Analysis of the 2018 Pesticide Industry: Low Market Concentration and Strong Regional Differentiation!

　　Pesticide production in China is distinctly regional, concentrated primarily in the three eastern coastal provinces of Jiangsu, Zhejiang, and Shandong. In 2013, these three provinces collectively produced 1.9548 million tons of technical-grade chemical pesticides, accounting for 61.27% of the national total. The following provides a detailed overview of the current state of pesticide development.

　　Market Status

　　Based on an analysis of the current state of pesticide development, as China’s agricultural modernization has advanced, the level of pesticide use in agricultural production has also increased, thereby driving the growth of the country’s pesticide industry. Moreover, owing to the global shift of the pesticide manufacturing sector, China has become one of the world’s most important production hubs for technical-grade active ingredients. Over the past decade and more, China’s pesticide industry has experienced rapid expansion; in 2015, the nation’s output of chemical pesticide technicals reached 3.74 million tons, with a compound annual growth rate of 14.11% from 2003 to 2015.

　　In China’s chemical pesticide export mix, herbicides and insecticides account for the bulk of shipments. In 2015, exports of herbicides, insecticides, and fungicides totaled 820,000 tons, 225,000 tons, and 83,000 tons, respectively. Fungicides represented only 7.06% of total exports, significantly below their roughly 26% share in the global pesticide market, indicating substantial untapped market potential.

　　In 2016, the global pesticide market totaled US$56.52 billion, a slight year-on-year decline of 1.76%, with the rate of decline markedly narrower than in 2015. Agricultural pesticides accounted for 88% of the total market, amounting to US$49.99 billion, down 2.39% from the previous year, while non‑agricultural pesticides generated US$6.54 billion in sales, up 3.37% year over year. From 2003 to 2016, the global pesticide market posted an average annual compound growth rate of 4.7%, with agricultural pesticides growing at a compound rate of 4.9%.

　　Current Development Trends: Medium- and low-concentration formulations remain dominant, while the number of compounded suspending agents continues to grow.

　　The quality of a pesticide formulation is judged not by its active‑ingredient content alone, but by its efficacy and cost‑effectiveness. Around the year 2000, domestic companies were keen to develop high‑concentration formulations; however, over the past decade or so, they have increasingly shifted toward R&D of medium- and low‑concentration products, creating greater flexibility to balance performance with synergistic effects and ensuring superior delivery characteristics. This trend has been particularly evident in the development of novel formulation types such as SCs, marking a new direction in the evolution of pesticide formulation technology.

　　The number of agrochemical active ingredients directly formulated into suspension concentrates is growing. Influenced by regulatory policies and other factors, emulsifiable concentrates are facing increasing restrictions, leading to a steady rise in the development of suspension concentrates. Consequently, both the selection of agrochemical formulations and the volume of products processed into suspension concentrates have expanded, a trend that was particularly evident in 2015 and helped establish suspension concentrates as the leading formulation type for pesticide registration.

　　The widespread misuse of pesticides has compelled the introduction of industry policies.

　　Over the years, as the area sown to crops has expanded annually and the challenges of pest and disease control have grown increasingly complex, China’s overall pesticide usage has shown an upward trend. According to statistics, from 2012 to 2014, the average annual consumption of pesticides for crop pest and disease control reached 311,000 tons (expressed in terms of 100% active ingredient), a 9.2% increase compared with the period from 2009 to 2011. However, the current average utilization rate of pesticides in China stands at only 35%, with the majority being lost through runoff, leaching, and drift, thereby contaminating soil and water resources and compromising the ecological safety of agricultural ecosystems. At present, 70.6% of China’s farmland is affected by varying degrees of pollution. Moreover, within the country’s pesticide product mix, highly toxic and persistent‑residue formulations remain relatively prevalent. Although the state has progressively banned the use of certain highly toxic pesticides, some small and medium‑sized manufacturers continue to produce such products in violation of regulations, leading to frequent incidents of crop injury and pesticide poisoning. In response, the government has introduced a series of industrial policies, including measures to regulate pesticide application, phase out highly toxic and long‑lasting‑residue pesticides, and encourage mergers and acquisitions among pesticide companies. These policies have helped foster the development of large, well‑structured, and competitively advantaged pesticide enterprises.

　　The variety and quality of pesticide products have improved rapidly, but innovation capacity remains inadequate.

　　After years of sustained and steady development, China’s agrochemical industry has established a comprehensive industrial system encompassing active‑ingredient production, formulation processing, research and development, and the supply of raw materials and intermediates, with an increasingly diversified range of products. At the same time, to integrate into the global agrochemical value chain, the quality of Chinese agrochemicals has improved rapidly; currently, more than 200 national or industry standards that are mandatorily enforced either adopt or are equivalent to international standards set by the FAO or the WTO.

　　Industry concentration is low, with pronounced regional characteristics.

　　At present, China has become the world’s largest producer of pesticides; however, the industry remains highly fragmented, with over 2,000 domestic firms. Among them, companies with annual sales below 2,000 tons account for 85% of the market, resulting in an overall structure characterized by a large industry dominated by small enterprises.

　　Pesticide production in China is distinctly regional, concentrated primarily in the three eastern coastal provinces of Jiangsu, Zhejiang, and Shandong. This region boasts a well-developed chemical industry and pronounced agglomeration effects, providing robust support for the expansion of scale, industrial consolidation, and technological upgrading within China’s pesticide sector.

　　Through an analysis of the current state of pesticide development, it is evident that agriculture is a relatively low‑cycle industry, with demand exhibiting a degree of stability and continuing to grow in tandem with global population expansion, upgrading of agricultural product consumption, and the development of bioenergy. Given the constraints imposed by limited arable land, future agricultural progress will hinge primarily on advances in cultivation and application technologies, thereby driving the sustained growth of the pesticide sector. The foregoing provides a detailed overview of the current landscape of pesticide development, and we are confident that, in the near future, this field will emerge as a burgeoning blue ocean, poised for continued improvement.