China has almost ¼ of the world’s population but only about 10% of the globe’s arable land.  To make matters worse, large areas of China’s arable land are hilly, water deficient, difficult to access, far from population centers, prone to natural disasters and are of poor quality such that farming is difficult, unpredictable and costly.

Due to limited and poor quality farm land and the need to control increasingly serious land degradation and pest and disease problems, agricultural chemicals such as fertilizers, biocides and bio-regulators are used liberally in many parts of China to help enhance productivity.

China is the world’s leading agricultural producer and the largest user of agricultural chemicals.  The Chinese government is seriously concerned with the negative impacts of inefficient, overuse and abuse of chemicals in agriculture.  These include environmental pollution and degradation; spread of chemical-resistant pests, diseases and weeds; rising farm input costs; and trade, food safety and biodiversity problems.

A major contributor to China’s inefficient and harmful use of agricultural chemicals is the lack of education and enforcement.  Safe, efficient and sustainable use of chemicals is now a top priority in China's agriculture. 

Fertilizers

China’s fertilizer industry is growing at a rate of more than 5 % annually.

China produces more than 30 million tonnes of fertilizers a year but lacks quality and high efficiency fertilizers.  Twenty percent of China’s fertilizer requirements is imported.  High concentration and compound fertilizers are mainly imported from US.  Other import countries include Russia, Canada, Ukraine, Middle East and northern Europe.  Urea is usually sourced from Russia, Ukraine and the Middle East, and potassium fertilizers from Russia and Canada.

Chinese manufactured fertilizers are mostly of poor quality and are low in nutrient concentration and contain few compound fertilizers. Compound fertilizers only account for 10% of total fertilizer production in China.  The average nutrient content of local fertilizer is well below that required for efficient and modern agricultural production

China also has limited phosphate and potash resources and will depend on import to satisfy demand.

The present use of fertilizers per area of farm land in China is low compared to the advanced agricultural countries.  According to USDA reports, Chinese farmers use only about 300 kg of fertilizer per hectare and yield about 4.3 tonnes of crops per hectare.  In comparison, developed nations such as Germany and Japan use an average of 700 kg of fertilizers per hectare of land to produce about 6 tonnes of crops.

Given the limited and shrinking farm land available, Chinese farmers will be looking to use greater quantities of better quality fertilizers to increase productivity.

Value of the Fertilizer Market in China
	USD Millions
	2001	2002	2003
Market Size	8,963	9,531	10,169
Local Production	7,767	8,544	9,398
Exports	391	473	572
Imports	1,587	1,460	1,343
STAT-USDA, 2002

Biocides

Food poisoning as a result of biocide contamination, particularly with fruit and vegetables is a serious problem in China.  Improper use of biocides and plant growth regulators not only poses serious problems to public health, but also to China’s agrifood export drive.

Chinese agrifood products are often banned in overseas countries due to chemical, disease and pest contamination and violation of the maximum residue limits set by importing countries, causing significant reputation and economic losses to China.

China has framed new laws and regulations regarding the proper use of agricultural chemicals and encourages the use of high efficiency, low residue biocides.  Most of these biocides will have to be imported in the short and medium term as China lacks the capability to produce sufficient high efficiency, low residue biocides.

The agrochemical industry is considered by the Chinese government to be a strategic and pillar industry that has national security implications and is therefore strictly controlled and regulated.

The state owned China National Chemicals Import and Export Corporation (SINOCHEM) and China National Agricultural Means of Production Group Corp. (CNAMPGC) and their subsidiaries and partners are currently the only companies approved to handle the import and export and the distribution of fertilizers and biocides in China.  This situation will change as China implements its WTO obligations.

Value of the Pesticide Market in China
	USD Millions
	2001	2002	2003
Market Size	2,327	2,487	2,652
Local Production	2,711	2,982	3,280
Exports	549	659	791
Imports	165	164	163
STAT-USDA, 2002

	Import of fertilizers and biocides
	Import of ingredients for the manufacture of high efficiency compound fertilizers
	Import of ingredients for the manufacture of high efficiency, low residue biocides
	Import of advanced technology for the manufacture of high efficiency agricultural chemicals
	Co-operation to manufacture high efficiency agricultural chemicals in China

Keys Needed to Develop and Capture Business Opportunities in China