2021 Global Pesticide Industry Development Trend Forecast: Outsourcing of Intermediates and Active Pharmaceutical Ingredients Is a Key Driver of Global Industrial Relocation.

2021 Forecast of Development Trends in China’s Pesticide Industry

1. Centering on “effectively addressing the issues of seeds and arable land,” accelerating innovation and continuously optimizing the industrial structure will be the dominant theme shaping the development of the agricultural pharmaceutical industry in 2021.

“Ensuring the success of seed and arable‑land issues” is one of the eight key priorities for China’s economy next year. To support this strategic goal and ensure its successful implementation, the agrochemical industry must accelerate innovation. However, China’s pesticide production is dominated by imitation, with relatively backward formulation technologies, widespread product homogenization, weak R&D in new products, and insufficient capacity for technological advancement and innovation. Insufficient investment in technological upgrading further undermines the long-term growth potential of enterprises. Moreover, compared with developed countries, China’s pesticide sector still lags significantly in overall technology, equipment, and management standards, leaving many technical challenges亟待 resolution. From the perspective of the industry’s product mix, the sector faces a pronounced imbalance: active ingredients are strong, while formulations remain weak; most companies continue to compete primarily on low‑end products, and product homogenization remains pervasive, with speculative marketing still prevalent. In addition, China’s pesticide portfolio is not sufficiently diversified—for example, there is a shortage of fungicides, nematicides, and virus‑inhibiting agents for fruits and vegetables. Therefore, achieving efficient, sustainable, high‑quality development hinges on intensifying strategic adjustments to the industrial structure. Furthermore, as measures to address seed and arable‑land issues are progressively implemented, the structure of the planting sector will be further optimized. Consequently, the pesticide industry must align with these changes and inevitably accelerate its own structural transformation.

2. By emphasizing the need to “resolve the issues of seeds and arable land,” this will spur the rise of green agriculture, promote the ecological transformation of agrochemicals, and usher in a peak period of development for green pesticides.

At present, China’s irrigation coverage stands at only 40%, far below the 80% or higher levels seen in developed countries, resulting in significant waste of water resources. Experts point out that, during an era emphasizing grain production, although China has achieved sustained increases in output over many years, this growth has come at the cost of environmental degradation. Consequently, only by winning the tough battle against pollution and ensuring ecological security—while simultaneously addressing the critical issues of seeds and arable land—and by advancing the industrial application of biotechnological breeding can China’s food security be truly and reliably safeguarded. This also sets a clear direction for the development of China’s agrochemical sector: to produce pesticides that are efficient, safe, economical, and environmentally friendly. Internationally, highly effective, low‑toxicity, and ecologically compatible pesticides have become key research priorities. For example, azadirachtin—a key active ingredient in plant‑based pesticide formulations—is widely recognized as a green pesticide with distinct competitive advantages. According to statistics, China’s pesticide utilization rate reached 39.8% in 2019 and is expected to hit 40% in 2020. However, compared with advanced agricultural nations, the average amount of pesticide applied per hectare in domestic grain production remains relatively high, while the actual utilization rate falls short of 40%. The same holds true for chemical fertilizers; unabsorbed residues from these inputs are causing severe soil contamination.

3. The agrochemical industry will accelerate the establishment of a dual-circulation development pattern; the degree of opening-up to the outside world will not be reduced, and agrochemical exports are expected to outperform this year. However, challenges remain severe, and risks persist.

In terms of pesticide exports, China recorded 1.826 million tons shipped in the first three quarters of 2020, with total export value reaching US$8.97 billion—up 14.37% and 28.77%, respectively, compared with the same period of the previous year. Export volumes for the full year 2020 are expected to surpass last year’s levels. However, it is important to recognize that the global pandemic and rising unilateral protectionism have imposed significant adverse impacts on worldwide economic development, leaving the global economic outlook subject to downside risks and ongoing trade tensions. As one of the world’s leading producers of pesticides, China has seen domestic demand decline under the policy of “zero growth” in the use of pesticides and fertilizers, inevitably leading to overcapacity. Many products must rely on exports, placing considerable pressure on Chinese exporters, with roughly half of China’s pesticide output destined for overseas markets. That said, there are also favorable factors: in 2021, the government will further refine its tax policies—adjusting VAT rates and expediting export tax rebates—while optimizing the business environment at ports and comprehensively expanding opening-up. These measures could unlock new opportunities for pesticide exports. In addition, tapping into markets along the Belt and Road Initiative and among RCEP signatory countries will create fresh sources of foreign‑trade growth; stepping up pesticide exports to these regions undoubtedly represents a promising strategy.

In addition, we must closely monitor the international economic landscape and promptly assess how domestic and global environmental changes impact China’s imports and exports. Pesticide exporters should adopt a broad‑minded perspective, align with prevailing trends, and, through diverse channels and concerted efforts, mitigate the pressure of rising costs, enhance export competitiveness, and strengthen their bargaining power in pricing. In particular, it is imperative to undertake solid, practical measures in areas such as developing new products, opening up new markets, and managing exchange‑rate risks. Well‑capitalized pesticide companies can also leverage opportunities along the Belt and Road countries and within the signatory nations of the Regional Comprehensive Economic Partnership (RCEP) to proactively expand overseas, engage in industry mergers and restructurings, and thereby advance the outward‑oriented development of China’s agrochemical sector.

4. In 2021, the overall development environment for the agrochemical industry remains favorable, and market prospects continue to be promising. Both supply and demand are expected to see significant improvements, particularly as demand-side management practices are gradually enhanced.

To effectively safeguard national food security, we must take advancing supply-side structural reform in agriculture as the central task: stabilize and optimize grain production, continuously adjust cropping patterns, vigorously promote green development, and drive high-quality growth in the planting sector. We must also enhance overall agricultural productivity, strictly protect arable land, vigorously develop farmland water conservancy infrastructure, strengthen science-and‑technology services, continually upgrade agricultural material and technological equipment, steadily increase the efficiency of pesticide use, and ensure a decline in total pesticide consumption. Furthermore, we should develop a new type of agricultural management system with farmers as the main actors, consolidate and improve policies that strengthen agriculture, benefit farmers, and enrich rural areas, and fully protect and stimulate farmers’ enthusiasm for production and operation—ensuring that farming and grain cultivation are profitable, not at a loss, and deliver tangible benefits. This, above all, constitutes the strongest support for farmers engaged in grain production. Increasing investment in agricultural infrastructure and scientific‑technological services to reduce farmers’ operating costs is tantamount to indirectly boosting direct subsidies across the board. Coupled with the continued implementation of subsidies for grain production, superior seed varieties, agricultural machinery purchases, and comprehensive agricultural inputs, along with government policies on minimum grain purchase prices and land transfer, these measures will undoubtedly serve as the fundamental driving force behind agricultural development in 2021. In addition, actively yet prudently advancing urbanization and orderly facilitating the urbanization of rural migrants will further promote rural land transfers and the emergence of large-scale farmers, various agricultural cooperatives, and integrated rural complexes. All of these efforts lay a solid foundation for China’s agricultural development and grain production in 2021, while also providing robust support for the growth of the country’s agrochemical industry. On the premise of maintaining a negative growth trend in pesticide usage, total pesticide demand in 2021 is expected to remain broadly stable; however, the quality of supply will improve significantly, and the supply‑demand structure will be refined. Products such as pesticide adjuvants, seed coatings, plant growth regulators, insecticides, and fungicides are likely to perform strongly in the market, with specialized formulations for minor crops and plant growth regulators emerging as key market highlights.

2021 Global Pesticide Industry Development Trend Forecast

1. The difficulty of pesticide innovation is increasing, and the product life cycle of pesticides is being extended.

As demands on pesticide applications continue to rise—addressing issues such as resistance, ensuring safety and environmental friendliness, improving product efficacy, and mitigating biodiversity loss—the difficulty of discovering new active ingredients has increased substantially, leading to a gradual decline in R&D efficiency and requiring more time for the development of novel products. At the same time, adopting formulation‑based improvements, such as blending existing pesticides, helps meet market needs, thereby extending the overall lifecycle of these established products.

2. Outsourcing of intermediates and active pharmaceutical ingredients is an important form of global industrial relocation.

As downstream international agrochemical giants continue to consolidate, the market for upstream intermediates and active pharmaceutical ingredients is also expected to become increasingly concentrated. Concurrent with these mergers and acquisitions among global agrochemical leaders, the number of long-term supplier relationships will decline compared with the past, enabling leading intermediates and API manufacturers to secure a greater share of orders from these major clients and steadily expand their market presence. Looking ahead, as the agrochemical industry’s value chain undergoes restructuring, domestic intermediates and API producers are poised to see further growth in their development prospects.

3. Expired patented products are market-driven.

Due to the formidable formulation distribution channels and brand advantages of global agrochemical giants, they continue to command a dominant share of the market even after patent expirations. Meanwhile, as patents expire and the number of manufacturers expands, the prices of formerly patented products are expected to decline, ushering in a phase of accelerated volume growth and broader market adoption. API and intermediate producers maintain close ties with downstream customers; following patent expirations, as downstream demand rises, the market share of these expired‑patent products is gradually increasing.

4. Strengthen regulation and oversight of the pesticide industry

In recent years, countries have imposed strict controls on the production, sale, and use of pesticide products, and have introduced restrictive measures for certain pesticides. For example, in April 2017, New Zealand issued a notice revoking the registration of several chlorothalonil‑based formulations and imposing stricter restrictions on other chlorothalonil‑containing products, requiring users to undergo professional training and certification before application. In May 2019, following a re‑evaluation of 2,4‑D, Brazil’s National Health Surveillance Agency decided to maintain the herbicide’s registration but established regulations governing application concentrations, applicator qualifications, protective equipment, buffer zone requirements, and maximum application rates, while also revising all existing maximum residue limits.

Source: China Business Industry Research Institute