An Analysis of the Ministry of Agriculture and Rural Affairs’ “Regulation of Pesticide Contract Manufacturing and Repackaging”

The Regulations on the Administration of Pesticides, revised on July 1, 2017, came into effect, legally recognizing contract manufacturing of pesticides and establishing a lawful framework for such activities. Under these regulations, contractors are not required to obtain registration certificates for processing or repackaging pesticides; however, they must hold a pesticide production license. This means that after obtaining a pesticide registration certificate, new‑product developers can accelerate the market launch of their products. At the same time, this arrangement enables enterprises to make full use of their production resources, leverage their technological strengths, and reduce operating costs to some extent. Nevertheless, as the contract manufacturing sector continues to expand, certain issues have gradually emerged, including product quality that fails to meet registration requirements, subpar performance in field applications, and frequent disputes between principals and contractors during the manufacturing process. By reviewing the relevant regulatory provisions governing contract manufacturing and repackaging, this paper analyzes the key challenges and proposes measures to improve the management of these activities, thereby contributing to more effective oversight of contract manufacturing and repackaging in the pesticide industry.

Regulations on the Management of Contract Manufacturing and Repackaging of Pesticides

1.1 Requirements for Participating in Pesticide Contract Manufacturing and Repackaging

1.1.1 Conditions for the Principal and the Processor in Contract Manufacturing and Repackaging

Article 19 of the Regulations on the Administration of Pesticides stipulates that, for commissioned processing or repackaging of pesticides, the commissioning party shall obtain the relevant pesticide registration certificate, and the entrusted party shall obtain a pesticide production license. Accordingly, the commissioning party engaging in commissioned processing or repackaging of pesticides may be a domestic manufacturer holding a pesticide registration certificate, a developer of a new pesticide, or an enterprise exporting pesticides to China (hereinafter referred to as “foreign enterprise”). The entrusted party must be a domestic manufacturer holding a valid production license.

1.1.2 Scope of Contract Manufacturing Products

Article 2 of the Measures for the Administration of Pesticide Production Licenses stipulates that pesticide production encompasses the manufacture of technical-grade active ingredients (parent compounds), as well as the formulation and repackaging of finished products. Accordingly, the “contract manufacturing and repackaging of pesticides” referred to in Article 19 of the Regulations on the Administration of Pesticides and Article 18 of the Measures for the Administration of Pesticide Production Licenses pertains solely to the processing and repackaging of formulated pesticide products and does not extend to technical‑grade active ingredients (parent compounds). The contract manufacturing of such active ingredients is prohibited. Pursuant to Articles 7 and 17 of the Regulations on the Administration of Pesticides, the State implements a system of pesticide registration and pesticide production licensing. Any entity seeking to produce technical‑grade active ingredients (parent compounds) within the territory of China must obtain the requisite pesticide registration certificate and production license. This point was further clarified in the Ministry of Agriculture and Rural Affairs General Office’s reply letter dated July 2021 to the Zhejiang Provincial Department of Agriculture and Rural Affairs regarding whether technical‑grade active ingredients may be produced under contract (Document No. Nong Fa Ban Han [2021] 13).

1.1.3 Scope of Processing Services That the Trustee May Accept on Entrustment

Article 18 of the Measures for the Administration of Pesticide Production Licenses stipulates that, within the scope of its pesticide production license and in accordance with Article 19 of the Regulations on the Administration of Pesticides, a pesticide manufacturer may, upon commission from new‑pesticide developers or other pesticide manufacturers, engage in the processing or repackaging of pesticides; it may also, upon commission from enterprises exporting pesticides to China, undertake the repackaging of such products. Accordingly, a commissioned enterprise may accept orders for the processing or repackaging of registered products within its licensed production scope; however, it may only undertake the repackaging of pesticides on behalf of enterprises exporting to China and may not perform the processing of those pesticides.

1.1.4 Pesticide operators shall not engage in commissioned processing or repackaging of pesticides.

Article 28 of the Regulations on the Administration of Pesticides stipulates that pesticide operators shall not engage in the processing or repackaging of pesticides, nor shall they add any substances to pesticides. They are also prohibited from purchasing or selling pesticides whose packaging and labeling do not comply with the relevant requirements, that lack a certificate of product quality inspection, or that have not obtained the requisite permits and documentation. The pertinent regulations clearly set forth the eligibility criteria for entities participating in commissioned processing; accordingly, pesticide operators may not undertake commissioned processing or repackaging of pesticides unless they hold both a pesticide registration certificate and a production license.

1.2 Quality Assurance Provider for Contract-Processed and Repackaged Pesticide Products

During the processes of contract manufacturing and repackaging, the commissioning party shall be responsible for product quality and shall monitor and track its production and sales activities. Article 19 of the Regulations on the Administration of Pesticides stipulates that the commissioning party shall bear responsibility for the quality of pesticides produced or repackaged under contract. Article 18 of the Measures for the Administration of Pesticide Production Licensing provides that pesticide manufacturers shall organize production in accordance with product quality standards and the provisions of their production licenses, ensuring that the manufactured products are consistent with the registered formulations and assuming responsibility for product quality; Article 19 further requires that pesticide manufacturers submit, within fifteen days after the end of each quarter, the previous quarter’s production and sales data to the pesticide management information platform designated by the Ministry of Agriculture. For pesticides subject to contract manufacturing or repackaging, the reporting obligation rests with the commissioning party.

1.3 Labeling Requirements for Contract-Processed Products

Article 8 of the Measures for the Administration of Pesticide Labels and Instructions stipulates that pesticide product labels shall indicate the name and contact information of the holder of the pesticide registration certificate. Article 9 provides that, for pesticides manufactured or repackaged under contract, the label must also specify the contractor’s pesticide production license number, the contractor’s name and contact information, and the date of manufacturing or repackaging. Accordingly, products manufactured or repackaged on a contractual basis shall, in accordance with the requirements of the Labeling Management Measures, display both the consignor’s and the contractor’s information.

1.4 Provisions on Penalties for Illegally Undertaking Pesticide Contract Manufacturing or Repackaging

1.4.1 Provisions on Penalties for Client Violations

Pesticides subject to contract manufacturing or repackaging must obtain a pesticide registration certificate within the territory of China. Article 44 of the Regulations on the Administration of Pesticides stipulates that pesticides produced by enterprises without a pesticide registration certificate shall be treated as counterfeit pesticides. Accordingly, if the commissioning party engages in contract manufacturing without holding a pesticide registration certificate, the resulting contracted‑manufactured or repackaged products shall be deemed counterfeit pesticides. If, however, the contracted‑manufactured or repackaged products have obtained a pesticide registration certificate in China but fail to meet the relevant quality standards for pesticide products, they shall, pursuant to Article 45 of the Regulations on the Administration of Pesticides, be classified as substandard pesticides.

1.4.2 Provisions on Penalties for Trustees’ Violations

Article 52 of the Regulations on the Administration of Pesticides stipulates that if a party entrusts a contractor without a pesticide production license to process or repackage pesticides, or if it entrusts such a contractor to process or repackage counterfeit or substandard pesticides, both the principal and the contractor shall be subject to penalties in accordance with the provisions applicable to the production of pesticides without a production license or to the production of counterfeit or substandard pesticides. Article 24 of the Measures for the Administration of Pesticide Production License provides that if a party entrusts an enterprise holding a pesticide production license to process or repackage pesticides beyond the scope authorized by its license, such conduct shall be treated as if no production license had been obtained.

Basic Information on Contract Manufacturing and Repackaging of Pesticides

2.1 Forms of Pesticide Contract Manufacturing and Repackaging Activities

Pesticide contract manufacturing and repackaging activities primarily take place among domestic group‑affiliated entities, between different domestic enterprises, and between Chinese exporters of pesticides and domestic firms, and typically manifest in the following forms.

2.1.1 Forms of Representation of Pesticide Contract Manufacturing Activities

Depending on the method of raw material procurement, processing can be categorized into fully commissioned processing and partially commissioned processing.

A fully entrusted processing arrangement refers to a situation in which the commissioning party provides the product’s formulation and production process, while the entrusted party procures all raw materials, auxiliary materials, packaging materials, and other inputs. The entrusted party then manufactures the product in accordance with the commissioning party’s specifications and delivers a finished product that meets the commissioning party’s quality standards.

Certain consignment processing arrangements involve the consignor providing the product’s formulation and production processes, while the raw materials, auxiliary materials, and packaging materials are sourced and supplied jointly by both parties. The contract manufacturer then produces the product in accordance with the consignor’s specifications and delivers a finished product that meets the consignor’s quality standards.

2.1.2 Forms of Pesticide Repackaging Activities

Pesticide repackaging activities are primarily concentrated among companies that export pesticides to China. Foreign firms export bulk‑packaged products to China and entrust domestic enterprises with the requisite qualifications to carry out repackaging; additionally, some domestic companies also commission qualified entities in the sales destination to perform repackaging.

2.2 Major Issues in the Contract Manufacturing and Repackaging of Pesticides

2.2.1 Some enterprises have inadequate management systems, and product quality control is lax.

Pesticide formulation companies generally exhibit relatively low levels of production management. In particular, smaller enterprises often have inadequate quality management systems, with incomplete policies and procedures governing raw material procurement and usage, supplier management, and other critical areas. Their production facilities are comparatively outdated, and their managerial staff typically lack the requisite expertise, resulting in insufficient adherence to applicable regulations. Furthermore, the commissioning party’s lack of effective oversight over the contract manufacturer further compromises product quality assurance.

2.2.2 Some enterprises have a weak legal awareness, resulting in ineffective oversight of commissioned collaborations.

The forms of contract manufacturing and repackaging are diverse and complex, ranging from full‑process outsourcing to the outsourcing of only certain production stages. Some enterprises prioritize market considerations over management, exhibit weak legal awareness, and either fail to enter into formal cooperation agreements or draft contracts with incomplete provisions. They do not adequately address issues such as product quality, production volumes, “remaining‑stock items,” and sales authorization, relying excessively on trust as the foundation of their partnerships. In some cases, this even leads to secondary subcontracting after the initial contract is executed. With unclear delineations of rights and responsibilities between the principal and the contractor, disputes and problems are prone to arise.

2.2.3 There are numerous quality issues with contract-manufactured products, posing significant challenges for law enforcement.

The Regulations on the Administration of Pesticides and their accompanying rules set forth clear penalties for illegal practices such as commissioned processing and repackaging of pesticides, stipulating that the commissioning party bears primary responsibility for product quality. However, in market supervision, authorities frequently encounter situations where enterprises pass the buck, destroy evidence, or evade accountability, and there are even cases of illegally commissioned‑processed products. According to data released in the “Notice from the General Office of the Ministry of Agriculture and Rural Affairs on the Results of the 2021 Pesticide Supervisory Sampling,” among 23 repackaged products originating from overseas, all were found to be compliant; meanwhile, of 1,164 domestically commissioned‑processed products, 1,116 passed inspection, yielding a compliance rate of 95.9%—4.1 percentage points lower than that of repackaged products. Of the 1,164 commissioned‑processed products, 52 were identified by the labeled manufacturers as counterfeit; furthermore, among the 48 non‑compliant products, more than half were likewise determined by the labeled manufacturers to be counterfeit. Data analysis indicates that commissioned‑processed products exhibit significantly more problems than repackaged ones, primarily because this form of inter‑enterprise market activity is often conducted in an unregulated manner, making it difficult to gather evidence on problematic products during oversight and resulting in low enforcement efficiency.

2.2.4 Enterprises’ lack of integrity undermines industrial development.

For the purpose of product protection, the commissioning party often refrains from providing its proprietary formulation during contract manufacturing and instead relies on the contractor’s formulation. This practice may lead to a decline in product quality or even result in products that fail to meet the registered specifications. Furthermore, some contractors, after the termination of the collaboration, continue to manufacture products using the commissioning party’s formulation or disclose it without authorization, thereby infringing upon the commissioning party’s legitimate rights and interests and potentially triggering legal disputes with serious consequences. In addition, the development of an integrity‑building framework within the agrochemical industry remains lagging; enterprises generally lack a strong sense of integrity, and trust among firms is relatively low, which to some extent constrains the sector’s rapid growth.

Regulatory Recommendations for Contract Manufacturing of Pesticides

3.1 Refine the relevant management regulations for commissioned processing and repackaging.

Conduct a comprehensive survey of the key issues associated with contract manufacturing and repackaging in the industry, solicit input from all stakeholders, and put forward practical, actionable management recommendations. Refine and improve relevant regulatory provisions, further clarifying the allocation of responsibilities and the modalities of cooperation between the contracting parties. For example, explicitly define the scope of pesticide contract manufacturing, prohibit the outsourcing of active‑ingredient production, and ban sub‑contracting by the contracted party; require both the principal and the contractor to enter into formal contracts for contract manufacturing or repackaging, detailing obligations related to raw material procurement, label and packaging printing, production and sales record‑keeping, and product quality inspection; and introduce corresponding penalty provisions for violations of these requirements. Such measures will help better regulate corporate contracting practices, ensure the quality and safety of pesticide products, and foster faster, higher‑quality development of the pesticide industry.

3.2 Expedite the formulation of regulatory standards for the contract manufacturing and repackaging of pesticides.

In light of the current state of pesticide contract manufacturing and repackaging, experts have, based on in-depth industry research, developed standardized documents—including guidelines for pesticide contract manufacturing and repackaging—that provide detailed provisions and clarifications on such matters as the fundamental principles governing contracted operations, the scope of products covered, qualification requirements, preliminary preparations and contract execution, material handover, requirements for commissioned processing or repackaging, product acceptance and transfer, follow-up services, and confidentiality. These measures are intended to facilitate enterprises in conducting related contracted activities and to standardize practices in pesticide contract manufacturing and repackaging.

3.3 Guiding Enterprises to Enhance the Level of Their Quality Control Systems

Organizations should guide manufacturing enterprises in upgrading and replacing production equipment, enhancing energy efficiency, advancing the intelligentization of manufacturing processes, actively promoting energy conservation and emissions reduction, and accelerating the green transformation of the industry. Furthermore, it is essential to refine internal quality‑control systems, establish an early‑warning mechanism for product quality and safety, mitigate related risks, expand supporting testing infrastructure, raise pesticide‑product quality standards, and strengthen quality‑inspection management—ensuring scientific oversight and precise risk prevention—to foster high‑quality development of the pesticide industry.

3.4 Gradually improve the enterprise integrity system.

On December 25, 2014, the Ministry of Agriculture issued the “Guiding Opinions of the Ministry of Agriculture on Accelerating the Development of a Credit System for Agricultural Product Quality and Safety.” Since then, local authorities have actively explored ways to build such credit systems. Beginning in 2016, the China Pesticide Development and Application Association has conducted credit assessments of entities engaged in the production and marketing of pesticides, establishing and refining credit profiles for these operators. Currently, the system registers 462 enterprises; however, compared with the roughly 2,000 domestic pesticide manufacturers and more than 300,000 business entities in the sector, the scope of coverage still requires further expansion. Efforts should be made to encourage broader participation, increase publicity for trustworthy enterprises, and enable them to reap benefits in areas such as product sales, brand development, and public recognition. At the same time, non‑compliant and untrustworthy entities should be publicly disclosed, providing crucial reference information for collaborative relationships between principals and agents.

3.5 Strengthen training and guidance for enterprises and law enforcement agencies

Relevant laws and regulations on pesticides set forth provisions regarding the entities engaged in contract manufacturing and repackaging, the responsibilities of all parties involved, and product quality control. By leveraging various channels—such as social media platforms, online training programs, and on-site observation sessions—efforts should be intensified to disseminate and enforce the legal requirements governing contract manufacturing, thereby guiding enterprises to conduct their operations in compliance and fostering their awareness of the need to standardize such practices. At the same time, agricultural law enforcement personnel should receive enhanced training on applicable legal provisions, ensuring they are thoroughly familiar with the relevant statutes and regulations; moreover, case‑by‑case analysis of typical examples should be strengthened to improve their capacity to handle violations of contract‑manufacturing rules in accordance with the law.

3.6 Strengthening Regulatory Oversight of Pesticide Contract Manufacturing Products

Strengthen targeted inspections of contract‑manufactured and repackaged products by making such products a key focus of annual pesticide supervision and sampling. Compile a list of enterprises that have repeatedly exhibited serious compliance issues in past supervisory inspections, designate them as “blacklist” entities, and impose enhanced process‑based oversight. Severely crack down on illegal and non‑compliant contract‑manufacturing practices to foster a sound and orderly pesticide production environment.

Source: Pesticide Science and Management, Issue 9, 2022

Author : Pesticide Inspection Institute, Ministry of Agriculture and Rural Affairs Yuan Jianli Liu Liang* Zheng Zuntao Li Kaixuan