The path to reducing fertilizer production capacity is fraught with difficulties; listed companies seek new opportunities through innovation

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The path to reducing fertilizer production capacity is full of obstacles. Listed companies seek new solutions through innovation. Author/Source: Date: 2016-12-02 Clicks: 83. 2016 was the year when efforts to reduce production capacity began; as the year came to an end, various industries started submitting reports on their progress in this regard. At present, various local authorities and the State-owned Assets Supervision and Administration Commission of the State Council have carried out acceptance work in accordance with the relevant procedures, and spot checks at the ** level have also been initiated one after another. Looking ahead to next year, Li Jin, executive dean of the China Enterprise Research Institute, believes that supply-side structural reform will remain the key focus in 2017, with the creation of new drivers for economic growth taking center stage. For over a year now, efforts to reduce the production capacity of chemical fertilizers have been in full swing; key enterprises have taken concrete actions to achieve higher efficiency and reduced emissions by pursuing transformation and upgrading. 　　The path to reducing capacity in the fertilizer industry Last year, the Ministry of Agriculture proposed for the first time a goal of achieving zero growth in fertilizer usage by 2020, formulating and issuing the \"Action Plan for Zero Growth in Fertilizer Usage,\" thereby marking the official start of efforts to reduce fertilizer production capacity. 　　In 2014, China’s total fertilizer production capacity reached 131.67 million tons, with the actual output amounting to 80.11 million tons. The demand for chemical fertilizers was only 66.1 million tons, resulting in a surplus of 14.01 million tons, and an excess production capacity of nearly 50%. Entering 2015, China’s fertilizer production continued to increase, by about 7.3%. In the face of an increasingly tight supply-demand imbalance, **several policies have been introduced to promote the transformation and upgrading of the fertilizer industry. 　　Starting from April 20, 2015, the National Development and Reform Commission began to phase out the electricity price discounts for fertilizer production, and by April 20, 2016, all such discounts were removed ； In August 2015, the Ministry of Finance and other relevant departments issued the \"Notice on Re-imposing Value-Added Tax on Fertilizers,\" and thereafter a 13% value-added tax was imposed on fertilizers ； On November 5, 2016, the National Development and Reform Commission issued the \"Notice on Advancing the Reform of Prices for Gas Used in Fertilizer Production.\" Starting from November 10, prices for gas used in fertilizer production were completely deregulated. This means that the fertilizer industry is returning to its origins amid the wave of marketization, re-establishing a new order and shaping a new landscape. 　　Listed companies lead thanks to their innovation capabilities. The fertilizer industry is facing new challenges – who will gain the upper hand in this new wave of market changes? **One must be an innovator. 　　The \"Guiding Opinions on Promoting the Transformative Development of the Fertilizer Industry\" issued in July 2015 clearly state that, with the goal of improving the efficiency of fertilizer use and product quality, it is necessary to vigorously develop new types of fertilizers. By 2020, the share of new types of fertilizers in China’s total fertilizer usage is expected to rise from less than 10% at present to 30%, while the proportion of sales revenue from non-fertilizer products generated by nitrogen and phosphorus fertilizer manufacturers will reach 40–50%. The quality of fertilizer products has been further improved, with the standards for compound fertilizers continuing to rise, resulting in products that are safer and more reliable. 　　New types of fertilizers have become a breakthrough for fertilizer companies to improve quality while reducing quantity. Companies listed on the stock market, with Sierte as a representative, began working steadily on the innovation, research, and development of new types of fertilizers many years ago, striving to be the first to achieve transformation and upgrading amid the industry’s restructuring. 　　It is understood that Sierte launched a project in Bozhou to produce 900,000 tons of new type of compound fertilizer per year, as well as a project in Xuancheng to produce 900,000 tons of such fertilizer per year, with an emphasis on accelerating the development of bases for producing new types of fertilizers. In addition, the company continues to strengthen its cooperation with academic and research institutions, developing and promoting various new types of fertilizers such as high-efficiency slow-release fertilizers, water-soluble fertilizers, and biological fertilizers, and making continuous innovations in areas such as \"precision fertilization, controlled fertilization, and achieving zero growth in the use of chemical fertilizers\". In June this year, Sierte entered into a strategic partnership with Nanjing Agricultural University to officially launch Quanyuan biological organic fertilizer, thereby achieving product innovation and adjustments to the product portfolio. At present, Sierte has developed six major product lines, including formulated fertilizers, tower-type fertilizers, water-soluble fertilizers, slow- and controlled-release fertilizers, bio-organic fertilizers, and soil conditioners. 　　As Sierte makes significant efforts in adjusting and optimizing its product portfolio, as well as in the research and development and promotion of new types of fertilizers, it will strive for major breakthroughs in innovative and differentiated development, thereby creating more opportunities for the company’s transformation and growth. (China Agri-Materials Network)