Pesticide industry research report: Food security has been valued by all countries, and the global demand for pesticides is expected to increase

First, pesticides are indispensable means of agricultural production

1. Pesticides are important for global food security

Pesticides are important means of agricultural production and are of great significance to global food security. Pesticide refers to a substance or a mixture of several substances derived from biological or other natural substances and its preparations used to prevent, eliminate or control diseases, insects, grasses and other harmful organisms that are harmful to agriculture and forestry, and to purposefully regulate the growth of plants and insects. According to categories, pesticides can be divided into crop protection pesticides and non-crop protection pesticides, of which crop protection pesticides account for about 90% of the market, and crop protection pesticides can be divided into: herbicides, fungicides, pesticides and other pesticides by use, mainly used in crop protection. As an important means to prevent diseases and pests in agricultural production, pesticides, as a rigid demand, play an important role in improving crop yield and ensuring global food security.

Pesticides play an irreplaceable role in ensuring grain yield increase and income. The use of chemical pesticides can effectively control crop diseases, insects and grass damage, which can save 30%-40% of the total agricultural crop loss for the world every year. China needs to feed 22% of the world's population with 7% of the world's arable land, and the importance of pesticides in agricultural production is more obvious. In recent years, with the emergence of many high-efficiency, low-toxicity, low-residue new pesticides, the input-output ratio of the use has reached more than 1:10, and the input-output ratio of general pesticide varieties has reached more than 1:4. According to the statistics of IHS Markit Pesticide market analysis, pesticides used in fruits and vegetables will account for 25% of the global crop pesticide market in 2020. It was followed by grain (16%), soybean (15%), corn (11%), rice (10%), cotton (5%), sugarcane (3%), rape (3%), sunflower (2%), sugar beet (1%), etc. Other crop pesticides account for 9% of the global crop pesticides market. At present, the global wheat and corn consumption and production are in a tight balance, and the global wheat production per unit area is steadily increasing, while China's wheat production per unit area is still far behind that of foreign countries. Global corn production and consumption have maintained rapid growth, and the corn sown area has continued to increase.

2. Rising global food prices are conducive to increasing the demand for pesticides

The conflict between Russia and Ukraine, a major global crop exporter, has led to a sharp rise in global food prices. Since the outbreak of COVID-19, countries have paid more attention to food security, and their food security strategies have been raised to unprecedented heights. Food prices have gradually risen since the third quarter of 2020, and the prices of CBOT wheat, corn and soybeans in field crops have all approached historic highs. Russia and Ukraine are both important crop producers and exporters. According to the statistics of the Food and Agriculture Organization of the United Nations, Russia and Ukraine will account for 1.19% and 14.49% of the world's corn exports and 18.77% and 9.09% of the world's wheat exports in 2020, respectively. Barley exports accounted for 13.07% of the world, 13.29%. Recently, affected by the Russia-Ukraine war, food prices continue to rise, the Chicago Exchange traded wheat, corn, soybean prices compared to the low in 2020 have increased by more than 100%, farmers' enthusiasm for planting grain has been greatly improved, and the improvement of planting income often drives farmers to increase investment in agricultural materials such as pesticides in the year or the next year.

The strategic position of food security is unprecedented, and food prices are easy to rise and difficult to fall, which is conducive to increasing the demand for pesticides. Russia and Ukraine crop exports occupy a pivotal position in the world, the two countries of wheat, barley, corn exports accounted for 27.86%, 26.36%, 15.68% of the world respectively, since the military conflict between Russia and Ukraine on February 24, CBOT wheat and corn prices rose 31% and 15.72%, respectively. On the one hand, Ukraine has fertile land, one of the three largest black lands in the world, accounting for more than 40%, and very high-yield grain. Ukraine's main corn producing areas are generally sown in April and harvested in September. Now it is the agricultural spring ploughing season in the northern Hemisphere. On the other hand, the sanctions imposed by some countries led by the West on Russia may affect Russia's grain exports, which will have an adverse impact on international grain prices. Due to the impact of geo-military conflicts and the COVID-19 epidemic, we believe that the consideration of food security in the next 2-3 years will be in an extremely important position, and food prices are easy to rise but difficult to fall, which greatly enhances the enthusiasm of farmers to apply pesticides, so the demand for pesticides is expected to increase in the next few years.

The global pesticide industry has a large market space, and China is the largest producer of raw drugs

1, the scale of the global pesticide market has steadily increased, and multinational companies occupy a dominant position

International agrochemical giants control the front-end research and development and terminal channels of pesticides, and Chinese enterprises have obvious advantages in processing and manufacturing. The pesticide industry chain mainly includes five links: "chemical raw material intermediates - active drugs - preparations - agriculture, forestry and animal husbandry and protection and health", in which pesticide active drugs are the active ingredients of pesticides, which are prepared by various pesticide intermediates and basic chemical products through chemical synthesis or other technologies; Preparation is based on the original drug, plus the auxiliary materials such as dispersant and co-solvent, through development, compounding, processing, production of preparation products, directly used in agricultural production. From the perspective of research, production and marketing, the pesticide industry chain can be divided into innovative drugs, generic drugs, intermediates, preparations, the highest two ends of the value chain are innovative drugs and preparations, international agrochemical giants control the front-end innovative drug research and development and terminal preparation sales channels, Chinese enterprises are in the processing and manufacturing link. International agrochemical giants bundle pesticides, seeds, fertilizers, etc., to achieve an integrated business model, generic drugs and intermediates more choose to purchase from China, India and other countries, Chinese pesticide companies mainly focus on the production of generic drugs and customized processing of intermediates, and the terminal preparation market shows a decentralized pattern.

In 2020, the global pesticide market will reach nearly 70 billion US dollars, maintaining stability and increasing. In 2020, the total sales volume of global pesticides, including non-crop pesticides, was 69.886 billion US dollars, up 2.5% year on year, of which crop pesticides sales (at the factory level) were 62.036 billion US dollars, up 2.7% year on year; Excluding the impact of inflation and exchange rate, the growth rate reached 12.9%. As the world's largest pesticide market, the depreciation of the Brazilian currency real has become the main factor affecting the global pesticide market, in addition to weather conditions, the new coronavirus epidemic and other important influencing factors. In 2020, global herbicide sales increased by 2.9% to 27.407 billion US dollars, accounting for 44.2% of the crop pesticide market, mainly due to the increase in soybean and corn planting area, as well as favorable monsoon weather conditions in India and Southeast Asia; Sales of fungicides and insecticides accounted for 27.1% and 25.3% of the crop pesticide market, respectively. Under the influence of factors such as the discovery of new products, the continuous application of new technologies in emerging markets, and the replacement of old products by advanced and environmentally friendly products, the overall market value of global plant protection products is expected to continue to increase.