Shandong Province Will Accelerate Revitalization and Adjustment of Pesticide Industry    

Recently, the Economic and Trade Commission of Shandong province, the Shandong Provincial Petrochemical Industry Association and the Shandong Provincial Pesticide Industry Association (SPIA) issued a program to help the pesticides industry of the province have a more rational distribution and manage the challenges brought by the economic downturn.
    Shandong province is one of China's major pesticide production regions. It has the second biggest number of pesticide producers among China's provinces, just next to Jiangsu province. By the end of 2008, Shandong province has 265 designated pesticide production enterprises, of which 66 produces pesticide active ingredients, and 199 produce pesticide formulations.
    In 2008, Shandong's 55 backbone pesticide producers tracked by SPIA achieved a total output value (output multiplies by current price) of RMB13.432 billion, up 42.3% year on year, totally produced 194.1 thousand tons of pesticide active ingredients (counting on 100%), up 15.3%. These 55 companies achieved a total sales of RMB13.167 billion, up 52.2 %, a net profit of RMB1.283 billion, up 138.6%, profit before tax of RMB1.479 billion, up 122.1%, and remained RMB823 million of finished goods in inventory at the end of 2008, down 3.1%. The 55 companies consumed 53.6 thousand tons of pesticide active ingredients by themselves, up 2.1% year on year, and sold 72 thousand tons in domestic market, up 5.7%.
    In 2008, these 55 companies produced 59.2 thousand tons of insecticide active ingredients in total, accounting for 30.5% of total pesticide output, 132.2 thousand tons of herbicides, accounting for 68.1% of total, 2.5 thousand tons of fungicides, 227 tons of rodenticides and 30.5 tons of plant growth regulators. The output ratio of insecticides, herbicides and fungicides is 31:68:1, varying greatly compared with 48:50:2 in 2007.
    These 55 producers can produce 91 types of pesticide active ingredients in total, of which 39 are insecticides, 32 herbicides, 16 fungicides, 1 rodenticide and 3 plant growth regulators.
    In 2008, 29 of the 55 companies exported pesticide active ingredients in 55 types including 24 insecticides with a total export of 10.2 thousand tons, 25 herbicides with a total export of 57 thousand tons, five fungicides with a total export of 1 053 tons, and one rodenticide with a total export of 224 tons. Total exports were 68.5 thousand tons, increasing by 70.1% year on year. 35.3% of the production was exported. The export value was US$1.066 billion, up 153.7% year on year, translating to a price increase.
     In the aspect of production process and equipment, most of pesticide enterprises in the province adopt the production method of batch unit reaction, with a lower automatic control level. Only a few pesticide producers, such as Shandong Weifang Rainbow Chemical Co., Ltd., Shandong Huayang Technology Co., Ltd., Shandong Qiaochang Chemical Co., Ltd., Shandong Binnong Technology Ltd. and Shandong Tianfeng Biotechnology Co., Ltd., use automatic control technologies in some of pesticide active ingredients production facilities. The packagings of pesticide formulations (preparations) are basically made by automatic packaging machines in the province. Majority of pesticide products are made through imitating from oversea patents whose protection periods expired. Shandong province has owned independent intellectual property rights for one product only, but its commercial production has not yet been formed.
    In the province most of 265 pesticide manufacturers are not large enough. Other shortages in Shandong's pesticide industry include huge number of pesticide formulation producers, products without special features, low level of automation and outdated on-site management.
    Given the impacts of global financial crisis, domestic demand for pesticide active ingredients entered the off-season from July 2008. The orders got by export-orientated companies declined dramatically. Some foreign buyers even repealed orders. Many pesticide active ingredients manufacturer accumulated a high inventory. And some enterprises had to discontinue production ahead of schedule. The average operating rate in second half of 2008 has touched the lowest level in the same period of recent years. At the same time, prices of pesticide products suffered a free drop, with prices of some products dropping 80%. The value of stocked products has seriously shrunk, resulting in a loss for many enterprises.
    In order to promote the stable and rapid development of Shandong province's pesticide industry, the three departments under the Shandong provincial government made up a stimulus program.
   The principal of the program is to phase out outdated pesticide capacities, stabilize production of herbicides, and accelerate the development of high-efficiency, low-toxicity and low-persistent insecticides, fungicides and non-farm pesticides in the province. The provincial government encourages pesticide manufacturers to merge and regroup inter-regionally, restricts low-level and redundant constructions, and will phase out gradually small sized enterprises with poor production conditions, low-quality products and outdated technologies and enhance the pace of research and development of new varieties and new technologies of pesticides.
    The objective of the program is defined as follows. By the end of 2011, the pesticide industry in the province will achieve a total capacity of 450 000 t/a in active ingredient, an annual sales of RMB23 billion, a total profit before tax of RMB3.0 billion a year. Ten large-scale pesticide production groups will be fostered, and five major pesticide production bases will be formed.
    The province will focus on the development of six important pesticides, including neonicotinoid series insecticides such as imidacloprid and acetamiprid, biological pesticides such as avermectins, and herbicides such as glyphosate, paraquat, triazines and amide series.

Eleven big projects will be constructed during 2009-2011:
    (1) Shandong Binnong Technology Co., Ltd.'s 1 000 t/a metolachlor active ingredient, 200 t/a methyl sulcotrione and 500 t/a pyraclostrobin project.
   (2) Shandong Xianda Chemical Co., Ltd., 50 t/a pyraflufen-ethyl active ingredient, 500 t/a pyraflufen-ethyl (2%) suspending agent,  2 000 t/a bentazon active ingredient and 4200 t/a bentazon (48%) aqueous solution project.
    (3) The 2 000 t/a acetamiprid project of China-Agro Shandong Joint Biotechnology Co., Ltd.
    (4) Shandong Qiaochang Chemical Co., Ltd., the 500 t/a ZJ0777 (patented product) active ingredient, 2 500 t/a ZJ0777 formulation, 1 000 t/a ZJ2211 (patented product) active ingredient and 6 500 t/a ZJ2211 formulation project.  
    (5) The spinosad and ethofenprox project of Shandong Dacheng Pesticide Co., Ltd.
    (6) The 3 000 t/a imidacloprid project of Qingdao Hailir Pharmaceutical Group Co., Ltd.
    (7) A high-efficiency haloxyfop-P-methyl project of Jinan Luba Chemical Co., Ltd.
   (8) The polyoxin and kasugamicin project of Rushan Hanwei Biochemical & Pharmaceutical Co., Ltd.
   (9) A tebuconazole project of Shandong Huayang Technology Co., Ltd.
  (10) A methyl ethyl phoxim (patented product) project of Shandong Vicome Lunan Pesticide Co. Ltd.
   (11)  A propiconazole project at Zhaoyun San