Wu Guoqiang, Deputy Director of the Pesticide Testing Institute, discusses pesticides from “four dimensions.”

When it comes to pesticides, most people first think of whether agricultural products are safe and whether these chemicals leave residues on fruits and vegetables. With so many industries out there, no one can possibly explain every single one in full detail. To outsiders, the complexities of pesticides may seem easy to grasp, but even those within the field might not be entirely clear—just as construction workers building a skyscraper or residents living in an apartment complex often struggle to fully understand the real estate industry. Those who work with pesticides typically only see a small part of the bigger picture, making it far from simple to lay out the whole story. Back in the day, Kodak film, once renowned in the market, was rendered obsolete by the sudden rise of digital technology. Even Kodak’s astute management must have had an intimate understanding of the film business—but when a disruptive force emerged unexpectedly, it wiped out the entire industry, leaving nothing behind. The truth is, they never really had a complete grasp of the film sector after all.

How can we comprehensively and clearly articulate the pesticide industry, while maintaining a balanced perspective and sound judgment? From a methodological standpoint, we must first adopt a holistic, big-picture view: Where does the pesticide industry stand within the broader economic and social landscape? As the ancients said, “One cannot plan for a single region without considering the whole.” Only by grasping the larger context can we accurately assess the industry’s position. Next, we should conduct a comparative analysis—objectively benchmarking our own sector against its peers. We must avoid both blind envy of others’ achievements and the myopic belief that “our own is uniquely superior.” Such comparative scrutiny reveals both interconnections across industries and the distinctive characteristics of our own. Finally, we turn to an in-depth examination of the pesticide industry itself, drawing conclusions about its development trends and overall trajectory. Yet putting this methodology into practice proves dauntingly complex, like a tangled skein of threads—where do we even begin? How can we grasp the essence of the pesticide industry concisely yet precisely? This is a question of profound concern not only to those in the pesticide and agricultural sectors, but to society at large. If we cannot find a clear starting point, the problem remains unresolved; a knot left untied will remain just that—a tangled mess. As the old saying goes, “Grasp the overarching principle, and the details will fall into place.” I suggest leveraging four key dimensions—height, breadth, granularity, and depth—to conduct a thorough analysis, using these four guiding principles to illuminate the fundamental contours of the pesticide industry.

One of the four dimensions: height

To put it succinctly, from a broad perspective, the role of pesticides can be summarized as “three contributions and two possibilities.” First, they bolster food security. According to the Food and Agriculture Organization of the United Nations, annual global grain losses due to pests, diseases, and weeds range from 20% to 40%; without current pesticide use, these losses would double. This carries two implications: on the one hand, even with pesticides, pest and disease pressures still account for 20%–40% of yield losses—more rational and scientifically informed application could further reduce this gap; on the other hand, abandoning existing pesticides would lead to an additional 20%–40% drop in yields. With global arable land largely stable and no revolutionary breakthroughs in agricultural technology, maintaining a tight balance between supply and demand in food production will remain challenging. Abandoning current pesticides would either require a drastic reduction in population or leave everyone living in near‑famine conditions—a burden the real world cannot sustain. Reports indicate that since Sri Lanka banned fertilizers, pesticides, and herbicides last May, rice yields have fallen by 50%, large swaths of farmland have been abandoned, and food prices have soared. Ultimately, the government was forced to rescind the ban and reinstate the use of these inputs. By safeguarding food security, pesticides provide indispensable support—their most fundamental and vital function.

Second, it has facilitated the emancipation of rural labor. Weeding used to be a grueling physical task, but today it has been largely replaced by herbicides. Likewise, the control of crop‑damaging pests once relied primarily on manual labor; in some cases, such efforts were barely effective—for example, locusts, which historically inflicted the most severe damage in China: when they arrived, they obscured the sun, and when they departed, almost no harvest remained. Humanity’s struggle against locusts was long marked by hardship and despair. However, with the introduction of modern pesticides, large‑scale locust infestations have all but disappeared across the country. Pesticides have virtually eliminated the need for manual weeding and pest control, freeing agricultural workers from arduous physical labor. This not only enhanced their well‑being and boosted agricultural productivity but also increased farmers’ incomes. As fewer people are required for farming, surplus rural labor can be reallocated to industry and services, thereby indirectly accelerating national industrialization and the integration of urban and rural areas.

Third, it has strengthened public health protection. The Regulations on the Administration of Pesticides explicitly define “the prevention and control of mosquitoes, flies, cockroaches, rodents, and other harmful organisms” as falling within the scope of pesticides; such products are commonly referred to as “public‑health pesticides.” Mosquitoes, flies, cockroaches (blattodeans), and rodents pose threats to both production and daily life—harming rural areas as well as urban centers, and affecting agriculture as well as industry, commerce, and services. Collectively known as the “Four Pests,” they can even trigger outbreaks of malaria and plague, underscoring their severe impact. According to the World Health Organization’s 2021 World Malaria Report, in 2020 there were 241 million malaria cases worldwide, resulting in 627,000 deaths, with over 95% of these occurring in Africa. Since 2001, among the 663 million malaria cases that have been successfully averted, 69% were attributable to the use of insecticide‑treated bed nets, and 10% to indoor residual spraying. Additional data indicate that, between 2001 and 2010, increased deployment of insecticide‑treated bed nets prevented the deaths of 842,800 children in malaria‑endemic regions globally. The WHO has set a goal for 2020–2030 to achieve the control and elimination of malaria and other vector‑borne tropical diseases, with public‑health products playing a pivotal role in vector‑control interventions.

Pesticides have been immensely beneficial to humanity, yet they are far from perfect. Just as excessive consumption of pharmaceuticals can harm the body and overeating can lead to discomfort, improper use of pesticides can give rise to two potential consequences: first, it may compromise environmental safety; second, it may jeopardize food safety. In recent years, issues related to environmental and food safety have attracted widespread attention from the Party and the government, as well as from public opinion.

From the standpoint that pesticides are integral to food security and public well-being, it is easy to understand the following issues.

First is the issue of pesticides’ future prospects. Humans need to eat and rely on crops for sustenance, yet crops are inevitably plagued by diseases, pests, and weeds—conditions that have required the use of pesticides for a very long stretch of history. To promote their products or as a marketing ploy, some agricultural firms claim to produce entirely without pesticides, while certain localities even announce bans on chemical pesticides. Everyone has their own preferences: whether or not to apply pesticides on one’s own land is a matter of personal choice. However, foregoing pesticides would sharply reduce agricultural yields and drive up costs, making such an approach fundamentally unfeasible on a large scale. Beyond the decline in output, if herbicides were eliminated, given the current state of rural labor, could sufficient manpower be found to carry out manual weeding? Therefore, the demand for pesticides is essentially inelastic; although the mix of available formulations may need adjustment, the overall volume of pesticide use remains broadly stable.

Second, there is the issue of state‑level market regulation of pesticides. The most fundamental characteristic of a market economy is an “open” or “liberalized” economy; however, “liberalization” does not mean “abandonment.” For products that have significant societal impacts and whose unchecked release could lead to grave consequences—such as firearms and narcotics—the government continues to impose extremely stringent controls. Similarly, the misuse of pesticide products not only harms the environment and food safety but can, in extreme cases, even serve as a lethal “weapon,” as in instances of poisoning or deliberate contamination. Therefore, appropriate regulatory measures are also necessary. These measures are reflected in the pesticide registration and evaluation system, as well as in restrictions on production, marketing, and use. The pesticide registration and evaluation regime functions as a kind of “pre‑birth health check”: through preliminary review, pesticides that fail to align with national policies or pose potential adverse social consequences are denied official approval and barred from entering the market. Even those already approved may, if proven to be highly harmful in practice, be subject to “controlled use” (restricted application) or outright “life imprisonment” (prohibition of use). Although such measured regulation increases costs for producers and operators, its overall benefits to society far outweigh its drawbacks. From the perspective of corporate competition, this approach also creates a competitive moat, making it more difficult for new entrants to gain foothold in the market.

Third is the issue of public opinion surrounding pesticides. What most readily draws intense public attention? Naturally, it is matters that directly affect everyone’s daily lives. Issues that are distant from the average person and difficult to relate to seldom become hot topics in the public sphere. After all, everyone needs to eat, so they will inevitably pay close attention to what ends up on their plate. The reason pesticides command such widespread public scrutiny lies fundamentally in their very nature: their distinctive characteristics attract public interest and focus. This, of course, also underscores that the pesticide industry still has much work to do in terms of public communication and education, ensuring that society gains a deeper understanding of the sector’s progress and development.

Fourth, there is the question of whether pesticides will gradually move toward centralized procurement. Similar to human pharmaceuticals, it is both possible and realistic for pesticides to follow this path. The key factor remains that pesticides are indispensable for ensuring food security—food security being a matter of paramount national importance. The COVID‑19 pandemic and the Russia–Ukraine conflict have further reinforced the determination of policymakers and all sectors of society to keep the “grain basket” firmly in their own hands. Consequently, it will be difficult to tolerate, over the long term, sharp price spikes or supply shortages of pesticides, which are critical inputs for grain production. On the basis of providing appropriate fiscal support, the government can stabilize prices and ensure supply through centralized procurement—a relatively feasible approach. This measure will not be implemented all at once but will be rolled out gradually in select regions. While centralized procurement will bring certain benefits to the pesticide industry as a whole, its impact on individual producers will vary: companies with proprietary products, large scale, and superior quality stand to gain more, whereas smaller firms, lacking exclusive offerings, may face some adverse effects.

Dimension Four, Part Two: Width

Industry breadth refers to the scope an industry encompasses or covers, representing the room for maneuver and strategic flexibility it offers. We often say that a market economy is a competitive one: in market competition, the companies whose products sell well and capture market share thrive. On the surface, competition appears to be a contest among firms, but at its core, it is a battle for consumer demand—ultimately, the key lies in who can most accurately anticipate and meet those needs. Yet demand is never static; therefore, the heart of competition shifts to identifying and seizing emerging needs as quickly as possible, leveraging technological innovation to transform those needs into new products, capture market share, and secure success. The broader an industry’s scope, the wider its reach and influence, the more diverse the demands it must address, and the more opportunities it presents—whether one segment falters while another flourishes, or all segments perform strongly. In such cases, the industry becomes far more promising and dynamic.

The scope of the pesticide industry can be examined from two perspectives: geography and the sectors it impacts. Geographically, pesticides are used not only in rural areas but also in forested regions, pastoral zones, and urban gardens and parks. In the realm of public health, the range of applications is even broader—mosquitoes, flies, cockroaches, and rodents all require pest control measures that rely on pesticides. As the well‑known idiom goes, “a thousand‑li dike may collapse because of an ant’s nest”; controlling such small threats likewise depends on pesticides. In short, wherever there are crops, trees, or people, pesticides are indispensable. From an industry standpoint, pesticides are not confined to crop production; they are also essential for forestry, animal husbandry, the storage and transportation of agricultural products, urban landscaping, and public health care.

Macro-level analysis aims to better guide practical applications. Having broadly defined the scope of the agrochemical industry, we can examine emerging demands for pesticides by analyzing their areas of application and industry trends.

First, let’s consider the impact of urbanization on the pesticide industry. While urbanization does reduce arable land and shrink the area devoted to crop cultivation—potentially affecting the use of pesticides for agricultural crops—it is unlikely to significantly alter overall pesticide consumption, as urban landscaping and turf management also rely on pesticides. Moreover, urbanization drives demand for public‑health pesticides used to control mosquitoes, flies, and other pests. In many urban households, cockroaches, mosquitoes, flying insects, and ants seem almost indestructible—resilient and ever‑recurring—leaving residents eagerly awaiting highly effective, low‑toxicity, environmentally friendly products for pest control.

Second, there is the impact of agricultural structural adjustment on the pesticide industry. This impact is primarily structural in nature: for example, in recent years, as regions have promoted the cultivation of high-value crops such as vegetables, fruits, and traditional Chinese medicinal herbs, a structural shortage of pesticides for minor‑crop varieties has emerged. In the past two years, with the emphasis on intercropping corn and soybeans, the inadequacy of herbicide‑tolerant formulations tailored to this cropping system has become increasingly apparent. While agricultural restructuring may lead to structural shortages or surpluses of specific pesticide products, it is unlikely to have a major overall impact on the pesticide industry.

Third, there are new requirements arising from the adoption and widespread use of new technologies, innovative agricultural practices, and advanced equipment. In recent years, thanks to the government’s heightened emphasis on agriculture, these innovations have advanced rapidly—examples include facility‑based farming, drone‑based pesticide application, and integrated water‑fertilizer systems—each of which has created fresh demands for agrochemical products. Against the backdrop of an overall oversupplied market, this is set to become a key battleground for agrochemical companies: those that can better adapt to these emerging needs will enjoy stronger sales and secure a foothold in the marketplace.

Fourth, agricultural business models are imposing new requirements on pesticides. In recent years, farm‑management outsourcing services and agro‑chemical service organizations have expanded rapidly, with the primary purchasers and users of pesticides shifting from smallholder farmers to these service providers and large-scale growers. This trend is conducive to the scientific and rational use of pesticides and, overall, is unlikely to have a major impact on the pesticide industry; however, it does create new demands for pesticide distributors and for product packaging. For instance, when buyers place large, one‑off orders, the demand for bulk‑packaged pesticides increases.

Dimension Four, Part Three: Granularity

Why is the degree of market segmentation important? Consider a familiar example: in school teaching, if students’ foundational levels are fairly similar, a single lesson plan can be applied throughout, making instruction relatively straightforward. However, when students’ backgrounds vary widely, teachers must cater to different ability levels, significantly increasing the workload—and they may even need to adopt differentiated instruction. Here, homogeneity implies simplicity, while heterogeneity signals growing complexity and the need for further segmentation. Of course, education differs from industry; we use teaching as an analogy to help illustrate the concept of segmentation. Industries with low segmentation tend to be highly homogeneous, with products offering largely similar functions and benefits—for instance, the passenger‑car sector. Whether high‑end or budget‑oriented, cars differ little in core functionality; variations lie mainly in trim levels and comfort. Such industries are characterized by extremely fierce competition, with firms vying on price, marketing, and economies of scale. As a result, the market increasingly concentrates among leading, dominant players, driving rising industry concentration and giving rise to oligopolistic structures. Today, anyone who drives can name several well‑known passenger‑car manufacturers—why? Because only large, well‑known brands that have survived this brutal competition remain. By contrast, with low market segmentation, the household‑car industry features a wide array of models, but plant species are diverse, and pests, diseases, and weeds abound; each target requires a distinct type of pesticide. This reality makes the agrochemical sector highly segmented. Currently, China’s agrochemical market encompasses nearly 700 active ingredients and more than 40,000 registered products. Such extreme fragmentation fundamentally shapes the dynamics of the agrochemical industry.

First, why is the concentration in China’s pesticide industry relatively low? At present, there are roughly 1,700 pesticide manufacturers in China. Compared with the sector’s total output value, industry concentration is indeed quite low. However, given the extreme fragmentation of the pesticide market—where a handful of large firms cannot dominate the entire landscape—and the regionally distinct nature of agricultural production, which to some extent gives rise to regional markets for pesticides, the coexistence of a certain number of small and medium-sized enterprises that focus on local markets and specific product lines is inevitable. Some may counter that in the international pesticide market, several major multinational corporations have already established an oligopolistic structure; how then can we argue that excessive market fragmentation keeps industry concentration low? In fact, this is not contradictory. The logic of capital is that larger firms absorb smaller ones, gradually consolidating market power. While the extreme fragmentation of the Chinese pesticide sector may slow down the pace of such consolidation, it does not alter the underlying trend. Over the course of several centuries of capitalist development, the global pesticide market has had ample time to accumulate capital, whereas China’s market economy has only been developing for little more than four decades. Consequently, it is entirely natural that the concentration of pesticide enterprises in China remains relatively low at this stage.

Second, why have the prices of certain pesticide products surged? On the one hand, pesticides are a necessity with inelastic demand—consumers will continue to use them even when prices rise. On the other hand, the pesticide industry is highly fragmented: although there are roughly 1,700 manufacturers overall, only a handful actually produce any given product. In a lengthy production chain, a disruption at a particular stage or in a key raw material can quickly lead to supply shortages. When essential demand collides with temporary production constraints, sharp price spikes are hardly surprising. Add to this the possibility of hoarding and reluctant sales by individual firms, and the situation only worsens.

Third, why do pesticides lack well‑known brand names? In 1987, a prime‑time pesticide commercial on China Central Television left an indelible mark on those born in the 1960s and beyond: “The righteous Lufuling must kill, kill, kill the pests.” Lufuling became a household name and a cherished memory for an entire generation. By contrast, today, with the pesticide industry fully mature, not only are there no brands that have captured the public’s imagination, but many people are even unaware that pesticide products can carry brand identities. The root of the problem lies in excessive product segmentation. Back then, with fewer pesticide formulations available and rudimentary registration, evaluation, and regulatory systems, Lufuling was used to control virtually any pest, enjoying strong sales and making high‑impact advertising financially viable. Now, as the market has become highly segmented—requiring specially registered and evaluated products for each specific pest—the share of any single product is small, rendering large‑scale, high‑profile advertising no longer cost‑effective.

Fourth, why does supply still fall short of demand even in a situation of oversupply? In China, 60% to 70% of pesticides are exported, resulting in an overall surplus; however, structural shortages persist. The root cause lies in the industry’s excessive fragmentation: for major crops and their primary pests and weeds, pesticide use is high, prompting strong R&D, registration, and production activity, leading to ample supply. By contrast, for minor crops—where market size is limited—companies show weaker motivation to invest in R&D and registration, giving rise to supply constraints. Moreover, given the lengthy pesticide production chain, temporary shortages of certain raw materials can leave manufacturers unable to produce, further contributing to supply shortages for specific products.

Dimension Four: Depth

When we talk about “depth,” we are primarily referring to the level of technological research and development and its practical application within an industry. As a segment of the fine chemicals sector, the agrochemical industry is a high‑tech field with substantial depth: it is highly technology‑driven, and its value chain is typically long. The structure of the value chain essentially reflects the degree of technological sophistication; because such high levels of technology make it difficult for a single firm to master every aspect in detail, the industry relies on specialized division of labor, with each player focusing on a specific link and striving for excellence in their respective areas. Multiple firms collaborate to form a cohesive value chain. The higher the level of technological advancement, the wider the competitive moat, and the more challenging it becomes for new entrants to break into the market. By contrast, some industries—such as furniture manufacturing—while increasingly moving toward modular designs, customization, and material diversification, still maintain relatively low overall technological content, leaving entry barriers comparatively low. Agrochemicals, particularly chemical pesticides, belong to the fine chemicals sector. Developing new agrochemicals requires substantial R&D investment, lengthy timelines, and carries a low success rate; the production process is complex and spans multiple stages, while scientific and technological advances are fully integrated into every phase—evident in cutting‑edge R&D, advanced manufacturing processes, and state‑of‑the‑art materials.

First, the demand for innovation in agrochemicals is higher than in other types of chemicals. As we often emphasize, technological innovation and its application are driven by market competition: those who leverage technology to enhance production efficiency and product quality gain a more favorable position in the marketplace. This represents proactive innovation on the part of firms. However, for agrochemicals, there is also a form of passive—or even forced—innovation. When a particular active ingredient is used over an extended period, the target pests or weeds can develop resistance; as resistance continues to intensify, manufacturers must either increase application rates or switch to new formulations or novel compounds. Moreover, since agrochemicals are primarily applied to food crops and vegetables, they must not only be safe for humans and livestock but also harmless to beneficial birds and insects and environmentally sustainable, with residue levels kept as low as possible. Meanwhile, public expectations regarding food safety and environmental quality are steadily rising, further compelling innovation in this sector. Consequently, the need for innovation in agrochemicals is greater than in other chemical industries.

Second, integrated innovation and application of pesticides are becoming increasingly important. Technological innovation is the core competitive advantage of pesticide companies, yet the focus of such innovation varies across different stages. In the early days, innovation primarily centered on developing new pesticide varieties; however, it is now evident that creating novel active ingredients is growing ever more challenging. According to data from multinational corporations in 2015, discovering a single new pesticide variety requires screening tens of thousands of candidate compounds, with an average investment of $286 million and a development timeline of 11.3 years. Today, governments worldwide are imposing stricter registration and regulatory requirements on chemical pesticides, making R&D even more demanding than before. Companies must screen tens of thousands—sometimes even hundreds of thousands—of new compounds, incurring significantly higher costs and longer development periods. As a result, most conventional pesticide firms can no longer afford the expenses associated with new‑product innovation. Application‑oriented technological innovation once constituted the mainstay of pesticide R&D, aiming to expand the utility of existing products by broadening their spectrum of target pests, diseases, and weeds, while enhancing environmental compatibility and meeting specific user needs through innovations in formulation, packaging, and delivery systems. Such applied innovations are extensive and highly practical, better aligned with consumer demands, and continue to hold a meaningful market share. Looking ahead, the greatest potential for pesticide R&D will likely lie in integrated innovation—such as combining novel materials with pesticides or integrating other agricultural inputs with pesticidal technologies. The integration of nanotechnology into pesticide formulations, giving rise to “nano‑pesticides,” can enhance efficacy and efficiency, reduce application rates, and has already achieved a certain scale and momentum, with promising prospects for further advancement. Similarly, the convergence of pesticide, fertilizer, and seed technologies—known as “integrated agrochemical solutions”—addresses pressing challenges like labor shortages and rising labor costs in agriculture, while also improving the overall efficiency of these inputs. Moreover, the concept of plant health is opening up new frontiers for the integrated application of pesticides and related technologies. Just as human medicine increasingly blends treatment with preventive care, considering plant health in tandem with disease management could unlock a wealth of novel integrated applications.

Third is the agglomeration effect of industries. The industrial chain is a critical factor in modern market competition. Any enterprise’s investment and production must comprehensively address issues related to raw materials, equipment, products, the environment, and human resources: where raw materials are sourced and whether they can be utilized with minimal distance and maximum convenience; where products will be sold and whether sales can be conducted efficiently and at low cost; and how waste and wastewater will be managed—ideally achieving high efficiency at low cost, ideally turning waste into valuable resources. The industrial chain is an inevitable outcome of market competition: producing a finished product typically requires the collaborative efforts of multiple firms, with each company handling only a single stage or a small component. Such high specialization makes it easier to achieve precision and lower costs, but it also increases interdependence among enterprises. In the early days of reform and opening-up, market shortages allowed virtually any enterprise to survive; today, however, the situation has changed dramatically. Upstream and downstream firms must join forces to weather challenges and coexist through cooperation. Currently, some agrochemical companies are relocating westward; in addition to environmental considerations, the integrity of industrial clusters and supply chains has become a key issue. An incomplete industrial chain can lead to numerous hidden costs. Industrial park development provides the foundational conditions for industrial agglomeration. By bringing together related enterprises within a park, it facilitates the formation of robust supply chains and helps reduce expenses associated with environmental protection and waste management.

Fourth, it is the streamlining and application of digital processes. Digital technologies have become pervasive; in the agrochemical industry, demand research, product development, manufacturing, marketing, field application, and customer management all rely on digital tools for support or enhancement. The key to digitalization lies in the word “transformation”: turning traditional industries into smart, modern ones requires reengineering workflows, upgrading equipment, and reskilling personnel—a complex undertaking, yet one that offers numerous advantages and aligns with an overarching trend. Fundamentally, those who leverage digital transformation to bring new products that meet market needs to fruition, elevate both production safety and sales channels, and drive down production costs will gain a decisive competitive edge. Many of our agrochemical companies remain relatively small in scale and have yet to achieve a high level of digital maturity, leaving considerable room for improvement in this area.

Source: AgroPages (World Agrochemical Network)