not investing more in them。The drop in oil prices is a double-edged sword - it boosts the production of pesticides, but it also reduces the value of the fine chemicals industry, and the low price of crude oil also inhibits the development of the bioethanol industry, which uses corn and sugar cane as feedstock, resulting in excessive corn stocks。With the import of cheap GM corn into the Chinese market, the domestic government expects farmers to fully adapt to the industrial plan in the next few years, the corn planting area will be reduced by 50 million mu (3.3 million hectares), the soybean planting area will be increased, and the domestic pesticide use structure will be adjusted。

　　The government has changed its strategy for plantation structure management。In the early years, the government's basic goal was to utilize 1.8 billion acres (1.200 million hectares) of grain cultivation to ensure adequate domestic food supply。Recently, the government has updated this strategy to the current strategy of ensuring the cultivation of rice and wheat while adjusting other crops to changes in the market。China imports 80 million tons of soybeans a year from the United States and South America for oil processing to meet the growing demand for oil products。It is conceivable that more land would be needed to grow soybeans without imports。

　　Regarding the trend of pesticide production, I think the Chinese pesticide industry has helped to lower global food prices to some extent, because farmers all over the world are using our high-quality and cheap products, at least compared to those multinational companies。Reducing farmers' production costs, making food cheaper, ultimately leads to weaker demand for pesticides - a negative cycle。But the market ups and downs, this is regulated by the market, that is, supply and demand。I hope the pesticide industry will overcome its current difficulties sooner than expected。

　　It is no secret that multinational companies purchase original drugs and even preparations from more than 30 Chinese companies。Multinational companies need to check whether the supplier's EHS meets the requirements to ensure the continuity of production。Any potential accident, such as a leak or explosion, could disrupt the supply chain and affect procurement。In general, domestic enterprises still benefit from strict EHS standards。

　　To meet environmental standards, local governments occasionally force polluters, large and small, to shut down。As a result, larger companies are more severely affected。As an example, a large number of upstream raw materials/intermediates, such as glycine, are produced by small and medium-sized enterprises in Shijiazhuang, Hebei Province。Once shut down, downstream pesticide production will be severely affected by the suspension of production by raw material suppliers (usually small businesses)。Companies such as Xin 'an and Nantong Jiangshan used to produce glycine themselves, but they eventually gave up production because sourcing from smaller companies made the products more profitable。So business closures caused by the environment actually lead to some negative effects on the entire industry。

记者：The government's current five-year plan target is to reduce the number of crop protection companies by 30%, and progress has been slow. Do you think this target can be achieved?

孙会长：The 30% reduction in the number of crop protection companies was proposed by the China Pesticide Industry Association and supported by the government。At present, too many pesticide production enterprises are not conducive to the healthy development of China's pesticide industry, because it is difficult to control the quality。Reducing the number of enterprises by 30% is the target of the 13th Five-Year Plan (2016-2020), and we are working in the right direction, and we have already achieved some results。In the past two years, the National Ministry of Industry and Information Technology has not approved new pesticide production enterprises, and the state encourages enterprises to enrich product varieties and innovation through mergers and acquisitions。

记者：目前的环保督查形势如何？该举措能有助于小企业退出产业么？对于大企业的影响如何？环保督查是产业巩固的驱动器么？

孙会长：Environmental protection policy plays an active role in industrial merger and reorganization。Taking action to protect water sources and the atmosphere as an example, the China Pesticide Industry Association and the Ministry of Environmental Protection organized environmental inspections of major glyphosate enterprises in 2013, and the price of glyphosate also rose due to the shutdown of a number of production enterprises。I hope that environmental verification will become the norm in the industry, rather than an occasional occurrence。My logic is that small production enterprises cannot survive under the high pressure of environmental supervision due to the lack of corresponding environmental protection facilities and strategic planning, while larger enterprises that comply with environmental protection policy management can develop healthily。 

　　So far, we have seen many mergers and acquisitions between domestic enterprises, but its impact on the industry is not as good as the merger and reorganization of multinational enterprises。Not every merger and acquisition can be successfully completed, for example, Nantong Jiangshan originally planned to acquire Jiangsu Changlong, but eventually because of Changlong's environmental problems and shareholder opposition was stranded。

记者：2016年中国农药的出口如何？草甘膦的出口行情和价格是怎样的？其他主要品种的原药出口情况怎样？

孙会长：According to statistics, domestic pesticide exports and prices have declined in 2016。Falling prices for crude oil and raw materials are responsible for the drop in exports。We can find from the quarterly reports of those listed companies that they have a small profit or even a loss。

　　以草甘膦为例，出口下滑15%。In fact, glyphosate is a bellwether for the entire pesticide market。In the fourth quarter of 2016, the price of glyphosate increased due to two reasons, one is the price of crude oil from $25 / BBL to $50 / BBL, and the other is the reduction of production capacity due to environmental inspections。

　　The China Pesticide Industry Association also warned relevant member companies to maintain the stability of pesticide prices。We want a stable crop protection company and not a roller-coaster ride。Stable price growth in the pesticide industry can also attract venture funds to follow。

记者：With the increasing cost of manpower and raw materials, do you think it is possible for domestic companies to turn to India for sourcing products？

孙会长：In fact, we import some pesticides from India, such as insecticide deltamethrin, fungicide mancozeb and some other products, because their products are more competitively priced。We also import raw materials such as pyridine and inulinic acid from India。But India is buying more from China by far。It is difficult to predict whether Chinese companies will increase their purchases from India - there is always a possibility, but personally it is very unlikely。

　　Pesticide production involves technology integration, including production processes, environmental protection and advanced facilities。The core technology is not easily replicated, although generic products are not comparable to the discovery of new active ingredients。Another key point is that China's pesticide industry has a vertical industry chain, and most active drug synthesis is started from scratch, that is, from raw materials。Abundant sources of raw materials make China's pesticide industry prosperous and competitive。I don't think other countries can do the whole industrial chain like China, except India can do part of it。Unlike the toy, electronics, and apparel industries, which are cost - and price-sensitive, the pesticide industry is relatively more stable。I think there is still room for improvement in China's pesticide industry。

记者：What are the changes in the development of the domestic pesticide market in 2016 compared with 2015？有哪些重要的影响因素？

孙会长：I think the National Agricultural Technology Extension Service (NATESC) and the Department of Agriculture (MoA) can answer that question more authoritatively than I can。According to some newly released data from the Nanjing Plant Protection Association, 2016 was not a good year, and the quantity and price of pesticides in the domestic pesticide market declined。I think the main reason is that the pressure to control the impact of pests has decreased。In addition, lower commodity prices are not good for the pesticide market。

记者：Does China have any action plan on pesticide export tax rebate, pesticide safety issues, and the use of "zero growth of pesticides"？

孙会长：At present, the tax rebate for preparations is 5%, and the tax rebate for original drugs ranges from 7% to 11%。我不认为这是一个理想的情况。I suggest that the tax rebate rate for the export of preparation should be higher than that for the original medicine。Not all policymakers are familiar with the pesticide industry。We need some fine-tuning to boost pesticide exports。

　　The China Pesticide Industry Association, multinational companies and the China Crop Protection Corporation have been working together to promote the safe use of pesticides。We found that the most important safety issues do not come from the manufacturing process and transportation, but actually from the misuse of pesticides, such as overuse, misuse, and so on。

　　Pesticides are one of the important means of production, used to help farmers ensure quality while increasing yields。No one blames pesticides when we don't have enough to eat。Once we became self-sufficient, food security became a big topic。Pesticide residue has become a criticism of food quality decline。我们如何解决这些问题呢？I think there are two solutions: one is technological innovation to improve pesticide efficacy, reduce dosage, and reduce residue, which depends on the discovery of new ingredients and formulation innovation。The second and more important is to educate farmers about the proper use of pesticides。To achieve this goal, the China Pesticide Industry Association, in cooperation with the Ministry of Agriculture and the Plant Protection China Association, launched a farmer education program called "Village Lecture Hall.。The China Pesticide Industry Association also provides a variety of overall crop protection solutions。

　　With regard to the zero-growth use of pesticides, we encourage smaller formulation companies to transform themselves into crop protection service providers and guide farmers in the scientific use of pesticides。More recently, drones have been used to spray pesticides on fields, and advanced crop protection sprays play an important role in reducing pesticide use and ensuring efficacy。Another strategy is to teach farmers the concept of economic thresholds to use in practice。Farmers usually do not tolerate seeing mobile pests after spraying pesticides in their fields。We need to convince farmers that 85% pesticide efficacy is sufficient to ensure high yields。

记者：What role does merger and reorganization play in China's pesticide industry？

孙会长：Multinational companies pay more attention to marketing research than Chinese companies, so that they can anticipate the market in the future and prepare for potential mergers and acquisitions。Mergers between multinationals (Dow and DuPont) and acquisitions (Bayer and Monsanto, ChemChina and Syngenta) will reduce the number, and the withdrawal of duplicate products will reduce the product line。On the negative side, the concentration of monopoly power may stifle innovation and lead to reduced bargaining power of domestic active drug suppliers。On the plus side, Chinese companies can take advantage of the production lines freed up from multinationals. For example, Beijing Yingtai bought the entire product line from Dow, which helps it penetrate global markets。In addition, crop protection companies in China can easily hire experienced marketing/sales personnel, since mergers and acquisitions usually mean layoffs at some point。

记者：What is your vision for the pesticide industry in the next five years？

孙会长：We know that the pesticide market is closely related to commodity prices and oil prices。The price of pesticides will go up because of the increase in oil prices。And it is cyclical, like the previous cycle from 2008 to 2013。I am sure that pesticide prices will fluctuate within a reasonable price range in the next cycle, and big fluctuations are unlikely to occur (big price swings occurred from 2008 to 2013).。一夜暴富是不可持续的。In short, the most difficult time is over, and I am confident about 2017。

记者：When do you think genetically modified corn and soybeans will be allowed to grow in China？

孙会长：Over the past decade, China has invested about 20 billion yuan in research into genetically modified crops。The most successful example is the widespread cultivation of Bt cotton in China, which reduces the use of pesticides。China has a variety of GM crops stored in research institutes/university laboratories that have not yet been commercially developed。We don't know how good these GM crops are compared to multinationals。

　　In China, the scientific community and the government are supportive of GM crops。为什么中国想并购先正达?I think the main reason is genetically modified crops and other new innovations, not just the pesticide business。

I think genetically modified corn can be grown in China。However, we have many limitations compared to the United States, such as our farmland area, seed distribution channels and maintenance costs。Despite the central government's desire to expand soybean cultivation, I do not see any possibility of cultivating GM soybeans in the north or northwest of China。The reason is about eating habits, Chinese people love tofu, but many people can't accept tofu made from genetically modified soybeans。

记者：Once the central government issues permits for GM crops in the near future, how will this affect China's pesticide industry？

孙会长：If Roundup resistant crops were allowed to grow in China, the use of selective herbicides would be greatly reduced。At the same time, "superweeds" will become a new problem, which opens up new possibilities for selective herbicides。

记者：Could you comment on the current research and discovery of new active ingredients in China？

孙会长：Four Chinese crop protection companies have made it into the top 20 of the Agrow Award, with relatively large sales and net profits。At least bigger than the crop protection companies in Japan with the ability to synthesize new compounds。I think the discovery of new active ingredients will be a direction or responsibility for the development of Chinese enterprises。In the last decade we have patented more than 30 new active ingredients, all of which were developed by research institutions rather than companies。Due to the lack of a sales strategy, the new ingredient does not seem to achieve profitability。The reason we can't catch up with the Japanese research team is because their discovery of new ingredients is funded and driven by corporate-their research includes molecular design, synthesis, screening, bioassays, toxicity studies, and physicochemical properties, while we focus on molecular synthesis。

　　In addition, our new components are mainly discovered in research institutions/universities, led by researchers, and implemented by graduate, master, and doctoral students。I can't deny that some of the discoveries/patents are driven by the need for their title to be published in a scientific article。The new ingredients found are either sold to multinationals or used for commercial development by Chinese companies that are too small to develop the new ingredients。This presents a problem - the development of new ingredients is not closely linked to the development of product production。To me, the new discoveries are systems science。将来，新分成Discoveries should be driven by farmers' needs and developed by crop protection companies。

来源：中国农药工业协会网