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At the very beginning of 2019, with the cancellation of fertilizer export tariffs, the introduction of a series of fertilizer standards, and the launch of the Soil Environmental Protection Law, a number of large-scale fertilizer enterprises have gone bankrupt and reorganized, and industry integration has been accelerated. Everything has laid the foundation for the trend in 2019.
There is no doubt that the fertilizer industry will be more orderly, efficient, specialized and environment-friendly in the future. However, what specific policies are most likely to be implemented? And what changes will take place in the existing industry layout? The following are the top ten forecasts of agrochemical industry. People engaged in the industry are also welcome to propose extensive ideas and make a good start with confidence in the New Year.
Prediction 1: The label of fertilizer packaging will change, and the medium and trace elements will no longer be invisible
Basis for the forecast: Due to the constraint of the industry standard, the medium and trace elements in compound fertilizer (mixed fertilizer) could not be labeled on the packaging container and quality certificate in the past. With the popularization of medium and trace elements in agricultural production, enterprises have been calling for release the constraint. In 2017, the Ministry of Industry and Information Technology and other two departments completed the revised draft of “Fertilizer Labeling Content and Requirements”, and the revised version released the labeling restrictions on medium and trace elements, but the issuance time has not been determined yet.
The industry standard “Fertilizer Labeling Content and Requirements” clearly stipulates that if the compound fertilizer (mixed fertilizer) is added with medium elements and trace elements, it will not be marked either on the packaging container or on the quality certificate; for medium-element fertilizer, it shall label all nutrient contents of medium element and the sum of the nutrient contents of the medium element; and in the event that the single medium element with the content less than 2%, it shall not be labeled.
In recent years, more and more fertilizer enterprises and growers have realized the importance of medium and trace elements in agricultural production, but the medium and trace elements added by fertilizer enterprises in compound fertilizers cannot be labeled. Additionally, in the event of the medium-element fertilizer, the medium elements with a content of less than 2% could also not be labeled. In the past few years, enterprises have been calling for releasing the restrictions increasingly. After the final review and approval of the revised Fertilizer Labeling Content and Requirements, it will be approved and issued by the State Council or other department authorized by the State Council. But the release time has not been determined yet. Will it be issued in 2019? We will wait and see!
Prediction 2: The Chinese standard for bio-stimulants will be put on the agenda
Basis for the forecast: Due to the lack of industry standards, the concept confusion and the absence of classification standards, bio-stimulants could not show their special functions and actual effects, which makes it difficult to register products and popularize them in the market.
In recent years, bio-stimulants have developed rapidly at home and abroad, but many outstanding problems have appeared in the promotion procedure, such as concept confusion, small and discrete pattern of the industry, rampant counterfeit goods, bad money driving out good money, more concept hype than product innovation, lack of scientific use of technologies, exaggeration of their functions and functions, which seriously affect the healthy development of bio-stimulant market.
At present, the European Union has defined biostimulants as the substances containing certain components and microorganisms, which could stimulate the natural processes of plants when applied to plants or used as rooting medium, including enhancing/benefiting nutrient absorption, nutrient efficacy, abiotic stress resistance and crop quality, and have nothing to do with nutrient components. And they have also issued industry standards. Currently, China is speeding up the process of formulating industrial standards for biostimulants. In April 2018, Stanley held an industry conference, aiming to arouse the attention of the industry to biostimulants by analyzing the European standards of biostimulants in depth. In May, Southern Rural News hosted a conference on biostimulants, focusing on the industry hotspot as well. The National Standardization Committee of Fertilizer and Soil Conditioner proposed to define biostimulant as a substance which can promote plant growth and improve stress response and crop quality, and it is also pushing push forward the implementation of this standard.
The data shows that China has published the national standards related to biostimulants, including GB/T 33804-2017 Agricultural Potassium Humate, GB/T 34765-2017 Mineral-Sourced Fulvic Acid Content Determination, GB/T 35112-2017 Agricultural Humic Acid and Fulvic Acid Raw Materials, etc. The published industrial standards include HG/T 3278-2011 Sodium Humate for Agriculture, HG/T 5045-2016 Urea Containing Humic Acid, HG/T 5046-2016 Humic Acid Compound Fertilizer, HG/T 5050-2016 Alginic Acid Fertilizer, etc.
However, with the application of the existing relevant standards, it is impossible to measure some components, action mechanisms and metabolites, and it is also difficult to popularize biostimulant products without registration certificate. Therefore, it is urgent for the biostimulant industry standards to be released to promote better and healthier development of the industry. In 2019, the formulation of Chinese standard for biostimulants will be put on the agenda.
Forecast 3: The unit price in the potash fertilizer contract will exceed USD 300/ton?
Basis for the forecast: This forecast is not what agricultural people desire. The price of potash fertilizer is rising sharply all over the world, so it is not easy for China to win the CFR price of 290 US dollars/ton. It is speculated that with the current trend, the unit price of potash fertilizer will exceed USD 300/ton in 2019.
After nine months of negotiations, Chinese potash joint negotiating team finally reached an agreement with BPC (Belarus Potash Company) on China's potash import contract by sea of 2018/2019, at the contract price of CFR290 US dollars (unit price per ton, the same below). Although the price has increased by USD 60 compared with the contract price in 2017, it is still significantly lower than the increase in South America and other places.
Although the final negotiated unit price increases by 60 dollars compared with last year, the CFR price of 290 dollars/ton is still low, which is in line with the current international market situation. Under the industrial background that the unit price has risen to 370 USD/ton (CFR) in Europe, 310-320 USD/ton (CFR) in Southeast Asia, and the demand for potash fertilizer in the international market is increasing, while the demand in the domestic market is decreasing, it is possible that prices in some regions will continue to rise slightly after the demand is released, and that the unit price in potash fertilizer contract will exceed 300 USD/ton in 2019.
预测四：有机肥料行业标准有望提升
Forecast 4: Standard of organic fertilizer industry are expected to improve
Basis for the forecast: The current standard of organic fertilizer was formulated in 2012, but the current plan of replacing chemical fertilizer with organic fertilizer was formally put forward in 2017. There is a big time span between the standard and the policy, which is difficult to meet the development needs of the industry. Farmers have a vague understanding of the concept of organic fertilizer, and some enterprises cheat on labor and materials, even using isoflavones, the scraps from industrial processing of soybean, as organic fertilizer. Therefore, it is urgent for the organic fertilizer market to upgrade the industry standard to restrain it.
The starting point of formulating the technical parameters of organic fertilizer standard is to maximize the use of various organic solid wastes to increase the level of soil organic matter. However, due to the low attention paid to and the insufficient market recognition of organic fertilizer at that time, most organic fertilizer enterprises were small and adopted discrete business pattern, and it was difficult to guarantee the production technology, production process and good production environment.
At present, some special industries, such as tobacco, have begun to formulate local standards based on the existing standards of organic fertilizer, to make refinement of standards in terms of technical process and environmental requirements of organic fertilizer production, the use of special decomposed strains, and the use of aerobic fermentation instead of anaerobic fermentation, and they are also actively applying for intra-industry standards. Additionally, organic fertilizer industry urgently needs the improvement of industry standards to reorganize the industry and eliminate backward production capacity. The author thinks that the national standard of organic fertilizer will be greatly improved in 2019, embodied particularly in the directions such as organic matter content, whether organic matter is clearly defined as active organic matter, and the technical process and environmental requirements of organic fertilizer production.
Forecast 5: Industry integration will speed up and the fertilizer industry will be more concentrated
Basis for the forecast: The pressure of environmental protection drove the national fertilizer enterprises to suspend production and make large-scale adjustment, and the pressure of operation forced many fertilizer enterprises to go bankrupt and reorganize, accelerating the fertilizer industry reshuffle. It is predicted that the fertilizer production will be more concentrated in 2019.
Under the high pressure of environmental protection, the enterprises with backward production capacity were weeded out, and the upgrading of enterprise product line was accelerated. In August 2018 alone, 620 chemical enterprises were closed or required to change production line and 2,614 enterprises were suspended for adjustment in Shandong, accounting for 42.5% of the province's total chemical production enterprises. Guangdong Environmental Protection Department issued a document requesting to carry out special actions for comprehensive remediation of discrete and polluting enterprises and clusters. Dongguan alone has completed the elimination and remediation of 4,824 discrete and polluting enterprises.
The compound fertilizer industry has entered the stage of comprehensive strength competition, involving quality, brand, capital, technology and service etc., and is undergoing the large-scale integration. More and more enterprises with backward production capacity and poor management have closed down, and large enterprises have also suffered losses in different degrees. For example, Yankuang Lunan Fertilizer Factory, the subsidiary of one of world’s top 500 fertilizer enterprises, declared bankruptcy due to accumulated debts of 3.7 billion yuan; Jiangxi Liuguo, the subsidiary of Liuguo Chemical, filed for bankruptcy reorganization; SinoChem International had spent nearly RMB 6.1 billion yuan to acquire Yangnong Group; and Inner Mongolia Ordos Union Chemical Co., Ltd., the subsidiary of Hubei Yihua was forced to stop production due to limited natural gas supply in winter.
Taking nitrogen fertilizer as an example, there were more than 200 nitrogen fertilizer production enterprises in China at the peak, with a production capacity of more than 60 million tons. Now, there are more than 60 nitrogen fertilizer production enterprises with a production capacity of more than 50 million tons, showing the concentrating development trend of the nitrogen fertilizer industry. In addition, some nitrogenous fertilizer production enterprises engage in the fields of compound fertilizers and new fertilizers, making their products more competitive. Henan Xinlianxin Chemicals Group Co., Ltd., for example, not only owns the world-class coal urea production line and the largest individual urea production line in China, but also can produce multiple high-efficiency fertilizers such as compound fertilizer, humic acid-containing fertilizer and water-soluble fertilizer, thus further enhancing its comprehensive competitiveness.
Forecast 6: The export of potash fertilizer will be increased greatly, and the export of chemical fertilizer will get over the decline as a whole
Basis for the forecast: It is proposed in the Adjustment Plan for Provisional Import and Export Tax Rate in 2019 that from January 1 of this year, zero export tariff will be imposed on chemical fertilizers and other commodities. The zero-tariff plan will have a great impact on the export of potash fertilizer, compound fertilizer and phosphate rock, especially on the domestic processed potassium sulfate and potassium nitrate, which will have a greater price advantage in the international market. This will stimulate the export of potash fertilizer to increase greatly, thus the export of chemical fertilizer will stop declining as a whole.
In recent years, the domestic potash fertilizer production and processing technologies have been improved, and the industries such as potassium sulfate, potassium nitrate and granular potash fertilizer have developed rapidly. With the cancellation of export tariff of potash fertilizer (including potassium-containing fertilizer), the export cost of potassium chloride (fertilizer grade) and potassium sulfate could decrease RMB 600 yuan/ton, so the domestic potassium sulfate will have stronger price competitiveness in the world, and the operation rate of processed potassium sulfate will increase, which will drive up the domestic potassium chloride price. As a result, the export of potash fertilizer will continue to grow.
According to the data from China Customs, China exported 22.76 million tons of various fertilizers from January to November 2018, 25.48 million tons in 2017 and 28.09 million tons in 2016, a decrease of 21.5% compared with 2015. In recent years, the total export volume of fertilizer has been declining year by year, and the export volume of compound fertilizer is affected by the supply and demand of the international fertilizer market. Consumers pay more attention to the brand as well as the price, so the export volume of compound fertilizer still needs time to be tested. Although zero-tariff export policy has improved the market competitiveness in fertilizer export to a certain extent, it is difficult to greatly increase the export volume in the short term. At present, there is still a big gap in the fertilizer market in Africa, Southeast Asia and countries along “The Belt and Road”. Driven by the zero-tariff policy, the export volume of potash fertilizer will increase greatly in 2019, and the export of fertilizer will also stop declining as a whole.
Forecast 7: Southeast Asia will become a new promising market for domestic fertilizer enterprises
Basis for the forecast: Since more than more skilled growers have gone abroad to explore than planting industry in Southeastern Asia, the demand for fertilizer in Southeast Asian countries is increasing. With the export price advantage brought by zero tariff policy, Southeast Asia market will undoubtedly become a new promising market for domestic fertilizer enterprises to compete. More than ten enterprises such as Kingenta, Lardmee and Ruifeng have begun to lay out their businesses in the Southeast Asian market, and many well-known fertilizer enterprises have also put the development of Southeast Asian market on the agenda.
A large number of domestic skilled growers went to Southeast Asia to develop the planting industry, which led to the growth of demand for domestic fertilizer in foreign planting industry. The demand for fertilizer was increased continuously in India, Malaysia, the Philippines, Thailand, and Vietnam etc. In Thailand, for example, there is about 6 million tons of fertilizer demand every year; Vietnam needs to import 1.5 million-1.8 million tons of urea, 700,000 tons of diammonium phosphate and 200,000 tons of compound fertilizer every year; and the potential demand for chemical fertilizer in Philippines is nearly 4.7 million tons.
Although most of Southeast Asian countries are agricultural countries, their fertilizer industry started late, and their production enterprises are generally lack of technology. Under the influence of the strategic development of “The Belt and Road” and the establishment of China-ASEAN Free Trade Area, China's fertilizer products have certain an advantage in exporting to Southeast Asia. At present, there are more and more Chinese fertilizer products in the whole Southeast Asian market. From January to July, the volume of fertilizer exported from China to Philippines increased slightly, and the volume of fertilizer exported to Vietnam at least doubled from January to September. The release of zero-tariff policy for fertilizer export will further promote domestic fertilizer enterprises to go abroad.
At present, more than a dozen of domestic enterprises are stepping up their efforts to enter the Southeast Asian market. For example, Lardmee built an ecological green compound fertilizer production base with an annual output of 600,000 tons in Zhanjiang, which is its major action to open up the fertilizer market in Southeast Asia; Ruifeng Group has entered the fertilizer market in Malaysia and Thailand early, and has reached a cooperation with the Vietnamese Ministry of Agriculture to introduce new high-end functional fertilizers and agrochemical services into Vietnam; and Kingenda has set up branches in Vietnam, Singapore and other places, and its layout in India, Thailand and Malaysia are also undergoing.
Forecast 8: The traditional single e-commerce platform will be gradually transforming into an integrated service provider
Basis for the forecast: The continuous increase of large professional growers has driven the arising of a huge agricultural technology service market. The traditional single e-commerce that only provides agricultural products for sale will become increasingly incapable to meet the needs of growers. Taking the transformation step from "products" to "technical services" will be the only way for the traditional agricultural e-commerce platforms to survive in 2019.
According to the data, there are over 4 million large-scale planters with a farmland area of over 50 mu, about 30 million medium-sized planters with a farmland area of 10-50 mu, and about 2 million cooperatives and large-scale farm bases in our country. It can be said that professional large-scale planters have become the main force of planting in China. Different from the traditional small-scale peasant economy, these large planters not only have the demand for agricultural products, but also have the demand for diversified and comprehensive agricultural technology services. The traditional single e-commerce business model that only provides agricultural products for sale can no longer meet the needs of these planters. As shown by the data, China's agricultural technology service market has reached a scale of RMB 100 billion yuan, and it is still growing continuously. This market trend will inevitably promote the transformation of the agricultural e-commerce platform from the traditional model with online purchase and sale of agricultural products as a single business to the comprehensive service-oriented e-commerce provider.
At first, the emergence of agricultural e-commerce is more aimed to meet the needs of upgrading the channels of agricultural industry. Now, agricultural e-commerce is transformed from upgrading channels to upgrading products and services. For example, the traditional e-commerce based on single product business is just like a pharmacy, which provide farmers whatever medicine they need. However, what the farmers need now is doctors in the field. They need doctors to visit the sites for consultation, to diagnose various problems existing in planting, and to make a proper prescription. After the prescription is approved by farmers, they will provide farmers with a complete set of products and services. Therefore, farmers' requirements for services are getting higher and higher.
Taking DFS168.com, which has been successfully transformed, as an example, since 2015, it has gradually explored the field of agricultural technology services, established a series of online and offline agricultural technology service sections for different crops in different regions, and carried out agricultural technology activities in the countryside. It also put forward the slogan of “providing product package, package service and service standardization”, and took the platform orientation principle of “being the planting housekeeper around farmers”.
In addition to service-oriented e-commerce, the agricultural e-commerce model that provides paid agricultural knowledge services has also emerged. The agricultural knowledge payment platform "Learning Agriculture Everyday" has completed three rounds of financing in less than one year, providing agricultural knowledge services covering crop knowledge, agricultural technology promotion, brand building, product marketing, and agricultural innovation knowledge, etc.
In addition to the existing agricultural e-commerce service model based on pre-production and intra-production stages, it also cooperates with financial institutions to provide supply chain financial services for distributors and growers; and provides agricultural informatization and O2O website services, and provides farmers with planting solutions using precision agriculture technology, which will also become the direction and outlet for the transformation of agricultural e-commerce to comprehensive service-oriented e-commerce. To sum up, agricultural comprehensive service-oriented e-commerce has become the mainstream trend of agricultural e-commerce. In 2019, agricultural e-commerce must continuously drive the transformation and innovation of agricultural technology services.
Forecast 9: Traditional agricultural retail stores will face more competition, and the proportion of direct sales of manufacturers will get higher and higher
Basis for the forecast: Large planters are springing up like mushrooms. The pressure of operation will drive manufacturers to directly connect with large planters, and the pressure of planting cost will also drive large planters to skip the circulation and seek opportunities to cooperate with manufacturers directly. Channels will either transform into technology export and service companies, or they will face the risk of elimination.
In recent years, the national land circulation market has shown a leap-forward growth, and the proportion of large planters in the flow of agricultural resources market has become larger and larger. According to the data in the Land Transfer Market Report released by Tuliu.com in April 2018, in past three years, about 55% of the rural collective land were transferred to large agricultural planters, 32% to agricultural cooperatives and agricultural enterprises, and 13% of the land management rights had gone to other business entities.
With the gradual increase in the price of upstream agricultural materials, the pressure of such price increase will prompt large agricultural planters and cooperatives to skip the traditional agricultural retailers and directly seek sales from agricultural manufacturers. The increasingly urgent demand for products and services has also drive the emergence of a number of manufacturers and platforms that specially provide services for large planters all over the country, including “nongfengqi.com”.
Through strategic cooperation with well-known fertilizer manufacturers such as Kingenda, Sierte and Redsifang in Anhui Province, “nongfenqi.com” provides pre-sale services of agricultural materials for large-scale planters, giving full play to the advantages of large-scale order, such as cost reduction and benefit improvement, and reducing the operating pressure and risks brought by the traditional agricultural purchase-and-sale mode to farmers in terms of price, quality, logistics, warehousing and capital, etc.
In addition, various forms of agricultural input ordering meetings have been held in multiple places one after another, in which personalized customization and direct supply and sale of manufacturers’ products and services have been realized through assembling new agricultural business entities that mainly include large planters and cooperatives to negotiate directly with agricultural input manufacturers. This kind of ordering meetings have been welcomed by many new agricultural business entities and well-known agricultural manufacturers. In the Heilongjiang Exhibition and Purchasing Meeting of Agricultural Input for New Agricultural Business Entities held in October last year, for example, more than 2,000 new agricultural business entities were attracted from all over China, and the intentional contract amount at the meeting exceeded RMB 400 million yuan.
In the agricultural materials market in 2019, The operating profit and market share of traditional agricultural retailers will be further decreased, and the proportion of factory direct sales will become higher and higher. With the further implementation of Pesticide Management Regulations, more and more family-style (husband and wife-style) agricultural retail stores will face bankruptcy, and the transformation of traditional agricultural retailers will become the major trend and mainstream proposition of the times. Under such circumstances, are you still selling on credit?
Forecast 10: Microbial fertilizer will be the hot product category in 2019
Basis for the forecast: In 2018, the number of microbial fertilizer registration certificates increased by 3,508, and it is expected to exceed 10,000 in 2019, showing a spurt growth. By the end of October last year, there were 2,050 microbial fertilizer enterprises in China, with a production capacity of 30 million tons, accounting for 70% of the annual output of new fertilizers, and the output value reached RMB 40 billion yuan. The competition in microbial fertilizer market will become white-hot, and microbial fertilizer products will become the hottest products in fertilizer market in 2019.
Compared with traditional fertilizer, microbial fertilizer has advantages in protecting ecology, recycling agricultural waste resources, maintaining soil health, improving fertilizer utilization rate and improving agricultural product quality. It is shown by data that the number of microbial fertilizer registration certificates (including bio-organic fertilizer, microbial inoculant and compound microbial fertilizer) in the Ministry of Agriculture and Rural Affairs increased from 5,685 in 2017 to 9,193 in 2018. Microbial fertilizer has become one of the new fertilizers in China with the largest annual output and the widest application area.
On the other hand, a series of soil degradation problems have arisen due to the unreasonable use of chemical fertilizers for a long time. According to the “City Blue Book: China Urban Development Report NO.11” published in September last year, the soil pollution in some areas of China is serious, the contaminated area of cultivated land reaches 15,000 mu, and the limit exceeding rate is as high as 19.4%. The use of chemical fertilizers and pesticides in China is at a high level across the world, which leads to serious soil pollution problems and poses great hidden dangers to food safety, land safety and ecological safety. The formal implementation of the Law of the People's Republic of China on the Prevention and Control of Soil Pollution is bound to have a far-reaching impact on the prevention and control of soil pollution and the soil remediation in China.
There is still a long way to go to remedy the soil ecology. With the implementation of the national initiative “The Belt and Road” and the rural revitalization strategy, in 2018, Southern Rural Newspaper joined hands with like-minded domestic and foreign well-known agrochemical enterprises to launch a program called “Revitalizing Thousands of Villages and Towns with Implementation of The Belt and Road Initiative & 2018 China Soil Ecological Remediation and Agricultural Technology Promotion Campaign”, in which total 20,000 farmers have been trained cumulatively and the number of people engaged in online dissemination has reached 500,000. In 2019, the campaign will continue to proceed in 20 crop producing areas across 11 cities and provinces.
The huge demand for pollution control means big market space. It is said by some industry authorities that China needs to develop and use bio-fertilizer more than any other country, and application of microbial fertilizer in soil will be an important development direction of soil ecological restoration. With the continuous introduction of high-pressure environmental protection policies and the further expansion of soil remediation market, more capital will be invested in the field of microbial fertilizer.
(Source of Article: AGROPAGES)
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