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 China’s political and economic relations with the United States and 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 insulated from broader macroeconomic headwinds thanks to the inelastic demand for food, it generally maintained a steady growth trajectory. Nevertheless, certain regions experienced localized disruptions and shocks, with sharp volatility in the market making it difficult for companies to anticipate and navigate the future. Meanwhile, uncertainties in the sector 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 transgenic soybeans and insect‑resistant, herbicide‑tolerant transgenic 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 combo pesticide sets remain key concerns across the industry. This year, national and local pesticide regulatory authorities have intensified their efforts to address practices that blatantly violate the Regulations on Pesticide Management—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 fundamental solution to the frequent and widespread issue of excessive procymidone residues in this crop. The reevaluation 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 also drawn widespread attention and lively debate; the related article on the “Pesticide Market Information New Media” official account has 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 further amplify uncertainty. In particular, the global economic slowdown, the decline in European and American demand for Chinese export products, and the rise of India’s agrochemical industry are all likely to exert a certain degree of pressure on the development of China’s pesticide sector.

2. At the Industry Level

The irrational, explosive growth of the agrochemical 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; the resulting financial abundance prompted some enterprises to make indiscriminate investments in hot‑ticket products and those 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 particularly evident in the following areas:

(1) The company’s overall strength continues to improve, but its revenue has experienced a pullback following last year’s robust growth. According to statistics compiled in 2022 by the China Pesticide Industry Association among the top 100 pesticide‑industry companies, total sales exceeded RMB 320 billion, up 28.8% year on year. The entry threshold for the list reached RMB 660 million, an increase of RMB 50 million compared with the previous year. Looking at the 2022 Top 100 ranking, the combined sales of the top ten firms amounted to RMB 130.502 billion, a year‑on‑year rise of 29.48%, accounting for 39.84% of the total sales of the top 100. 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 all, 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. Nevertheless, it is important to recognize that, since the beginning of this year, oversupply has prevailed across most product categories, while excess inventories built up during earlier years of aggressive procurement are now being worked off. As a result, prices for many products have fallen sharply. According to an analysis of the first three quarters’ performance of 24 listed pesticide companies, contrary to last year’s trend, over 90% of these firms reported declines—ranging from modest reductions to drops as steep as 80%—in both revenue and profit. This highlights the need for relevant authorities to address the risks posed by enterprises’ profit‑driven, often reckless 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 firms have seen their overall strength steadily improve and are increasingly adopting a development strategy that covers the entire product portfolio and spans the full industry chain. Meanwhile, enterprises 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, with R&D spending accounting for roughly 3% of revenue on average, a figure that continues to rise year by year. In addition, these companies are continuously enhancing their levels of automation and intelligent manufacturing, achieving notable results in workplace safety, pollution control, and environmental remediation, while major and particularly serious workplace safety incidents and environmental pollution accidents have declined significantly.

(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 sharp increase to RMB 31.905 billion from January to the end of September 2023—more than double the total for all of 2022. The provinces attracting the largest investments are Shandong, Liaoning, Anhui, and Hubei, with key products receiving new 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 two preceding 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, creating significant risks for 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 pesticide industry is best understood through Jiangsu, and Jiangsu’s pesticide sector is best understood through Nantong.” With more than 1,700 pesticide companies nationwide, Nantong’s performance can be regarded as a barometer for the entire industry. According to statistics compiled by the Nantong Pesticide Association based on the projected total sales revenue of 21 enterprises, the city’s pesticide sector is expected to generate approximately RMB 25.8 billion in 2023—a substantial year-on-year decline, amounting to roughly 70% of the 2022 level. Concurrent with this downturn in sales, total profits are forecast to fall by around 40% compared with the previous year. Judging from these trends, the overall operating conditions of the industry as a whole 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 work off existing inventories. 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—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 at around RMB 26,500 per ton—roughly two‑thirds below its highest level and another third lower than at the beginning of the year. Similarly, glufosinate has dropped 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 roughly halved compared with early‑year prices. Other products with significant declines include chlorantraniliprole and prothioconazole; overall, most active ingredients are trending downward, 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 ramp-up of new production capacity—for example, in glufosinate, refined glufosinate, chlorantraniliprole, and prothioconazole—has further pressured prices. Moreover, the sharp price surges of recent years have triggered a negative feedback effect. It is expected that, once global inventory reduction is largely complete in the first half of 2024, raw‑material prices for agrochemicals will 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 Testing 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 procurement and stockpiling of pesticides in international markets during the two years prior to the pandemic, which drove prices to abnormally high levels. Moreover, 70% to 80% of China’s pesticide production is destined for export. Surveys indicate that approximately 30% of existing inventories remain unsold on the global market, a factor that has been a key driver of the decline in pesticide exports this year.

(3) End-demand remains subdued, and prices have edged lower. The sharp volatility in the pesticide market and the sustained decline in active‑ingredient prices have also led to a drop in end‑product pricing. 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 boosted 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‑packaging 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 continue to 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 consolidated and transferred, large-scale farmers, professional agricultural producers, and especially the well‑educated younger generation are steadily emerging. 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‑ammonium—associated with these GM crops—is expected to rise further, benefiting relevant companies. Moreover, with the expansion of maize–soybean intercropping and an increase in soybean acreage, demand for related herbicide products is set to 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 rising prices of agrochemicals prompted many companies to aggressively 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 categories, 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—this trend is set to accelerate. In recent years, as many top-tier companies have ramped up investment, intra‑industry competition has intensified. Smaller, less well‑capitalized enterprises, particularly those that have run into cash‑flow difficulties due to reckless expansion, may face bankruptcy risks, prompting continued consolidation, mergers, and restructuring across the sector.

4. Pesticide exports are expected to improve.

In 2024, as global market inventories are fully 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 China’s export outlook. 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 Chinese exports. Therefore, in addition to maintaining competitive advantages in quality and pricing, China must strengthen brand building—particularly by accelerating the shift toward exporting formulated products—so that Chinese agrochemicals can enhance their brand presence in international markets, thereby generating greater value and higher profits.

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 place substantial, bulk orders for agrochemicals and typically source directly from manufacturers or wholesalers, making it increasingly difficult for retailers to remain viable. Over the next three to five years, more retailers are likely to either pivot or exit the market. Although agricultural 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 agricultural inputs, especially pesticides, differ from ordinary fast-moving consumer goods by requiring 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 a certain technical component 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 field of crop protection and pesticide application, this has manifested in the widespread use of agricultural drones and the development of autonomous spraying machinery, gradually ushering pesticide‑application techniques into a new era of intelligent automation.

Source: Agricultural Market Information