The Impact of Ongoing Safety and Environmental Rectification Efforts on the Development of Jiangsu’s Pesticide Industry, along with Policy Recommendations

Pesticides are essential agricultural inputs, and the development of the pesticide industry plays a crucial role in ensuring food security and the safe, reliable supply of agricultural products. In recent years, a series of safety and environmental incidents have occurred, generating profoundly negative social repercussions and placing “safety” and “environmental protection” squarely at the center of public scrutiny. Against the backdrop of Jiangsu Province’s efforts to upgrade and rectify its chemical industry in terms of safety and environmental protection, this paper analyzes the impact of relevant policies on the development of Jiangsu’s pesticide sector and offers recommendations for the industry’s evolution under the new circumstances.

1. Ongoing pressure on safety and environmental remediation is reshaping the pesticide industry’s landscape.

Safety and environmental protection issues are inextricably linked to chemical production; they represent both a red line and an absolute bottom line. A series of high-profile safety and environmental incidents have sounded the alarm across industries, delivering wave after wave of shocks to Jiangsu Province’s agrochemical sector.

1.1 Stricter Safety and Environmental Protection Policies

During the 13th Five-Year Plan period, Jiangsu Province successively introduced a series of policies on safety and environmental protection. In 2016, the Jiangsu Provincial Government issued the “Implementation Opinions on Deepening the Transformation and Development of the Province’s Chemical Industry,” publishing a list of industries subject to structural adjustment restrictions and phase-out measures. It mandated the immediate elimination of outdated production capacity posing significant safety risks or causing severe environmental pollution, and explicitly stipulated that “the construction of new or expanded facilities producing highly toxic, highly persistent, or environmentally harmful pesticide active ingredients is prohibited; in principle, no additional pesticide active ingredient production capacity (for chemically synthesized enterprises) shall be approved.” In 2017, the General Office of the Provincial Government issued the “Notice on Launching a Special Rectification Campaign—‘Four Batches’—for Chemical Enterprises Across the Province,” marking the first time that chemical enterprises failing to meet safety and environmental standards were subjected to categorized treatment. In 2018, the General Offices of the Provincial Party Committee and the Provincial Government jointly promulgated the “Implementation Opinions on Accelerating the Transformation, Upgrading, and High-Quality Development of the Province’s Chemical, Steel, Coal, and Power Sectors,” establishing the “Three ‘Absolutely No’” principle and tightening approval procedures for chemical parks and projects, while simultaneously advancing comprehensive VOCs control and the issuance of pollutant discharge permits for chemical enterprises. Following the March 21 explosion in Xiangshui, in April 2019, the Jiangsu Provincial Party Committee and the Provincial Government issued the “Jiangsu Province Plan for the Safety and Environmental Remediation and Upgrading of the Chemical Industry,” setting higher standards for workplace safety and environmental management, conducting a thorough survey and assessment of all chemical producers and chemical parks (concentration zones) across the province, and formulating tailored remediation plans—“one plan per enterprise” and “one plan per park.”

1.2 Intensified Efforts in Special Rectification Campaigns

Jiangsu Province has taken safety and environmental protection as key priorities, launching intensive special campaigns to reduce chemical production under the “263” initiative, implement the “Four Batches” program for chemical enterprises, address hazardous chemicals, and tackle small-scale chemical operations, thereby vigorously advancing the transformation and upgrading of the province’s chemical industry. Following the March 21 explosion in Xiangshui, General Secretary Xi Jinping personally oversaw the response, and the State Council dispatched a special supervisory team to Jiangsu to conduct targeted oversight of workplace safety, effectively providing tailored guidance to the province’s safety efforts. In April 2020, the General Secretary instructed that, upon completing this focused effort, Jiangsu should continue its specialized safety rectification in line with the national three-year action plan, maintaining unwavering commitment until the set objectives are achieved. In 2019, the provincial plan for enhancing safety and environmental standards in the chemical sector covered 4,022 chemical production enterprises, with plans to close or phase out 1,431 facilities and to shut down or revoke the designation of nine chemical parks (or concentrated zones). The scale of these measures was substantial (Figure 1). By the end of 2020, Jiangsu had fully accomplished its closure and exit targets, and the number of provincially recognized chemical parks (and concentrated zones) had been reduced to 29—14 chemical parks and 15 chemical concentration zones.

Figure 1: Classification and Disposal of Chemical Production Enterprises in Jiangsu Province Included in the Remediation Scope in 2019

1.3 Reshaping the Landscape of the Pesticide Industry

Jiangsu’s agrochemical industry originated in the 1950s and has enjoyed a generally solid industrial foundation. In 2017, the new Regulations on the Administration of Agrochemicals were promulgated and implemented, introducing a system of registration, production licensing, and business authorization for agrochemicals, which further standardized market order and fostered the sector’s sound development. Influenced by adjustments to the agricultural supply-side structure and by policies emphasizing safety and environmental protection, Jiangsu’s agrochemical industry is undergoing profound structural shifts, with a new landscape gradually taking shape.

1.3.1 Increased Efforts in Corporate Restructuring and Integration

As of the end of 2020, Jiangsu Province had 217 pesticide-producing enterprises (including those holding production licenses issued by the former Ministry of Industry and Information Technology and the former General Administration of Quality Supervision), of which 33 were engaged solely in the synthesis of active ingredients, and 91 both synthesized active ingredients and formulated finished products. The rate of enterprises located within designated industrial parks was approximately 70%. Eighty percent of the province’s pesticide producers were concentrated in the Nantong, Lianyungang, Yancheng, and Xuzhou regions, with Nantong accounting for roughly 20% of the total. Affected by environmental inspection‑driven rectification and the upgrading of the chemical industry, some pesticide firms were forced to shut down or suspend production for compliance upgrades, leaving them in a state of non‑normal operations. Coupled with the impact of the COVID‑19 pandemic, both output and sales value declined significantly. Rising safety and environmental standards, along with stricter market access requirements, have led to pronounced polarization among enterprises: large‑scale firms with well‑equipped safety and environmental protection facilities have seen their competitive advantages strengthened, fully unleashed production capacity, and markedly improved profitability; by contrast, small‑scale operators with outdated equipment face further shrinking survival prospects and are compelled to seek resource reallocation and restructuring through partnerships with larger companies. By the end of 2020, eight enterprises in the province had completed “two disconnections and three cleanups,” 81 had transferred their pesticide registration certificates, and seven had voluntarily surrendered their production licenses. It is anticipated that over the next two years, the number of pesticide producers in Jiangsu will continue to decline.

1.3.2 The market share of highly toxic pesticides has sharply declined.

As the principles of safety and environmental protection continue to gain traction, higher standards are being set for the bio‑rationality and environmental compatibility of pesticides. Regulatory authorities at all levels have steadily tightened controls on highly toxic pesticides, and Jiangsu Province is advancing the phased withdrawal of such products in an orderly manner. By the end of 2020, the province had a total of 6,484 pesticide registration certificates, accounting for approximately 15.5% of the national total. Among these, 197 were for highly toxic pesticides, representing about 3.0% of all registrations, covering 14 highly toxic active ingredients: five rodenticides, eight highly toxic chemical pesticides, and one highly toxic bio‑based pesticide. With the exception of rodenticides, no new registrations for highly toxic pesticides have been granted for the past decade. There are now 21 manufacturing enterprises in the province holding registrations for highly toxic pesticides, accounting for less than 10% of the total—down roughly 30% from 2000. During the 13th Five-Year Plan period, the production volume of highly toxic pesticides declined year by year, falling from 12,553 tons in 2016 to 2,162 tons in 2019—a reduction of 83%.

1.3.3 Increased R&D efforts in low-toxicity, environmentally friendly pesticides

The gradual optimization of the pesticide product mix and the orderly phase-out of highly toxic pesticides have made high‑efficacy, low‑toxicity, and low‑residue new‑generation products the primary focus of industry R&D and the prevailing trend. Pesticide manufacturers, by maintaining close collaboration with research institutes, have played a constructive role in adjusting product portfolios and translating key technologies and scientific advances into commercial applications. Between 2019 and 2020, the province registered a total of 171 new products, including 17 micro‑toxic, 145 low‑toxic, and 9 moderately toxic formulations. In 2020, preliminary review approved four new active ingredients: one chemical pesticide—tebuthiuron—and three biological pesticides—chitosan oligosaccharide, DA‑inducer, and Beauveria bassiana. Pesticide formulations continue to evolve in response to environmental and market demands, progressively shifting toward water‑based, dust‑free, and controlled‑release formats. Among the 6,484 pesticide registration certificates, 4,966 pertain to formulated products; the ratio of environmentally friendly to conventional formulations is approximately 4:1. Formulations of established products such as chlorpyrifos and abamectin have been further refined, giving rise to innovative new dosage forms like microcapsule suspensions.

1.3.4 The level of pesticide business operations is steadily improving.

Since the implementation of the pesticide‑business licensing system, Jiangsu Province has issued more than 20,000 pesticide‑business licenses, including 671 licenses for restricted‑use pesticides. Over three years of intensive training and oversight, operators’ legal awareness, professional competence, and commitment to safety and environmental protection have all improved markedly, effectively reversing the previous “small, fragmented, and disorganized” state of the sector and leading to a more standardized market order. Overall, safety and environmental risks at licensed pesticide‑business entities remain relatively low, and policy impacts have been limited; however, as requirements for safe pesticide use tighten and large‑scale agricultural production expands, smaller operations with older staff, weak technical capabilities, and thin profit margins are gradually being phased out. By the end of 2020, 26 provincially issued licenses had been voluntarily revoked. Recent comprehensive inspections of the pesticide industry have also served as a wake‑up call, emphasizing that while pursuing profitability, businesses must rigorously enforce all management systems and assume full responsibility for safety and environmental protection.

2. Issues and Challenges Facing the Pesticide Industry Under a High-Pressure Regulatory Environment

2.1 Enterprises exhibit uneven performance levels and possess limited risk resilience.

Jiangsu Province is a major producer of agrochemicals, yet it has relatively few highly competitive firms, with low levels of production intensification and significant disparities in firm size and automation. With the rapid introduction of industrial policies and steadily rising entry barriers, many small and medium-sized enterprises, as well as those operating in an unregulated manner, are struggling to withstand policy‑related risks and may face elimination. Currently, about one quarter of Jiangsu’s agrochemical producers are located outside designated chemical parks, and their overall safety, environmental compliance, and management standards remain inadequate. Should industrial policies continue to tighten, these companies will be among the first to bear the brunt. Moreover, safety and environmental remediation efforts have made production halts and shutdowns commonplace, disrupting normal operations. Jiangsu also enforces stricter standards than many other provinces, which objectively increases firms’ capital expenditures and erodes their market competitiveness. Among the companies forced to suspend operations, a substantial share are active‑ingredient manufacturers, leading to tight supplies and sharp price hikes. Small enterprises find it increasingly difficult to secure raw materials, making sustained production and business operations untenable and accelerating the exit of smaller, less efficient producers.

2.2 Insufficient investment in safety and environmental protection, resulting in a low level of inherent safety.

Pesticide production, particularly the manufacture of technical-grade active ingredients, generates substantial amounts of “three wastes” (wastewater, waste gas, and solid waste). A small number of enterprises lack a strong environmental awareness and insufficiently allocate funds for pollution control, resulting in low recovery rates for raw and auxiliary materials as well as by‑products, which undermines their ability to consistently meet regulatory standards. Pesticide manufacturing involves high‑risk processes such as nitration, chlorination, and hydrogenation, and utilizes hazardous chemicals like phosgene, chlorine, trichloroethane, and sodium cyanide. Among pesticide producers, 50% fall under the category of facilities classified as “two key areas and one major hazard,” meaning they handle significant quantities of dangerous substances. However, smaller firms tend to manage these hazards less rigorously than larger enterprises, with inadequate implementation of established safety protocols. According to recent surveys, most pesticide manufacturers have gradually increased their investments in safety and environmental protection; large companies now spend over RMB 60 million annually on these areas. Nevertheless, some enterprises remain reluctant to invest or carry out incomplete upgrades, leaving them still short of achieving the goal of intrinsic safety.

2.3 Insufficient innovation capability and severe product homogenization

Developing new pesticide varieties is highly challenging and demands substantial technical expertise and R&D investment. At present, Jiangsu Province’s pesticide portfolio is dominated by generic products; even major companies allocate less than 2% to 5% of their annual sales revenue to the research and development of new formulations, while the vast majority of small and medium-sized enterprises invest an even smaller share. Each year, companies file applications for the same active ingredients in 60% to 70% of cases, leading to redundant production of identical products and a lack of variety‑ and technology‑driven innovation. Consequently, biopesticides, environmentally friendly formulations, and truly novel compounds remain scarce. Among Jiangsu’s 6,484 pesticide registration certificates, there are only 35 registrations for glyphosate technical grade and 247 for imidacloprid formulations; meanwhile, as many as 971 registrations include active ingredients such as imidacloprid, carbendazim, abamectin, glyphosate, and acetochlor—accounting for roughly 15% of the total. This results in excessive duplication of testing and significant resource waste. Pesticide formulations are still largely confined to traditional types like emulsifiable concentrates and dusts, with eco‑friendly formats such as water‑based or granular formulations accounting for a relatively small share. Moreover, most formulated products are low‑end, low‑value‑added, lacking diversity and featuring a limited range of brands.

2.4 Operating conditions have been somewhat volatile, and the quality of personnel remains to be improved.

Based on pesticide‑regulation oversight over the past three years, some licensed retail outlets have been found to unilaterally alter their operating conditions: arbitrarily reducing the size of their sales premises, co‑locating storage and sales areas, and failing to adequately implement traceability‑management systems. In terms of safety and environmental protection, fire‑extinguisher provisions are inadequate or not subjected to timely annual inspections, and packaging‑waste‑collection equipment has become little more than a decorative item, failing to serve its intended purpose. Moreover, most such outlets are family‑run, with an aging workforce: individuals aged 50 or older account for more than 70% of staff, while those with primary‑school education or lower comprise 25%, those with junior‑high school education make up 44%, and those with senior‑high school education (including vocational secondary schools) represent 31%. Overall, the professional competence of operators is low, their ability to provide sound guidance on safe and rational pesticide use is weak, and instances of improper advice and indiscriminate product recommendations occur frequently, thereby increasing risks associated with the safe application of pesticides. As first‑tier agrochemical distributors continue to expand and specialized cooperative organizations grow rapidly, the operating space for these small‑scale pesticide retailers is likely to be further squeezed.

3. Policy Recommendations for the Development of the Pesticide Industry in the New Context

Safety and environmental protection policies have significantly impacted the agrochemical industry, yet they have also created substantial opportunities. Against the backdrop of ongoing efforts to enhance safety and environmental standards in the chemical sector, it is essential to further emancipate our minds, seize new opportunities amid crises, and forge new pathways amid changing circumstances. By carefully balancing five key sets of relationships, we must capitalize on these opportunities, strengthen foundational capabilities, and wholeheartedly advance the high-quality development of Jiangsu’s agrochemical industry.

3.1 Balancing the Relationship Between “Destruction” and “Construction”

Only by breaking the old can we build the new; without breaking, there is no building. Phasing out outdated production capacity and fostering an agrochemical industry that is intensive, large-scale, specialized, and distinctive is the only path for agrochemical firms to grow stronger and larger. As safety and environmental protection policies tighten, pesticide companies with numerous hidden risks and low technological standards will inevitably face existential challenges, causing short-term pain across the entire sector. However, in the long run, after several rounds of rectification, the current industry’s disorder will gradually be dismantled, leaving behind enterprises with brighter prospects that can secure a firmer foothold in the market. Guided by industrial policy, we must squeeze the survival space of lagging firms, while empowering technologically advanced, well‑structured, and agile companies to lead industry consolidation. We should encourage mergers and reorganizations to optimize resource allocation, establish robust supply‑chain partnerships, and promote long‑term, stable collaborations between active‑ingredient producers and formulation manufacturers, forming strategic alliances to further enhance the international competitiveness of Jiangsu’s agrochemical enterprises.

3.2 Balancing the Relationship Between Supply and Demand

Pesticide production must align with agricultural needs. Since 2015, China’s economy has entered a new normal, and supply-side structural reform has remained the overarching principle guiding all economic activities. To strengthen Jiangsu’s pesticide industry, it is essential to strike a balance between supply and demand, remain firmly guided by supply-side structural reform, proactively embrace change, and prioritize innovation. This involves gradually adjusting market strategies, optimizing product portfolios, and actively adapting to the demands of modern agriculture. Enterprises should align themselves with the broader goal of enhancing the quality and safety of agricultural products, firmly committing to green development and reduced‑use approaches. They should continue to increase investment in innovative pesticide R&D, fully leverage the strengths of industry–university–research collaboration, and focus on developing highly efficient, low‑toxicity, environmentally friendly new pesticides, thereby continuously bolstering brand competitiveness. At the same time, pesticide companies should be encouraged to accelerate technological breakthroughs in areas such as clean production, key enabling technologies, novel application methods, and standardized protocols, with a view to establishing a distinctive provincial system for innovative development in the pesticide sector.

3.3 Balancing the Relationship Between “Addition” and “Subtraction”

More registered products are not necessarily better, nor is a broader production scope always advantageous. Only by building on existing strengths—continuously enhancing the market competitiveness of core products and phasing out clearly outdated manufacturing processes—can companies secure long-term growth in the industry. API manufacturers should fully tap the production potential of their existing facilities, leveraging technological upgrades and process innovations to steadily improve the market competitiveness and share of established products. They should conduct thorough feasibility studies before developing products whose patents have expired, adopting a prudent approach to avoid blind rushes and redundant investments. Formulation companies, meanwhile, must demonstrate foresight and innovation, addressing key challenges such as hazardous solvents in emulsifiable concentrates and dust generation in powder formulations. They should drive the agrochemical formulation sector toward greater environmental sustainability, enhanced functionality, and intelligent solutions, while exploring new applications and usage methods for legacy products, conducting trials, and expanding their registration to cover new crops, novel targets, and innovative application techniques, thereby broadening their scope of use.

3.4 Balancing the Relationship Between “Points” and “Areas”

As the structure of crop production is adjusted and market demand continues to evolve, a specialized, large-scale model for pesticide distribution is becoming the industry’s prevailing trend. Upgrading and standardizing retail outlets should follow a “point‑to‑area” approach: in cities and counties with a solid foundation, pilot efforts should be launched to establish standardized pesticide‑retail operations, regulating eligible stores in terms of premises, business practices, and technical services. Regular technical training should be provided to staff, ensuring that all personnel are certified and qualified to work. The goal is to develop a group of model outlets characterized by sound management, robust technical expertise, and high levels of public satisfaction, thereby promoting demonstrations of safe pesticide use. At the same time, a dynamic management and exit mechanism for standardized outlets should be put in place to consolidate the achievements of standardization and drive high‑quality development of pesticide‑retail operations across the province.

3.5 Balancing the Relationship Between “Delegation” and “Regulation”

The market and the government are mutually interdependent and symbiotic; the development of the agrochemical industry cannot do without the proactive participation of enterprises and the guiding role of the government. It is essential to respect market principles and the central position of enterprises, encouraging them to proactively pursue transformation and upgrading, thereby fundamentally enhancing safety and environmental standards, effectively mitigating risks associated with policy adjustments, and ensuring fair competition and natural selection within a shared “ecosystem.” At the same time, the government must fully leverage its role by strategically planning the sector’s development, strengthening policy support, further optimizing production layouts and industrial structures, and charting a new roadmap for the agrochemical industry. Continuous innovation in oversight mechanisms, the advancement of information‑based management, intensified market inspections and random sampling, enhanced inter‑agency coordination and vertical alignment, and stringent crackdowns on illegal and non‑compliant practices will help standardize the production, distribution, and use of agrochemicals, striving to achieve comprehensive, gap‑free regulation and ensuring that farmers have access to safe, reliable products.

Source: Pesticide Science and Management, Issue 5, 2021 Authors: Zhang Yu, Qiu Feng, and Sun Yi, Jiangsu Provincial Pesticide Station