China agriculture investment bimonthly report


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Agriculture is very important for China, as China has less than 10% global tilled land and
has to feed over 20% global population. Threatened by reducing tilled land and water
resources as well as increasing demand, the food security has become more and more
important. Thus, pesticide, fertilizers and feeds which can greatly improve production
efficiency of agriculture have great market potential in China now and in the future.

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China agriculture investment bimonthly report

  1. 1. China Agriculture Investment Bimonthly ReportCopyright © CCM International Limited
  2. 2. China Agriculture Investment Bimonthly ReportA griculture is very important for China, as China has less than 10% global tilled land and has to feed over 20% global population. Threatened by reducing tilled land and waterresources as well as increasing demand, the food security has become more and moreimportant. Thus, pesticide, fertilizers and feeds which can greatly improve productionefficiency of agriculture have great market potential in China now and in the future.Currently, the pesticide, fertilizer, feed and food industries are not so developed in China,production accidents and food safety accidents happen frequently. In order to improvethese situations and ensure the food security, the Chinese government has carried outa series of policies. These policies will obviously activate development of the relatedindustries in the near future and will also accelerate the industry concentration ratio inChina. Figure 1 Focus of China Agriculture Investmnet Bimonthly Report Economic environment Risks Intermediate Enterprises M&A in China Seed Pesticide Fertilizers Agriculture Feed Food Opportunities GovernmentCCM International Limited
  3. 3. China Agriculture Investment Bimonthly Report Pesticide: Under supervision and keeping upgradingChinas pesticide industry witnesses fast development and made some positive actions toprotect domestic planting agriculture, public healthy, etc. in recent years. According toNational Bureau of Statistics of China, pesticide total output hit over 2.67million tonnesin 2010, up 20.34% year on year. As the most important pesticide exporter in the world,China exported about 0.51 million tonnes of pesticides in 2010, valuing approximatelyUSD420 million.However, without proper managementby government, many problems likeovercapacity and high pollution havebeen increasingly serious in this industry,blocking its further development. In orderto stop current chaotic market, build largescale companies, enhance internationalcompetitiveness of the whole industry,etc., the Chinese government has releaseda series of policies like Chinas PesticideIndustry Policy to accelerate the industryupgrading, thus fastening domesticindustrial M&A. Actually, with continuous integration, some companies like Sinochem Group and China National Agrochemical have been becoming more and more important in international pesticide market. Meanwhile, the weak pesticide players with weak competitiveness, high energy consumption, mass pollutant emission, etc. will be weeded out in the future in China.Obviously, many commercial opportunities will emerge along with thechanges in China, such as new investment in potential company/products,production expansion by asset integration, etc.CCM International Limited
  4. 4. China Agriculture Investment Bimonthly Report Fertilizers: Under strict supervision and mergingThe fertilizer industry mainly consists of nitrogenous fertilizers, phosphatic fertilizers andpotash fertilizers as well as NPKs and foliar fertilizers.Thanks to the modernization of agriculture in China, the demand of fertilizers increasesyear by year. Because of decentralized demand of fertilizers in China, there were manysmall fertilizers plants dispersed in China in the past, with the industry upgrading and themarket developing, the M&A in this industry happens more and more frequently. Now inChina, urea production in recent years has been more and more concentrated in the coalenterprises. The M&A trend in fertilizer industry will continue in the near future. Traditional ModernConsidering the close relationship with nature resources and harvest of crops, the Chinesegovernment has strict supervision on fertilizer production, distribution, import and exportto ensure the domestic supply.CCM International Limited
  5. 5. China Agriculture Investment Bimonthly Report Feed: Strict supervision and fast developingFeed is important for meat supply because now feed is widely used in animal breeding andaquaculture to improve the production efficiency in China. Feed industry has extensiveroom to increase in the next few years in China. Now, China is the second largest base offeed in the world, and in 2010, its total output of feed reached over 150 million tonnes,accounting for about 20% of global total output. But the per capita feed amount in China isjust one fifth of the US’s. Thus, it’s predicted that Chinese feed industry will witness greatdevelopment in future, and the market demand for feed may amount to over 200 milliontonnes in 2015.However, current development model of Chinese feed industry can not catch up with itsdevelopment. At present, there are hundreds of feed manufacturers at home, and mostof them are small ones, which can’t promise the safety of feed products. Besides, thescattered development model restrains the upgrade of feed products and R & D progress,thus Chinese feed industry needs to improve industry concentration ratio, which will bethe major develop tendency in future.It’s believed that Chinese government will strengthen the supervisor on feed industry,and more and more small manufacturers will be washed out. In the meantime, leadingmanufacturers will keep expanding their capacity and output, and to merge and acquiresmall players is also their priority option to grab more market share.CCM International Limited
  6. 6. China Agriculture Investment Bimonthly Report Food: Lack of supervision and facing crisis of confidenceThe food industry, including agricultural food processing, food manufacturing andbeverage manufacturing sub-industries, is a main constituent part of China’s economy.The food industry has realized sales value of USD667.44 billion in 2009, up 18.82% over2008, and the sales captures 12.92% of China’s GDP in 2009. And China’s food sales wereUSD677.45 billion in the first nine months of 2010, up 26% over the same period of 2009.China’s food industry is promising and the next five years are expected to be the golden ageof food consumption.Along with the rapid development of China’sfood industry, many food scandals and incidentsbroke out, which badly hit domestic consumers’confidences and impel the government to launchstricter policies, thus quickening the upgradingof food industry.China’s dairy industry is a typical example, affected by the 2008 melamine scandal andthe subsequent incidents, the government launched many policies, such as the policyabout production licenses reapplication recently. Affected by this policy, there are only643 dairies being approved by March 2011(accounting for 55% of China’s 1,176 dairies senttheir application to the government, while in fact there are believed to be at least 2,000dairy processors in China before). And the consolidation is expected to be continued inthe future, including the acquisition in China, such Mengniu acquired Junlebao Dairy –top 4 yogurt processor in China in November 2010, and the acquisition overseas, such asAusnutria Dairy acquired 51% stake of struggling Dutch dairy business Hyproca in March2011.CCM International Limited
  7. 7. China Agriculture Investment Bimonthly ReportWhat’s the scope?Industries related to agricultures such as:Pesticides, including insecticide, herbicide, fungicide, plant growth regulator, etc.Intermediates of pesticides, adjuvantSeedsFertilizers, including inorganic fertilizers, organic fertilizer, foliar fertilizer, etcEdible oil and foodstuffsCCM MethodologyDesk researchThe sources of desk research are various, including published magazines, journals,government statistics, industry statistics, association, seminars as well as information fromthe Internet.Telephone interviewCCM will interview events related party to gain first-hand information.QuestionnaireCCM will set questionnaire on events to collect experts’ views and opinions.Face-to-face interviewCCM carries out face-to-face interviews with industry insiders to make in-depth analysis &comment on relative issues.Experts consultancyCCM has established long-term business relationships with experts in each industry viapayment or information offering, and they would contribute stories or comments to CCMin return.Why to subscribe?Trace the latest M&A event for you business decision.Master the current industry environment in China.Get the changes in related industry policy in time to avoid the potential business risks.Discover M&A event’s influence on the whole industry.Know the insiders’ opinions about the latest policies and events.Who need it?Companies and researchers interested in China agriculture relative industries.Companies with the intention of developing in China to cooperate with domesticcompanies.What you will have?PDF newsletter bimonthly, 6 issues per annum.Access to online archives of all previous issues with downloadable filesCCM International Limited
  8. 8. China Agriculture Investment Bimonthly Report Main contentEnterprises dynamic (about 5 topics)• Report the latest dynamic of key enterprises in this industryMacro economy update (about 3 topics)• Macro economy environment analysis• Industrial macro analysis• Investment and financing environment analysisM&A dynamic and analysis (about 6 topics)• Report the latest M&A event in China with CCM’s analysis.• Trace the latest M&A dynamic in China.• Comments from companies, associations, experts, consumers, etc.• M&A feasibility analysisCentral and local policy analysis (1~2 topics)• Introduction to new policies affecting domestic agriculture industry• Analysis on impact of policies on the industry• Comments from companies, associations, experts, consumers, etc.Legislation & rules update (1~2 topics)• Introduction to new policies and legislations affecting domestic agriculture industry.• Analysis on impact of the legislations on the industry• Comments from companies, associations, experts, consumers, etc.The Interview (1~2 topics, this column may not appear in each issue.)• Key company’s interview on the M&A event, policy and legislation & rules• Companies strategies to respond to the legislationPrice update (about 5 topics)• Key pesticides• Key edible oil and foodstuff• Key fertilizers• Key seedsCCM International Limited
  9. 9. CCM International LimitedAddress: 17th Floor,Huihua Commercial & Trade Building, No.80 Xianlie Zhong RoadGuangzhou, 510070, P.R. ChinaTel: +86-20-37616606Fax: +86-20-37616968E-mail: econtact@cnchemical.comWebsite: