Agrichemicals Makers Face Challenges      

Agriculture is always a key issue to be addressed by China's government. The farmers' proportion is the biggest one in the country, in spite of the increased migrant workers and the accelerated urbanization. The balance between development and control of agrichemicals is now becoming more important than before, along with the augmented public attention to agrichemicals' impact on human health and environment. Stricter and stricter legislations, regulations, standards and supervision are taking care of this industry.
   Human's requirement on green food seems to drive pesticides away from the land. Indeed, the high pressure is helping the agrichemical companies to upgrade their technologies and products. After saying no to five high toxic pesticides in 2007, the government started to stare on other toxic insecticides. Recently, the Registration and Assessment Commission of Pesticides of China denied the registration application for 35 pesticides including calcium phosphoride while approved 25 other new pesticides. The commission also issued a notice that the related governmental departments shall strengthen the supervision on the production and usage of terbufos, an insecticide that may bring high risk. The production license of terbufos will be strictly controlled by the Ministry of Agriculture and the Ministry of Industry and Information Technology (MIIT). The numbers of terbufos manufacturers will be cut down in a few years and no new manufacturers will be approved. As for some low toxic pesticides technical that are difficult to produce or made from natural plants and some low toxic inorganic pesticides including sulfur and copper formulation, the commission agreed to exempt the persistent test in the registration proceedings.  
   Facing the serious oversupply locally in the chemical fertilizer sector, China Petroleum and Chemical Industry Association recently gave the MIIT a proposal to eliminate the export tariffs on all fertilizers and stop approving new constructions. It claimed the related governments to accelerate the elimination of outdated agrichemical factories, particularly through implementing environmental protection standards and controlling loans.
   Given the bad economic conditions, most of pesticides makers reported a year on year decline in sale for the first six months. Better than the chlor-alkali sectors, three publicly listed pesticide companies reported a high annualized growth in profit while other 15 companies reported losses or profit drop. Urea makers performed better than pesticides makers on average, although they claimed to have been operating at 75% of full capacity. Autumn will bring more good expectations to agrichemical companies and may help them gain a growth in the third quarter.

Zhong Weike
September 9th, 2009