Interview with Sanjiv Rana about his view on the China Pesticide Industry

January 3th,  2013


In the beginning of 2013, Agrow visited CCPIA office and shared  their opinions about China pesticide industry regarding the following hot topics: Industry consolidation, purchasing overseas companies and make itself more international, fighting against counterfeit products, developing new bio-pesticide products and finding new exporting growth point.

1. What are the current trends and direction of collaboration between the world’s top twenty companies?

A review of corporate activity in 2012 reveals that the focus of most of the licensing deals and acquisitions among the biggest agrochemical companies has been in areas generally considered peripheral to the agrochemical crop protection industry. These comprise sectors such as biopesticides, seed treatments and trait development in genetically modified crops.

While the trend has been that of collaboration agreements in seed treatments and biotechnology, corporate activity in biopesticides has been more in the form of acquisitions. With ever-tightening regulatory restrictions on pesticides and increasingly vociferous, albeit often unfounded, campaigns launched by NGOs, most of the bigger companies are showing an interest in biopesticides as a way to counter the somewhat negative perceptions associated with the crop protection industry. Bayer CropScience acquired US biopesticide company Agraquest last year and followed that with the acquisition of German company Prophyta in January this year. In September last year, Syngenta signed a deal to acquire US biopesticide company Pasteuria Bioscience, while BASF agreed to acquire US specialty products company Becker Underwood.

2. After Sanjiv’s excellent article, what opinions does Agrow have on the merger between MAI and Chemchina. What suggestions do we have for future mergers?

The ChemChina-Makhteshim Agan Industries (MAI) deal is an excellent example of two big companies coming together in an attempt to complement each other’s core strengths. ChemChina gets a broad global footprint and diverse portfolio. MAI receives a strong operational and distribution platform in the fast-growing Chinese market that could serve as a backbone for it globally. The new combined entity that is slated to emerge this year would create a domestic and global champion.

Other Chinese companies with global ambitions could easily follow a similar approach by going in for a strong collaboration with a company having an established brand globally or maybe even in another market in Europe or the Americas. The manufacturing strengths of Chinese companies could easily receive a wider distribution impetus through such a deal, making it possible to find inroads into growing markets across the world. That could go a long way in creating Chinese brands, which is stated to be one of the focus areas of state attempts at industry consolidation.

3. What aspects of Chinese agchem companies attract the attention of western media?

Chinese companies deserve praise for establishing China as the global production hub for agrochemicals. Companies in other parts of the world have realised the importance of having long-term sourcing deals with established Chinese players. The industry has suffered from negative perceptions in the areas of quality control and intellectual protection infringement. But attempts by the industry to establish a regulated manufacturing set up through product consortia and self regulation have gone some way in bringing coherence into the somewhat chaotic market place in the past. Government attempts at consolidation are bound to further increase confidence in the western world. While the likely emergence of big Chinese companies might be viewed as a threat by MNCs, the positive aspect of this would be that bigger players would attempt to play by global standards and put pressure on smaller players to abide by globally-accepted norms.

4. Seeing as Agrow has a biotech column, how does Agrow view the development of biopesticides and the problems associated with them? Do we have any suggestions for China’s development in this field?

The foremost advantage of biopesticides is that they are usually considered inherently less toxic than conventional pesticides. Moreover, they are typically target-specific and have little to no impact on non-target organisms. A third perceived benefit is that biopesticides often are effective in very small quantities and usually decompose quickly, thereby resulting in lower exposures and helping growers manage pesticide residues.

One of the main problems limiting the widespread usage of biopesticides is that to use them effectively, users need to know a great deal about managing pests. That is why the target specificity of bioinsecticides can be a handicap as well because proper identification of a target insect pest is essential and the pest problem must be accurately identified before selection of a biopesticide. The advantage of minimal residues can also be a double-edged sword as the relatively short residual activity compared with conventional pesticides implies the need for them to be applied when the pest is in its most vulnerable life stage, or else, applications may prove ineffective. Another problem is that as they are composed of living organisms, storage conditions, soil and air temperatures, and use of other chemicals can compromise their efficacy.

But in overall consideration, the environmental and “green” advantages outweigh the deficiencies, which could eventually be overcome with the enhancement of technology, especially in the areas of formulations and delivery mechanisms.

Biopesticides are likely to have a promising future in China as well. Attempts by the government as well as the industry to enhance environmental norms and restrict run off are likely to eventually incorporate biopesticides as a means of an overall sustainable agriculture.

5. Our coverage of Africa is minimal compared to other regions. Africa has plenty of land resources and has great potential for development. How does Agrow view the African market?

Africa certainly has growth potential in the medium to long term, considering the land resources available for agriculture. But the growth would most likely be limited in the short term as the market is still in its infancy as far as chemical crop protection is concerned. But quite a few big companies have realised the potential and are making investments for future returns. BASF has been setting up new offices in Africa in a bid to triple sales in the continent within four years. Arysta LifeScience also has had a specific focus on Africa ever since it acquired the South African company, Volcano, in 2008.

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