Summing up 2023 and looking ahead to 2024: While China’s agrochemical market continues to grow steadily, uncertainties are on the rise...

With the pandemic largely brought under control by the end of 2022 and the relaxation of COVID‑19 restrictions in 2023, China’s economy has begun to recover gradually. However, lingering post‑pandemic aftershocks, the ongoing Russia‑Ukraine conflict, and the cooling of political and economic relations between China and the United States and other Western countries continue to generate uncertainty and instability, all of which are likely to exert a measurable impact on the future trajectory of China’s economic development.

Although China’s pesticide market in 2023 was relatively less affected by the broader economic environment thanks to the inelastic demand for food, it generally maintained a steady growth trajectory. Nevertheless, certain regions experienced specific challenges and shocks, with sharp volatility in the market making it difficult for companies to anticipate and navigate the future, while uncertainties in development continue to mount. A brief analysis follows.

Overview of China’s Pesticide Market in 2023

1. At the policy and macro-environmental levels

The series of favorable policies that the state has continuously introduced to support agriculture, along with regulatory frameworks conducive to innovation, green practices, and high‑quality development in the agrochemical sector—particularly following the end of the three‑year pandemic—have further fostered a sound business environment. However, economic downturns triggered by the confluence of global uncertainties, coupled with the increasing frequency of extreme adverse weather events, have also imposed certain shocks and negative impacts on the agrochemical industry, leaving uncertainty factors for enterprise development steadily mounting. At the policy and macro‑environmental levels, these influences on the agrochemical sector are primarily manifested in the following aspects:

(1) The commercialization of genetically modified crops continues to gain momentum. The state supports and encourages innovation in transgenic biotechnology, thereby promoting the research, development, and industrialization of genetically modified crops in China. Pilot programs for the commercial application of herbicide‑tolerant genetically modified soybeans and insect‑resistant, herbicide‑tolerant genetically modified corn are being accelerated, which will gradually exert an impact on related herbicide products such as glyphosate and glufosinate.

(2) The production and sale of bundled packaging and set‑package pesticides have been brought under control. The production and sale of bundled packages and pre‑packaged pesticide sets remain key concerns across the industry. This year, national and local pesticide regulatory authorities have intensified enforcement against practices that blatantly violate the Regulations on Pesticide Administration—namely, the disguised bundling and promotion of pesticides not intended for the targeted crops or pests, which also run counter to policies aimed at reducing pesticide use. As a result, this issue has shown some improvement.

(3) The implementation of the “one product, one certificate” system helps to standardize market order. To strengthen pesticide management and prevent market disorder and cutthroat competition, the pesticide regulatory authorities will implement a “one registration certificate per product” policy for formulated pesticide products. This major shift has become a focal point of widespread concern and discussion within the industry this year. According to research by Nongxin Media, most companies welcome this policy; its implementation is expected to curb excessive internal competition among pesticide firms and help address market irregularities. However, it will significantly impact the production and operations of certain contract‑manufacturing enterprises that rely on registration certificates, as well as some pesticide distributors.

(4) The re-evaluation of maximum residue limit standards for pesticides has drawn attention. Effective May 11, 2023, the national food safety standard “Maximum Residue Limits for 112 Pesticides, Including Sodium Salt of 2,4‑Dichlorophenoxyacetic Acid, in Foods” (GB 2763.1‑2022) has raised the maximum residue limit for procymidone in chives from the current 0.2 mg/kg to 5 mg/kg, offering a potential solution to the persistent problem of excessive residues of this pesticide in chives. The re‑evaluation of the maximum residue limit for procymidone in chives aims to align it more closely with scientific principles and actual agricultural practices. This policy adjustment has drawn widespread attention and sparked lively debate; the related article on the “Pesticide Market Information New Media” official account has already garnered over 16,000 views.

(5) The confluence of global turmoil makes the outlook for future development difficult to predict. The ongoing Russia-Ukraine conflict, the sudden outbreak of the Israel-Palestine crisis, and their spillover effects will give rise to further uncertainties. In particular, the global economic slowdown, the decline in European and American markets’ demand for Chinese export products, and the rapid growth of India’s agrochemical industry are all likely to exert a certain degree of pressure on the development of China’s agrochemical sector.

2. Industry Level

The irrational, explosive growth of the pesticide market during the three-year pandemic has now backfired on the industry this year, with most companies reporting their lowest profitability in three years. Moreover, the sharp price surges of recent years enabled many firms to amass substantial profits, and the resulting financial abundance prompted some enterprises to make rash investments in hot‑button segments and products whose patents have expired, further intensifying intra‑industry competition and internal attrition. Nevertheless, it is worth noting that despite overall negative growth across the sector so far this year, the industry continues to exhibit a positive upward trajectory, with high‑quality development—marked by green innovation—steadily advancing. This trend is reflected in the following key areas:

(1) The company’s overall strength continues to strengthen, but its revenue has experienced a pullback after last year’s robust growth. According to statistics compiled in 2022 by the China Pesticide Industry Association on the top 100 pesticide‑industry companies, total sales exceeded RMB 320 billion, up 28.8% year over year. The entry threshold for the list reached RMB 660 million, an increase of RMB 50 million compared with the previous year. Among the top 100 firms, the combined sales of the leading ten amounted to RMB 130.502 billion, a year‑on‑year rise of 29.48%, accounting for 39.84% of the aggregate sales of the entire group. Five companies posted sales exceeding RMB 10 billion, three more than the previous year; 14 firms recorded sales between RMB 5 billion and RMB 10 billion, five more than last year; and 58 companies reported sales in the RMB 1 billion–RMB 5 billion range, one more than the prior year. In total, 77 enterprises achieved sales above RMB 1 billion, nine more than the previous year, underscoring the ongoing trend toward greater production concentration in China’s pesticide sector. However, it is also important to recognize that, since the beginning of this year, most products have faced oversupply, while inventories built up during earlier years of excessive procurement are now being worked off. Consequently, prices for many commodities have fallen sharply. According to a survey of the third‑quarter financial performance of 24 listed pesticide companies, unlike last year, more than 90% of these firms reported declines in both revenue and profit, with some experiencing drops as steep as 80%. This highlights the need for relevant authorities to address the risks associated with enterprises’ uncontrolled, profit‑driven expansion.

(2) The pesticide industry is demonstrating strong momentum in its high-quality development. Since 2022, companies including Runfeng, Lvheng Technology, Nongxin Shares, Taihe, and Jiuyi have either gone public or are in the process of applying for an IPO. These enterprises have steadily strengthened their overall capabilities and are increasingly demonstrating a trend toward full‑product‑line coverage and end‑to‑end industrial chain development. Meanwhile, firms such as Qingyuan Nongguan, Shandong Xianda, and Jiangshan Shares have been ramping up their R&D investments, resulting in the development of numerous agrochemical products with independent intellectual property rights—some of which have already been registered and brought to market. At present, listed companies allocate anywhere from tens of millions to several hundred million yuan to R&D, accounting for roughly 3% of their revenues on average, a share that continues to grow year by year. In addition, these companies are continuously enhancing their levels of automation and intelligent manufacturing, achieving notable results in workplace safety and environmental pollution control, with a marked reduction in major and especially serious accidents related to production safety and environmental harm.

(3) Investment in the agrochemical industry and the launch of new projects are experiencing strong growth, but this trend also raises certain concerns. According to statistics from the Petroleum and Chemical Industry Planning Institute, investment in the pesticide industry over the past few years has been as follows: RMB 16.518 billion in 2021, RMB 15.074 billion in 2022, and a staggering RMB 31.905 billion from January to the end of September 2023—more than double the full-year figure for 2022. The provinces receiving the largest investments are Shandong, Liaoning, Anhui, and Hubei, with key products attracting capital including glufosinate‑ammonium, chlorantraniliprole, prothioconazole, and various pesticide intermediates. The continuous record highs in investment can largely be attributed to panic‑driven relocations or transfers following the March 21, 2019, explosion in Xiangshui, Yancheng, as well as the need of northeastern and western provinces to attract investment, prompting many companies to hastily announce new investment plans during that period. Moreover, elevated pesticide prices driven by the pandemic in the preceding two years, coupled with widespread expectations of a full economic recovery in the post‑pandemic era, led some firms—both within and outside the sector—to engage in rash, indiscriminate investments. The repeated, redundant construction of new facilities or expansions across numerous product lines has intensified intra‑industry competition and internal resource consumption, posing significant risks to the industry’s move toward high‑quality development.

(4) As we approach the end of 2023, the industry’s downturn is expected to persist into the first half of 2024, with the overall outlook remaining challenging. As the saying goes, “China’s agrochemical industry is best understood through Jiangsu, and Jiangsu’s agrochemical sector is best understood through Nantong.” With more than 1,700 agrochemical companies nationwide, Nantong’s performance can be regarded as a barometer for the entire industry. According to estimates compiled by the Nantong Agrochemical Association based on data from 21 firms, total sales revenue for Nantong’s agrochemical sector in 2023 is projected at approximately RMB 25.8 billion, representing a substantial year-on-year decline—roughly 70% of the 2022 level. Concurrent with this downturn in sales, aggregate profits are expected to fall by around 40% compared with the previous year. Judging from these trends, the overall operating conditions across the industry are likely to mirror this pattern.

3. Market Level

Against the backdrop of the state’s continued emphasis on and protection of agriculture, the pesticide market has generally maintained a stable growth trend; however, certain aspects have begun to exhibit characteristics distinct from those of the past.

(1) Prices for technical-grade pesticides continue to decline sharply, and it will still take time to fully destock. According to price‑tracking data compiled by Zhongnong Lihua and Nongxin Media, most agrochemical products have continued to decline this year, with overall price drops ranging from 20% to 50%; some have even seen their prices cut in half. The “dual‑herbicide” market—comprising glyphosate and glufosinate—best reflects the current mood of the agrochemical sector: glyphosate has fallen from a peak of RMB 90,000 per ton in 2021 to RMB 46,000 at the start of this year, and now stands around RMB 26,500 per ton—a roughly two‑thirds drop from its highest level and another one‑third decline since the beginning of the year. Similarly, glufosinate has tumbled from a 2021 high of RMB 360,000 per ton to RMB 146,000 at the start of this year, and is now near RMB 68,000 per ton—essentially back to cost‑recovery levels and down by about half compared with early‑year prices. Other products with significant declines include chlorantraniliprole and prothioconazole; overall, prices for most active ingredients are trending lower, primarily due to ongoing inventory destocking in international markets and weak demand, coupled with the fact that more than 70% of China’s agrochemical output is exported. In addition, the gradual ramp-up of new production capacity—for example, in glufosinate, refined glufosinate, chlorantraniliprole, and prothioconazole—has further pressured prices downward. Moreover, the sharp price surges of recent years have triggered negative feedback effects, suggesting that once global inventory reduction is largely complete in the first half of 2024, raw‑material prices for agrochemicals should return to a more sustainable range.

(2) After years of steady growth, pesticide exports have posted a rare decline this year. According to data provided by the Pesticide Inspection Institute of the Ministry of Agriculture and Rural Affairs, from January to August, pesticide exports—measured in physical volume, active‑ingredient equivalent, and export value—experienced overall year‑on‑year declines. This trend is primarily attributable to the excessive stockpiling and inflated prices observed in international markets during the two years preceding this period, driven by pandemic‑related demand surges. Moreover, 70% to 80% of China’s pesticide production is destined for export. Surveys indicate that approximately 30% of existing international inventories remain to be absorbed, which has been a key factor behind the decline in pesticide exports this year.

(3) End-demand remains subdued, and prices have edged lower. Due to sharp volatility in the pesticide market and a sustained decline in active‑ingredient prices, end‑product prices have also fallen. As a result, distributors have become more cautious about purchasing pesticides and building winter inventories, typically adopting a strategy of buying larger quantities in smaller batches, which has placed certain pressures on companies. In some product categories, the recent promotion of intercropping soybeans with corn has led to increased demand for pre‑emergence herbicides such as pendimethalin and metolachlor, as well as post‑emergence herbicides like bentazon.

(4) Channel distributors are also undergoing continuous adjustments and changes. On the channel front, in addition to intensified regulatory efforts targeting co‑packaged products and bundled sales, pesticide authorities are also drafting relevant rules to address issues such as “one license for multiple products,” with expectations of tighter oversight going forward. As for online pesticide sales, opinions remain divided; most pesticide manufacturers and distributors adopt a cautious stance, and traditional distribution channels still dominate. Meanwhile, many companies have established new marketing departments or teams, leveraging live‑streamed sales and short‑video content to promote and sell their products—though this emerging marketing approach is still being explored by the majority of firms.

(5) Large-scale farmers will become the driving force of agriculture in the future. As land continues to be transferred and consolidated, large-scale growers, professional farmers, and especially the well‑educated younger generation are emerging in growing numbers. They will serve as exemplary leaders in adopting scientific farming practices and reducing pesticide use. Given that food, fruits, and vegetables are essential commodities, an increasing number of young people are expected to enter agriculture in the years ahead— a trend that will also bolster the sustainable development of China’s agrochemical and plant protection sectors.

A Brief Analysis of Pesticide Market Trends in 2024

1. The commercial cultivation of genetically modified crop varieties and the development of biopesticides in China may accelerate.

As China advances from field trials to commercial deployment of genetically modified soybeans and corn, the use of herbicides such as glyphosate and glufosinate‑isopropylammonium is expected to rise further, benefiting related companies. Moreover, with the expansion of maize–soybean intercropping and the continued increase in soybean acreage, demand for corresponding herbicide products will grow. In addition, the research, development, and application of RNA‑based biopesticides have garnered significant attention and have entered the registration‑testing phase, potentially driving biopesticides and plant protection technologies toward more advanced levels.

2. Pesticide prices are expected to stabilize, with a possible slight increase in the second half of the year.

In recent years, tight supply and soaring prices of agrochemicals prompted many companies to ramp up production and expand capacity in pursuit of higher profits. As a result, since the beginning of this year, numerous products have faced severe oversupply, with prices plummeting to rock-bottom levels—some even falling below cost. With global inventory destocking now largely complete, pesticide prices are expected to stabilize gradually in 2024, building on the trends observed in 2023. In the second half of the year, prices may trend upward, avoiding the extreme volatility of recent years. That said, certain product lines, where capacity continues to expand and intense internal competition persists, could still see further price declines.

3. Pesticide companies will also become more concentrated, and differentiation and intensifying competition will become even more pronounced.

Over the past decade or so of rapid growth, the agrochemical industry has seen more than a dozen leading companies each posting sales exceeding RMB 5 billion. As a result, the market is likely to evolve into a landscape where the strong remain dominant and weaker players face increasingly difficult survival prospects. Moreover, financially robust firms will expand upstream and downstream, extending their value chains and building end-to-end integrated operations to gain control over pricing power and capture greater profits—a trend that is set to deepen. With many industry leaders ramping up investment in recent years, intra‑industry competition is poised to intensify. Smaller, less well‑capitalized enterprises—or those whose financial strains stem from reckless expansion—could find themselves at risk of bankruptcy, prompting continued consolidation, mergers, and restructuring across the sector.

4. Pesticide exports are expected to improve.

In 2024, as global inventories are depleted, imports of Chinese agrochemicals into international markets are expected to rise significantly in the second half of the year, leading to an improvement in export prospects. At the same time, it is important to recognize that many Indian agrochemical products are entering the global market at lower prices, posing a challenge to China’s agrochemical exports. Therefore, beyond maintaining competitive quality and pricing, Chinese agrochemical exporters must strengthen brand building, with particular emphasis on accelerating the shift toward higher‑value formulated products. This will enhance the international brand presence of Chinese agrochemicals, unlocking greater value and boosting profitability.

5. Agricultural input retailers will continue to shrink, and the development of agricultural e‑commerce faces certain limitations.

As land transfer accelerates, the emergence of large-scale farmers has become an inevitable trend. These growers purchase agricultural inputs in substantial quantities at once, typically sourcing directly from manufacturers or wholesalers, which increasingly challenges the viability of retailers. Over the next three to five years, more retailers are likely to either pivot or exit the market. Although agrichemical e‑commerce has garnered considerable attention in recent years, the growing number of large-scale farmers—coupled with their need for bulk procurement—and the fact that agrochemicals, especially pesticides, differ from ordinary fast-moving consumer goods and require specialized technical support, mean that e‑commerce will primarily serve as a platform for product display and customer service, rather than replicating the rapid growth seen in the FMCG sector.

6. New media and new marketing in the agricultural inputs sector are thriving.

With the rapid growth of new media, it has become a prevailing trend for companies to establish their own social‑media accounts to promote and market their products. Enterprises and channel distributors are also increasingly leveraging short videos, live streaming, and other emerging platforms to conduct fast, efficient, and cost‑effective online marketing campaigns. However, it is important to recognize that, as agrochemicals are specialized products with technical requirements and intended for use on crops, relying solely on new‑media‑driven marketing strategies often fails to deliver satisfactory results. Therefore, further research and exploration are needed to master these new‑media approaches and to better integrate online and offline marketing efforts.

7. The development of new agricultural technologies has also driven transformative changes in the promotion and application of pesticides.

The penetration and application of new technologies, such as mobile internet, in the agricultural sector have also propelled agriculture toward digital and smart farming. In the pesticide and plant protection field, this has manifested in the widespread use of agricultural drones and the development of autonomous spraying machinery, gradually ushering pesticide application into a new era of intelligent technology.

Source: Agricultural Market Information