Industry Overview
China’s agricultural chemical market has been the subject of great attention, and as one of the biggest agro-chemical consumers and a large agro-chemical importer.
In 2005, China’s total fertilizer production reached 48.97 million tons and pesticide production reached 1.03 million tons, with an annual growth rate of 5.7% and 20.3%, respectively. Despite this growth, domestic output of fertilizer is still not able to meet local market demand, forcing China to import high-concentration and compound fertilizers. China needs to import 20,000-30,000 tons annually of high-efficiency and low residual pesticide to supplement local products and offer greater variety. In 2005, China imported $445 million in fertilizers and $36.94 million in pesticides from the U.S., accounting for 14.60% and 20.29% of total imported fertilizers and pesticides respectively. U.S. DAP (Diammonium Phosphate) has a strong position in the China fertilizer market. In 2005, China imported $441.31 million of DAP from the U.S., accounting for 40.03% of total DAP imports. China’s goal is to rely less on fertilizer imports in the future. However, the country lacks potassium resources and its phosphate is difficult to recover. Domestic output of fertilizer still cannot meet the total market demand, forcing China to import high-concentration and compound fertilizers.
China’s accession to the WTO provides benefits to U.S. fertilizer exporters. On accession, tariffs dropped 6% from the 11% import duty rate. WTO commitments stipulate that all quotas must be fully allocated, forbidding the current practice of limiting imports by only allocating a certain portion of the quotas each year. On October 10, 2006, China’s Ministry of Commerce (MOFCOM) released the 2007 fertilizer import tariff rate quotas (TRQs). The total 2007 TRQs will be 3.3 million tons of urea imports, 6.9 million tons of diammonium phosphate (DAP) and 3.45 million tons of NPK compound fertilizers. Of the TRQs, 2.97 million tons of urea, 4.49 million tons of DAP and 2.24 million tons of NPK are for state trading while non-state trading TRQs will be 330,000 tons of urea, 2.41 million tons of DAP and 1.21 million tons of NPK. The import volumes within the quota are levied an import duty of 4%, while imports exceeding the quota are levied a duty of 50%. From the data above, we can summarize that total volume under fertilizer tariff rate quota has been much higher than the one upon China’s WTO accession. However the domestic fertilizer industry develops rapidly in recent years, most fertilizers except potassium and DAP are gradually no longer desperately depend on imports. Therefore increase in TRQ will not much fluctuate China’s fertilizer market. In 2005 China imported 71,000 tons of urea, 1.74 million tons of DAP, 2.28 million tons of NPK compound fertilizers. It is estimated that in 2006 China’s import in urea, DAP and NPK will respectively total 60,000 tons, 1.5 million tons and 1.9 million tons. We may conclude from these statistics that the final import volume actually is much lower than what TRQ allows. Therefore although China still has not fully carry out its TRQ promise upon WTO, it will not be a concern for U.S. fertilizer exporters.
In October 2006, the Tariff Policy Commission of the State Council announced a temporary reduction of the in-quota tariff rate for fertilizer from four percent to one percent, effective November 2006. It is too early to tell what effect this change may have on U.S. fertilizer exports to China. According to an expert from China Phosphate Industry Association, this reduction will not much influence the fertilizer import market due to the increase both in local fertilizer’s quality and in foreign fertilizer’s cost.
Based on the WTO commitment, from December 11, 2006 China will start to allow foreign companies to gain the right to retail and distribute fertilizers. China’s fertilizer circulation field will face more fierce competition. In the telephone interview with a U.S. fertilizer exporter, its experts held that it is a great positive move and will untie their company in China market. Fertilizer exporters should apply to MOFCOM for license to be authorized to retail and distribute fertilizer in China. It will bring more business opportunities to U.S. exporters in China. The stage is set for greater market access for U.S. suppliers; however, the appearance of non-tariff barriers and a lack of transparency in the allocation process remain a problem. In the last several years, the U.S. has held the No.1 position among pesticides exporters to China. In 2005, China’s import value of pesticides from the U.S. amounted to $36.94 million, accounting for 20.29% of total pesticide imports. U.S. pesticide exporters face foreign competition from Malaysia, France and Japan, to gain share of the limited import market in China.
In the last several years, the U.S. has held the No.1 position among pesticides exporters to China. In 2005, China’s import value of pesticides from the U.S. amounted to $36.94 million, accounting for 20.29% of total pesticide imports. U.S. pesticide exporters face foreign competition from Malaysia, France and Japan, to gain share of the limited import market in China. China is taking measures to regulate the pesticide market to prevent toxic runoff and alleviate risks of consumer poisoning. The proportion of herbicides and fungicides within pesticides production has increased. The proportion of output of the pesticides featuring high performance, low toxicity and better safety characteristics has also increased. Imports of high efficiency, low toxicity, and low residual pesticides have strong market prospects, mainly as an alternative to highly toxic Chinese pesticides.
Fertilizer
The local producers have yet to meet the growing local market
demand, especially for phosphate and potassium fertilizer, which
are limited natural resources. China still must rely on importing
fertilizers in large quantities.
- Nitrogen fertilizer
- Phosphate fertilizer
- Potash fertilizer
Pesticides
High efficiency, low toxicity pesticides have strong market
prospects. Although domestic output of pesticides satisfies local
demand in most areas, domestic production of high efficiency
herbicides, high-efficiency and low-toxicity insecticides and
fungicides cannot meet the demand both in terms of quantity and
quality. Some raw pesticides and intermediates rely on imports,
such as aniline with o-dihydroxybenzene, furphenol and
tripoly-nitrogen-chlorine dialdyl. It is imperative for China to
stop the application and production of highly-toxic pesticides,
especially organo-phosphorous biocides, since the high-toxic
pesticides take up about 36% of the country's total consumption.
- Herbicides
- Environmentally safe insecticides
- Biopesticides
- New technologically advanced pesticides
Because the Chinese government now emphasizes environmentally sound technologies, pesticides will have to meet new requirements.
Market Research Reports
The Agricultural Chemicals Market
Irrigation Market In China
Useful Websites
China Fertilizer Information Net
China Agricultural Means of Production Net
China Chemical Information Net
China National Chemical Information Center
International Fertilizer Association (IFA)
The Fertilizer Institute (TFI) (U.S.)
Key Industry Contacts
China Pesticide Industry Association
Add: Bldg.16, Anhuili Siqu, Beijing 100723
Tel: (86-10) 8488-5001
Fax: (86-10) 8488-5256
China Nitrogenous Fertilizer Industry Association
Add: No.1, Liu Pu Kang Zhong Jie, Beijing 100011
Tel: (86-10) 6200-4185
Fax: (86-10) 6236-8259
China Phosphate Fertilizer Industry Association
Add: No.1, Liu Pu Kang Zhong Jie, Beijing 100011
Tel: (86-10) 6238-2616
Fax: (86-10) 6236-8259
Major Shows/Exhibitions
8th China International Agrochemical & Crop Protection Exhibition
Date: March 21-23, 2007
Venue: Shanghai Everbright Convention and Exhibition Center,
Shanghai, China
Profile: Chemical Pesticides, Crop Protection Products and
Technology, Chemical Fertilizer and Farming Bio-engineering and
Bio-engineering Technology
Frequency: Annual
Organizers: CCPIT Sub-council of Chemical
Industry Co-organizer:
- China National Agricultural Means of Production Circulation
Association
- China Pesticide Industry Association
- China Nitrogen Fertilizer Industry Association
- China Phosphate Fertilizer Industry Association - China
Humic
Acid Industry Association
Supporters:
- China Petroleum and Chemical Industry Association
- China National Agriculture Means of Production Group
Corporation
- Institute of Plant Protection of CAAS - Institute of
Agricultural Resources and Regional Planning of CAAS
- Institute of Environnment & Sustainable Development in
Agriculture of CAAS
Contact: Mr. Sun Heying, In-bound Exhibition Department CCPIT
Sub-council of Chemical Industry
Tel: 86-10-6427-2719
Fax:86-10-6422-5384
Email: sunheying@agrochemshow.com
U.S. Commercial Service Contact Information in China
Beijing Office:
Tel: (86-10)8529-6655
Fax: (86-10)8529-6558/9
David
Gossack
Cao Yue
Shanghai Office:
Tel: (86-21)6279-7930
Fax: (86-21)6279-7639
Francis
Peters
Meredith Ludlow
Guangzhou Office:
Tel: (86-20)8667-4011
Fax: (86-20)8666-6409
Li Shuquan
Chengdu Office:
Tel: (86-28)8558-3992
Fax: (86-28)8558-3991
Chen Ling
or