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Author/Source: World Agrochemicals Network. The year 2018 has come to an end. The abolition of export tariffs on fertilizers, the introduction of a series of fertilizer standards, and the enactment of laws regarding soil environmental protection have all taken place. Meanwhile, a number of large fertilizer companies have gone bankrupt or undergone restructuring, accelerating industry consolidation... Each of these events has set the stage for trends in 2019. It is beyond doubt that the fertilizer industry will become more organized, efficient, professional, and environmentally friendly in the future. However, which specific policies are most likely to be implemented, and what changes will take place in the existing industry structure? Below are the top ten predictions for the agrochemical industry. We welcome all industry professionals to contribute their ideas, so as to get off to a confident and successful start in the new year. Prediction 1: Fertilizer packaging labels will change; medium and trace elements will no longer be hidden. Reason for prediction: Due to industry standards, medium and trace elements in compound fertilizers cannot be indicated on the packaging or quality certificates. With the increasing use of medium and trace elements in agricultural production, companies are calling for the removal of these restrictions. In 2017, three departments including the Ministry of Industry and Information Technology completed the revision of the draft guidelines on \"Fertilizer Labeling Content and Requirements.\" The revised version removes the restrictions on labeling micronutrients and trace elements, but the date of its official release has not yet been determined. The industry standard \"Contents and Requirements for Fertilizer Labeling\" specifies that if medium-element or trace elements are added to compound fertilizers, they must not be indicated on the packaging or the quality certificate ； For medium-element fertilizers, the nutrient content of each individual medium element as well as the total amount of these nutrient elements should be indicated separately; single medium elements with a content of less than 2% need not be specified. In recent years, an increasing number of fertilizer manufacturers and growers have realized the importance of trace elements in agricultural production. However, fertilizer companies that include these trace elements in compound fertilizers are unable to indicate their presence ； In medium-element fertilizers, medium elements with a content of less than 2% cannot be indicated either. In recent years, businesses have called for the removal of these restrictions. Once the revised version of the \"Requirements and Content for Fertilizer Labeling\" is finalized, it will be approved for issuance by the State Council, with the exact timing of its release yet to be determined. Will it be released in 2019? Let’s wait and see! Prediction 2: The establishment of Chinese standards for bio-stimulants is being put on the agenda. Reason for this prediction: Due to the lack of industry standards, the concept of bio-stimulants is vague and there are no classification criteria; as a result, their special functions and actual effects cannot be demonstrated, which makes it difficult to register these products and promote them in the market. In recent years, bio-stimulants have seen rapid development both domestically and internationally. However, their dissemination is facing serious problems such as unclear conceptual definitions, a fragmented industry with many low-quality players, poor products outnumbering good ones, the phenomenon of inferior products driving out superior ones, more emphasis on conceptual hype than on product innovation, a lack of scientific usage techniques, and an overemphasis on their functions and effects – all of which severely hinder the healthy development of the bio-stimulant market. Currently, the EU has defined biostimulants as substances containing certain components and microorganisms that, when applied to plants or their root zones, stimulate the natural processes of plants – including enhancing/benefiting nutrient absorption, nutritional efficiency, resistance to abiotic stresses, and crop quality – independent of nutritional components, and has established industry standards. China is currently accelerating the process of formulating industry standards for bio-stimulants. In April 2018, Stanley held a meeting within the industry to conduct an in-depth analysis of the European standards for bio-stimulants, driven by the industry’s interest in these substances ； In May, the Southern Rural News hosted a conference on bio-stimulants, once again focusing on industry hot topics ； The National Standardization Committee for Fertilizers and Soil Conditioners has proposed defining biostimulants as substances that promote plant growth, enhance stress resistance, and improve crop quality, and is working to implement this standard. Data shows that the **standards related to bio-stimulants that have been issued in China include GB/T 33804-2017 on potassium humate for agricultural use, GB/T 34765-2017 for the determination of the content of mineral-derived fulvic acid, and GB/T 35112-2017 on raw materials and products of humic acid and fulvic acid for agricultural use ； The published industry standards include HG/T 3278-2011 Sodium Humate for Agricultural Use, HG/T 5045-2016 Urea Containing Humic Acid, HG/T 5046-2016 Humic Acid Compound Fertilizers, HG/T 5050-2016 Alginic Acid Fertilizers, etc. However, according to the existing relevant standards, certain components, mechanisms of action, and metabolites cannot be measured; bio-stimulant products lack registration certificates, which hinders their promotion. There is an urgent need for industry standards for bio-stimulants in order to foster a better and more healthy development of the industry. In 2019, the Chinese standards for biostimulants were put on the agenda. Prediction 3: Will the large-scale potash contracts in 2019 exceed $300 per ton? Reason for the prediction: This prediction is not what those in the agricultural sector expect. Potash prices are rising sharply worldwide, and it has been quite difficult for our country to secure a price of 290 dollars per ton CFR. It is estimated that, given the current trend, potassium fertilizer prices will exceed $300 per ton in 2019. After 9 months of negotiations, the Chinese potash fertilizer joint negotiation team finally reached an agreement with BPC (Belarusian Potash Company) regarding the contract for the sea freight import of potash fertilizer to China for the 2018/2019 period; the contract price was $290 CFR per ton (the same unit is used throughout). Although this price is $60 higher than that in the 2017 contract, it remains significantly lower than the increases seen in regions such as South America. Although the final negotiated price is $60 higher than last year, representing a significant increase, a price of $290 per ton CFR remains relatively low and is in line with current international market conditions. In Europe, the price has risen to 370 dollars per ton CFR, while in Southeast Asia it has reached 310–320 dollars per ton CFR. Given the growing demand for potash fertilizers in international markets and the declining demand in domestic markets, prices in certain regions may continue to rise slightly once demand picks up again. It is possible that in 2019, the price of potash fertilizers in large-scale contracts could exceed 300 dollars per ton. Prediction 4: Standards for organic fertilizers are likely to be improved. Reason for prediction: The current standards for organic fertilizers were established in 2012, while the plan to replace chemical fertilizers with organic ones was officially introduced in 2017; there is a significant time gap between these standards and policies, which makes it difficult to meet the needs of industry development ； Farmers have a vague understanding of the concept of organic fertilizer; some companies engage in unfair practices by cutting corners, and even use by-products from soybean processing to manufacture granules that are passed off as organic fertilizer. There is an urgent need to raise industry standards to regulate the organic fertilizer market. The starting point for establishing the standard technical parameters for organic fertilizers was the desire to make maximum use of various organic solid wastes in order to increase soil organic matter. However, due to the low level of attention given to organic fertilizers at that time and their limited market recognition, most organic fertilizer manufacturers were small-scale and scattered in operation, making it difficult to ensure proper production technologies, manufacturing processes, and a suitable production environment. At present, some special industries such as tobacco have begun to establish local standards based on the existing standards for organic fertilizers, further refining these standards in terms of production techniques and environmental requirements, the use of specific microbial strains for decomposition, and the adoption of aerobic fermentation instead of anaerobic fermentation. They are also actively applying to create industry-specific standards. The organic fertilizer industry urgently needs improved industry standards in order to organize the sector and eliminate outdated production capacities. The author believes that the standards for organic fertilizers are very likely to be upgraded in 2019; these improvements may relate to aspects such as the organic matter content, whether organic matter is specified to be active organic matter, and the technical processes and environmental requirements for organic fertilizer production. Prediction 5: Further acceleration in industry consolidation – a more concentrated fertilizer sector. Reason for this prediction: Environmental regulations are forcing fertilizer manufacturers across the country to suspend production on a large scale for restructuring, while operational pressures are leading many of these companies to go bankrupt or undergo reorganization. As a result, the reshuffling within the fertilizer industry is accelerating, and fertilizer production will become more concentrated in 2019. Under the pressure of environmental protection, outdated production capacities are phased out and companies accelerate the upgrading of their product lines. In August 2018 alone, Shandong shut down 620 chemical enterprises that were switching to other types of production, and ordered 2,614 enterprises to suspend operations for rectification; these accounted for 42.5% of the province’s total chemical manufacturing enterprises ； The Guangdong Provincial Department of Environmental Protection issued a directive calling for a special campaign to comprehensively rectify \"scattered, disorderly, and polluting\" enterprises and industrial clusters; alone in Dongguan City, 4,824 such enterprises have been phased out and rectified. The compound fertilizer industry has entered a phase of competition based on comprehensive strengths such as quality, brand, capital, technology, and service, with major integrations taking place within the sector. The wave of bankruptcies among companies with backward production capabilities and poor management has intensified, with large enterprises suffering losses to varying degrees. Yankuang Lunan Fertilizer Factory, a subsidiary of one of the world’s top 500 fertilizer companies, declared bankruptcy due to accumulated debts of 3.7 billion yuan; Jiangxi Liuguo, a subsidiary of Liu Guo Chemical, applied for bankruptcy restructuring; Sinochem International acquired Yangnong Group for nearly 6.1 billion yuan; and Inner Mongolia Ordos United Chemical Co., Ltd., a subsidiary of Hubei Yihua, was forced to suspend operations due to limited natural gas supply in winter. Taking nitrogen fertilizers as an example, the number of manufacturers in this sector in China peaked at over 200 companies with a production capacity of more than 60 million tons. Today, however, the number of such manufacturers has dropped to around 60, with a production capacity of slightly over 50 million tons; thus, the development of the nitrogen fertilizer industry is becoming more concentrated. In addition, some nitrogen fertilizer manufacturers have entered the fields of compound fertilizers and new types of fertilizers, thereby making their products more competitive. For example, Henan Xinlianxin not only possesses world-class urea production facilities based on coal processing, as well as the largest urea production plant in China, but it has also expanded its operations into high-efficiency fertilizers such as compound fertilizers, humic acid-containing fertilizers, and water-soluble fertilizers, further enhancing its overall competitiveness. Prediction 6: Significant increase in potassium fertilizer exports; overall decline in fertilizer exports stops. Reason for prediction: The \"Proposed Adjustments to Temporary Import and Export Tariffs for 2019\" state that, starting from January 1 of this year, zero tariffs will be applied to the export of goods such as fertilizers. The zero-tariff scheme will have a significant impact on the export of these three types of products: potash fertilizers, compound fertilizers, and phosphate rocks. In particular, domestically produced processed potassium sulfate and potassium nitrate will enjoy a greater price advantage in the international market. This will surely lead to a significant increase in potassium fertilizer exports, helping to reverse the overall decline in fertilizer exports. In recent years, domestic potassium fertilizer production and processing technologies have improved, and industries such as processed potassium sulfate, potassium nitrate, and pelletized potassium fertilizers have developed rapidly. With the removal of export tariffs on potassium fertilizers (including those containing potassium), the export of potassium chloride (fertilizer grade) and potassium sulfate can result in savings of 600 yuan per ton. Domestic potassium sulfate will thus have greater price competitiveness on the international market, and the operating rate of potassium sulfate production facilities may increase, which in turn will drive up prices for domestic potassium chloride. As a result, exports of potassium fertilizers will continue to grow. According to Chinese customs data, from January to November 2018, China exported a total of 22.76 million tons of various fertilizers. In 2017, the total export volume of such fertilizers was 25.48 million tons, while in 2016 it was 28.09 million tons – a decrease of 21.5% compared to 2015. In recent years, the total volume of fertilizer exports has been declining year by year. The export volume of compound fertilizers is influenced by the supply and demand dynamics in the international fertilizer market; as consumers pay more attention to brands as well as prices, it will take time to determine the actual trend in the export volume of compound fertilizers. Although zero export tariffs have improved the market competitiveness of fertilizer exports to a certain extent, it is difficult to see a significant increase in export volumes in the short term. Currently, there is still a significant gap in the fertilizer market in regions such as Africa, Southeast Asia, and those along the Belt and Road Initiative. Driven by zero-tariff policies, potassium fertilizer exports are likely to increase substantially in 2019, and fertilizer exports as a whole are set to stop declining. Prediction 7: The Southeast Asian market will become a new opportunity zone for domestic fertilizer companies. Reason for this prediction: There is an increasing demand for fertilizers in Southeast Asia, and China’s skilled farmers are going abroad to develop the farming industry there. Coupled with the price advantages resulting from zero tariffs, the Southeast Asian market will undoubtedly become a new field where domestic fertilizer companies will compete fiercely. More than a dozen companies such as Kim Jong-dae, Radomei, and Ruifeng have begun to expand into the Southeast Asian market, and many other well-known fertilizer manufacturers have also put developing this market on their agenda. A large number of domestic farming experts went to Southeast Asia to develop farming there, which led to an increase in demand for domestic fertilizers in foreign farming industries. Countries such as India, Malaysia, the Philippines, Thailand, and Vietnam have an increasing demand for fertilizers. Taking Thailand as an example, there is a demand for around 6 million tons of chemical fertilizers each year ； Vietnam needs to import 1.5 million to 1.8 million tons of urea per year, 700,000 tons of diammonium phosphate, and 200,000 tons of compound fertilizers annually ； The potential fertilizer demand in the Philippines is nearly 4.7 million tons. Although Southeast Asia is primarily agricultural, its fertilizer industry developed late and its manufacturing enterprises lack sufficient technology. Under the influence of the \"Belt and Road\" strategy and the establishment of the China-ASEAN Free Trade Area, Chinese fertilizer products hold a significant advantage when exported to Southeast Asia. Currently, there is an increasing supply of Chinese fertilizer products in the entire Southeast Asian market. From January to July, China’s exports to the Philippines increased slightly, while exports to Vietnam more than doubled from January to September. The announcement of zero tariffs on fertilizer exports will further benefit domestic fertilizer companies in expanding overseas. Currently, about a dozen domestic companies are stepping up their efforts to enter the Southeast Asian market. For example, Radome has started construction in Zhanjiang of a production facility capable of manufacturing 600,000 tons per year of ecological green compound fertilizers, which is a significant step in expanding its presence in the fertilizer market in Southeast Asia ； Ruifeng Ecology has long been active in the fertilizer markets of Malaysia and Thailand. It has also reached a cooperation agreement with the Vietnamese Ministry of Agriculture, with plans to introduce new, high-end functional fertilizers and agrochemical services to Vietnam ； Jindal has established branches in Vietnam, Singapore, and other places, with plans to set up offices in India, Thailand, and Malaysia as well. Prediction 8: Traditional single-e-commerce platforms will gradually transform into comprehensive service providers. Reason for this prediction: The increasing number of professional large-scale farmers has created a huge market for agricultural technology services. Traditional single-e-commerce platforms that only offer the sale of agricultural supplies will increasingly be unable to meet the needs of these farmers. Taking the step toward shifting from providing products to offering technical services may well be the only way for traditional agricultural e-commerce platforms to survive in 2019. Data shows that in China, there are currently over 4 million large-scale farmers with a cultivation area of more than 50 mu, around 30 million medium-sized farmers with a cultivation area of 10–50 mu. In addition, there are about 2 million cooperatives and large-scale farm complexes. It can be said that professional large-scale farmers have become the main force in agriculture in China. Unlike the traditional small-scale farming economy, these large-scale growers no longer merely rely on supplies for agricultural use; they prefer diversified and comprehensive agricultural technology services. Traditional e-commerce platforms that only offer the sale of agricultural supplies can no longer meet the needs of these growers. Data shows that China’s agricultural technology services market has now reached a scale of 100 billion yuan, and it continues to grow. Such market trends inevitably drive traditional agricultural supply e-commerce platforms, which rely on online sales of agricultural products as their sole business model, to transform into comprehensive service-oriented e-commerce platforms. Initially, the emergence of e-commerce for agricultural supplies was largely to meet the need for channel upgrading within the agricultural inputs industry. Nowadays, however, it has shifted from mere channel upgrades to simultaneous upgrades in both products and services. For example, traditional e-commerce businesses that used to focus on a single product line are like pharmacies – they provide whatever medicine the farmers need. What is needed now, however, are doctors who go to the fields; these professionals need to visit the farmers, diagnose various problems that arise in farming, and prescribe solutions. Only after the farmers approve of these prescriptions will they be able to provide them with a comprehensive set of products and services. As a result, farmers have increasingly higher expectations regarding such services. Taking Da Hong Shou, which has achieved relatively successful transformation, as an example, it began to expand its services in the field of agricultural technology starting in 2015; it developed a range of online and offline agricultural technology service offerings tailored to the needs of different crops in various regions, and carried out activities to bring agricultural technology to rural areas. It proposes the slogan of \"packaging products into packages, turning packages into services, and standardizing services,\" and positions itself as a \"growing management partner for farmers.\" In addition to service-oriented e-commerce, an e-commerce model for agricultural inputs that provides paid agricultural knowledge services has also emerged. The agricultural knowledge subscription platform “TianTianXueNong” has completed 3 rounds of financing in less than a year since its establishment; it offers agricultural knowledge services covering various areas such as crop knowledge, agricultural technology dissemination, brand building, product marketing, and innovation-related knowledge in agriculture. In addition to the existing e-commerce services for agricultural supplies that focus on the prenatal and prenatal stages, financial institutions are partnered with to provide supply chain financing services for distributors, growers, and others ； By leveraging precision agriculture technologies, offering agricultural information services, O2O website solutions, and various services such as planting plan formulation for farmers, this approach will also represent the direction and opportunity for agricultural supply e-commerce to transform into a comprehensive service-based e-commerce model. In summary, agricultural comprehensive service-based e-commerce has become the dominant trend in the field of agri-supply e-commerce; in 2019, such platforms must continue to deepen the transformation and innovation of agricultural technology services. Prediction 9: Traditional agricultural supply retail stores will face further pressure, with manufacturers increasing their direct sales. Reason for this prediction: As large-scale growers emerge in large numbers, the pressures associated with operating in this sector will drive manufacturers to work directly with them. Additionally, the costs associated with farming will encourage these large-scale growers to bypass intermediaries and seek opportunities to cooperate directly with manufacturers. Channel partners must either transform into companies that provide technology and services, or they risk being eliminated. In recent years, the national land transfer market has experienced rapid growth, with large-scale growers accounting for an increasingly larger share of the flow in the agricultural inputs market. According to the \"Land Transfer Market Report\" published by Tuliu.com in April 2018, of the rural collective lands that were transferred over the past three years, approximately 55% went to large-scale agricultural growers and breeders, 32% went to agricultural cooperatives and agricultural enterprises, while 13% was allocated to other types of business entities. As the prices of upstream production materials continue to rise, the pressure resulting from increasing costs of agricultural inputs will drive large-scale farmers and cooperatives to bypass traditional agricultural input retailers and seek direct purchases from manufacturers in order to obtain these products. The growing demand for products and services has also given rise across the country to a number of manufacturers and platforms that provide services specifically for large-scale farmers, and \"Nong Fenqi\" is one of them. “Through strategic partnerships with well-known fertilizer manufacturers in Anhui such as Jinzhengda, Sierte, and Hongsi Fang, \"Nong Qī Fen\" offers pre-sale services for agricultural supplies to large-scale farmers. It takes advantage of the cost reductions and efficiency improvements that come from large-scale order-based production of agricultural inputs, thereby reducing the operational pressures and risks associated with traditional purchasing and selling models in terms of price, quality, logistics, storage, and funding. In addition, various forms of ordering fairs for agricultural inputs have been held in different regions. By connecting large-scale growers and cooperatives, which represent the new type of agricultural operators, with agricultural input manufacturers directly, such fairs enable personalized customization as well as direct supply and sales of the manufacturers’ products and services. This format of ordering fairs has been well received by many of these new agricultural operators as well as well-known manufacturers of agricultural supplies. Take the Agricultural Inputs Expo and Ordering Fair for New-Type Agricultural Business Entities in Heilongjiang, held last October, as an example. The event attracted over 2,000 new-type agricultural business entities from across China, with the total value of tentative contracts signed at the fair expected to exceed 400 million yuan. In the agricultural inputs market of 2019, the operating profits and market shares of traditional agricultural inputs retailers will face further pressure; direct sales by manufacturers will become increasingly common. The stricter enforcement of the Pesticide Management Regulations will also lead to the closure of more and more family-run (husband-and-wife) agricultural inputs retail stores. The transformation of traditional agricultural inputs retailers will thus become a major trend and a key focus of the times. In such circumstances, are you still offering credit sales? Prediction 10: Microbial fertilizers will be a highly popular category in 2019. Reason for the prediction: The number of registration certificates for microbial fertilizers increased by 3,508 in 2018, and it is expected to exceed 10,000 in 2019, showing explosive growth. By the end of October last year, there were 2,050 microbial fertilizer enterprises in China, with a production capacity of 30 million tons. These enterprises accounted for 70% of the total output of new types of fertilizers, generating an economic value of 40 billion yuan. The competition in the microbial fertilizer market is set to intensify, with microbial fertilizer products becoming the most popular items in the fertilizer market in 2019. Compared with traditional fertilizers, microbial fertilizers have advantages in protecting the ecosystem, utilizing agricultural waste resources, maintaining soil health, improving fertilizer efficiency, and enhancing the quality of agricultural products. Data shows that the number of registration certificates for microbial fertilizers issued by the Ministry of Agriculture and Rural Affairs in 2018 (including bio-organic fertilizers, microbial agents, and compound microbial fertilizers) increased by 3,508 to 9,193, up from 5,685 in 2017. Microbial fertilizers have become the type of new fertilizer in China with the highest annual production volume and the widest range of application areas. On the other hand, the long-term improper use of chemical fertilizers has led to a range of soil degradation problems. According to the \"Urban Blue Book: China’s Urban Development Report No. 11\" released last September, soil pollution is severe in some areas of China; the area of arable land affected by soil pollution amounts to 15,000 mu, with a contamination rate as high as 19.4% at certain sites. China’s consumption of chemical fertilizers and pesticides is among the highest in the world, resulting in serious soil pollution issues that pose significant risks to food safety, land security, and ecological stability. The official implementation of the “Soil Pollution Prevention and Control Law of the People’s Republic of China” will undoubtedly have a profound impact on China’s efforts in soil pollution prevention and control as well as soil remediation. There is still a long way to go in restoring soil ecology. Taking advantage of the initiatives of the \"Belt and Road\" initiative and the strategy for rural revitalization, in 2018 the Southern Rural News, together with well-known domestic and international agrochemical companies that shared similar goals, launched the \"Set Sail on the Belt and Road to Revitalize Thousands of Villages – 2018 China Soil Ecology Restoration and Agricultural Technology Promotion Campaign.\" As a result, 20,000 farmers were trained, and the campaign reached an online audience of up to 500,000 people. In 2019, the campaign will continue to extend to 20 crop-growing areas in 11 provinces and municipalities. The huge demand for pollution control implies a vast market potential. Industry experts have stated that China needs to develop and use biological fertilizers more than any other country, and the application of microbial fertilizers to the soil represents an important direction for restoring soil ecology. With the continuous introduction of strict environmental protection policies and the further expansion of the soil remediation market, more capital will be invested in the field of microbial fertilizers.