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    Home > Agriculture News > Fertilizer News > The fertilizer industry breaks through overcapacity? Supply-side structural reform is imperative

    The fertilizer industry breaks through overcapacity? Supply-side structural reform is imperative

    • Last Update: 2022-03-05
    • Source: Internet
    • Author: User
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    Now, it's the spring plowing season again, and spring plowing production is in full swing in many places.
    At this time in previous years, due to the high demand for chemical fertilizers and other agricultural materials, many chemical fertilizer plants were running at full capacity at this time to ensure the supply of chemical fertilizers for spring farming.
    But this year we heard that in Linshu County, Shandong Province, a few years ago, there were hundreds of local fertilizer companies, but now a large number of them have closed down.
    What is going on? Linshu County, Shandong Province is a place where Shandong chemical fertilizer enterprises are relatively concentrated.
    According to local industry insiders, there are about 100 fertilizer companies here.
    The most prosperous time was ten years ago.
    At the door of each company, there were dealers and customers waiting to pick up the goods.
    Kilometers away.
    In recent years, the fertilizer companies here are experiencing a throes.
    Most of the companies have closed down or went out of business, and there are only about 40 companies left.
    What happened behind this hot and cold? On April 7, the reporter came to Shandong Xuyang Fertilizer Co.
    , Ltd.
    , which has ceased production.
    In the workshop warehouse, I saw that the place on the right side against the wall was filled with a pile of chemical fertilizer, about 2 to 3 meters high.
    A staff member at the scene told reporters that these fertilizers were piled up here before production was stopped.
    Staff: No production now, this factory is very difficult to get.
    As he was talking, a person in charge of the company came over.
    After a brief exchange, he took the reporter to a warehouse diagonally opposite.
    The reporter saw that there are about 3,000 square meters here, and there are also piles of chemical fertilizers.
    Some chemical fertilizer packaging bags have a layer of ash, and some parts are still yellow.
    Maybe it’s been a long time since it has been cleaned, and there is also a thick ash on the ground.
    When people walk around, the ash layer on the ground will be brought up, and the air will emit a musty smell.
    The roof steel frame of the roof has rusted, and the plastic roof is broken in some places and leaks air.
    The reporter noticed that the machinery and equipment in the warehouse are even more rusty, and some rust will fall off as soon as they touch them with their hands.
    The person in charge told reporters that production was discontinued six months ago.
    Now that the fertilizer industry is in a recession, it is difficult to do business, especially for a small factory like them with only more than 20 people.
    The person in charge of Shandong Xuyang Fertilizer Industry Co.
    , Ltd.
    : Now it's not like in previous years, it's over this year.
    I haven't made any money for three or four years, and there is no way.
    I can’t go up and down anymore.
    Let’s quit, there is still a loan.
    Let’s do it, I won’t make much money! This is the case with this company, what about other companies? Afterwards, the reporter went to the nearby Shan Dongfang Zheng Chemical Industry Co.
    , Ltd.
    The company's door is locked tightly.
    The rusty lock on the door seems to tell us that this company has long since ceased production and closed its doors, and people have gone to empty buildings.
    After walking about 20 meters along the road, the reporter saw a small house next to the iron railing, and a few captive birds were chirping next to it.
    Upon inquiring, the uncle who lives here turned out to be Founder Company specially invited to come here.
    The janitor told reporters that production here has been suspended for more than a year, and 60 acres of land are idle here.
    During the interview in Linshu County, the reporter learned that there are still many fertilizer companies that have closed down like Founder Company, and some of them couldn't be done even a few years ago.
    Shandong Funongda Fertilizer Co.
    , Ltd.
    is also such a fertilizer company that has closed down.
    The reporter saw at the scene that the company’s gate was also the "Iron General" door, and at the other gate, the gate was also locked, with grass eggs, grass roosters and contact numbers written on it.
    Why has a fertilizer company become a place to sell eggs? The guardian told the whole story.
    It turned out that Funonda has been closed for 3 or 4 years.
    The chickens and eggs here are the 100 acres of land that he and his wife are empty, so they simply use them to raise chickens and earn money.
    Some money to subsidize the household.
    Not only that, the company was also caught in a lawsuit over wage arrears, and was sued by an employee named Wang Fuguang to the court.
    The reporter also found this Wang Fuguang, who had worked as a salesperson for Funonda.
    He told reporters that since 2011, he has been working as a salesperson for Funonda Company.
    At the beginning, it was not bad.
    The company produces 30,000 to 40,000 tons of compound fertilizer per year, and sales are also very strong.
    He can get a monthly salary plus a commission.
    5 or 6,000 yuan, a pretty good income in the local area.
    But the good times didn't last long.
    Two years later, the company was in arrears of wages.
    Wang Fuguang, the former salesperson of Shandong Funongda Fertilizer Co.
    , Ltd.
    : In the second half of 2012, the funds will not be able to keep up.
    In other words, this salary will not be paid.
    Shandong Funongda owes me 80,000 yuan in salary.
    In addition to arrears of wages, Wang Fuguang said that there was also a customer payment of 172,000 yuan for the purchase of chemical fertilizers.
    After the money was remitted to the company, the company not only did not ship the goods, but also did not refund the money; in the end, he put together a piece of money to find someone to borrow it.
    17.
    20,000 yuan, I bought chemical fertilizers from other companies and distributed them to customers.
    However, Funongda has not given him this part of the money he paid in advance.
    Wang Fuguang: There were no less than 30 customers and salespersons who were victimized.
    We went to the Linshu County People's Court together to sue, and the total capital was no less than 20 million yuan.
    These several chemical fertilizer companies that have closed down are sorrowful.
    Local industry insiders told reporters that there are still some chemical fertilizer companies that seem to be operating on the surface, but in fact they are already very difficult to operate.
    For example, Shandong Chunyu Fertilizer Industry Co.
    , Ltd.
    , the industry knows that it has ceased production, but the staff here is another way of saying it to the outside world.
    Staff of Shandong Chunyu Fertilizer Industry Co.
    , Ltd.
    : Two months, now it is out of production for maintenance.
    Is this really the case? The reporter then came to the production workshop of Chunyu Fertilizer Industry.
    There was no one in the workshop.
    Some of the window glass in the workshop had been broken; there were weeds, sewage sludge and other debris on the ground; various large and small pipes in the workshop, The machinery and equipment have been severely rusted; in one corner of the machinery and equipment, some bags of chemical fertilizer were scattered, some of which were spilled from the packaging bags and exposed directly to the outside; the air was filled with a pungent and decayed smell.
    Wang Jinbu, Chief of the Fertilizer Industry Integration and Promotion Section of the Economic, Trade and Information Bureau of Linshu County, Shandong Province: Now it has to be said that there are 20 or 30 companies closed.
    Its production capacity is not large, there are 50,000 tons or 100,000 tons.
    According to the reporter's investigation in Linshu, in recent years, some small and medium fertilizer companies in the local area have suffered relatively serious losses.
    This is the fundamental reason for the closure of more than half of the local fertilizer companies.
    So, is the Linshu fertilizer company's experience in the entire industry an exception or a commonality? What are the underlying reasons behind the downturn in the fertilizer industry? Wang Jinbu, Section Chief of Fertilizer Industry Integration and Promotion Section of Linshu County Economic and Information Bureau, told reporters that the local closed fertilizer companies are generally small and medium-sized enterprises with an annual output value of about 20 million yuan.
    The main reason why the fertilizer business is not good is that the overall production capacity of my country's fertilizer industry is overcapacity, that is, the output far exceeds market demand.
    So, how serious is this problem at present? Sinochem Group is my country's largest fertilizer importer and one of the largest fertilizer producers.
    The person in charge of the company also bluntly said in an interview with reporters that this is a tough and serious problem.
    Qin Hengde, President of the Agricultural Division of Sinochem Corporation: Then we also have some data.
    For example, by the end of 2015, the overcapacity of the entire fertilizer industry exceeded 90%.
    The challenges faced by the entire fertilizer industry cannot be ignored.
    The reporter learned from the investigation that the 90 years of the last century In the middle and late epochs, with the acceleration of agricultural modernization, the demand for chemical fertilizers has experienced an unprecedented blowout, and the supply of products is in short supply.
    Take Linshu County in Shandong Province as an example.
    Because Linshu is close to the sea on one side and has abundant water resources, coupled with the low threshold for fertilizer production and extensive technology at that time, the annual output from the first few companies is less than 50,000 tons, and in just ten years, The local area quickly developed into hundreds of fertilizer companies, with a production capacity of 67 million tons.
    It turned out that machinery, real estate, and even carts have all joined this industry, but the market sales volume is only more than 1 million tons.
    At this time, the problem of overcapacity became prominent.
    In the following years, due to market competition and local government adjustments, there are currently more than 40 fertilizer companies.
    Small and medium-sized enterprises have decreased, but the production capacity of large companies is still increasing.
    Wang Jin, Chief of Fertilizer Industry Integration and Promotion Section of Economic, Trade and Information Bureau of Linshu County, Shandong Province: The production capacity reached more than 18 million tons at the end of 2016, but its sales volume was more than 7 million tons.
    However, this inequality in production and sales and overcapacity has actually become a serious problem that exists in the fertilizer industry.
    Even the person in charge of the Jinzhengda Group, the fertilizer company with the best sales performance of compound fertilizers in recent years, has also felt the pressure.
    Chen Hongkun, Vice President of Kingenta Ecological Engineering Group Co.
    , Ltd.
    : From the compound fertilizer industry we are in, there are probably more than 200 million production capacity in the country, and the actual production and sales are only about 50 million tons to 60 million tons.
    In fact, the operating rate of the entire industry is less than 30%, so the surplus is very serious.
    On the one hand, there is serious overcapacity and insufficient sales; on the other hand, many small and medium-sized enterprises have started price wars in order to survive and compete at low prices.
    Industry insiders: In order to get this order, if the cost price is 2,000 yuan per ton, they will insure the cost price, even lower than the cost price, conduct a vicious competition, restrict the decline in profits, so that the entire fertilizer industry has suffered losses in recent years.
    serious.
    According to data from the National Bureau of Statistics: In 2016, the main business income of the nitrogen fertilizer industry was 223.
    55 billion yuan, a year-on-year decrease of 12%, and the industry's loss was 22.
    28 billion yuan, an increase of 19.
    39 billion yuan from 2015, and the industry's loss was 50.
    7%; phosphate fertilizer industry The main business income was 109.
    75 billion yuan, the industry-wide profit was 640 million yuan, a sharp drop of 71.
    7%, and the industry's loss was 26.
    9%; the potash fertilizer industry's main business income was 30.
    91 billion yuan, and the industry-wide profit was 2.
    43 billion yuan, a sharp drop of 40.
    7%.
    The industry suffered a loss.
    Surface 34.
    2%.
    5 times.
    However, the utilization rates of nitrogen, phosphate and potassium fertilizers in field crops are low, 33%, 24% and 42% respectively, which are far below the level of developed agricultural countries.
    In 2015, the Ministry of Agriculture issued the "Action Plan for Zero Growth in Fertilizer Use by 2020", striving to achieve zero growth in the use of chemical fertilizers in major crops by 2020.
    So in such a big environment, how can my country's fertilizer industry break through? Some leading companies realize that only through transformation and upgrading can the industry be promoted to resolve excess capacity, adjust industrial structure, and improve core competitiveness.
    Slow-release and controlled fertilizer is a new direction they are studying.
    Slow and controlled release fertilizer is a new type of high-efficiency compound fertilizer.
    Simply put, this kind of fertilizer is covered with a high-tech film, which can slowly release the fertilizer in a certain stage according to the production cycle of the crop.
    Compared with ordinary fertilizer, the utilization rate of fertilizer is higher.
    The yield and quality of crops are also higher.
    Zhao Chuanbo, a senior agronomist from the National Engineering Technology Research Center for Slow and Controlled Release Fertilizers: The amount of fertilization has been reduced, the total cost has not increased, and the labor for one fertilization has been reduced; at the same time, the yield per acre has increased by 10%.
    In a case of 20%, this not only increases production and income, but also reduces labor costs.
    Li Nianzheng, a technician at the Agricultural Technology Station of Lukou Town, Changsha County, Hunan Province: Obviously, each mu is about 260 catties more millet, which was very obvious at that time.
    In addition to focusing on high-tech products, as a leader in the domestic compound fertilizer industry, Kingenta Group also focuses on overall solutions.
    In the early stage, professional and technical personnel went to the villagers' land to measure the pH of the soil and the content of nitrogen, phosphorus and potassium with instruments, and then scientifically and accurately select chemical fertilizers.
    Rui Wenli, a senior agronomist at the National Engineering Research Center of Compound Fertilizers: Like potassium sulfate fertilizers, they are used too much.
    These fertilizers are all acidic fertilizers.
    After using too much, the soil is hardened and acidified.
    From a fertilizer manufacturer to a "manufacturing + service" crop nutrition solution provider, fertilizer companies are hoping to open up the "last mile" of agrochemical extension services to increase production and income of villagers and growers.
    Like the big cherries grown in Pingyi County, Shandong Province, the same varieties have very different harvests after using high-efficiency fertilizers and overall technical support services.
    Zhang Hua: You see that the output of this tree is very good! Last year’s price, I sold big cherries for 15 yuan a catty.
    The big cherries of this tree are sold for 8 yuan per catty, all of the same variety.
    Chen Hongkun, Vice President of Kingenta Ecological Engineering Group Co.
    , Ltd.
    : The changes in soil and climate are also different, so we If the conditions are different, different crops, different climates, etc.
    , it is necessary to develop special products and related, whole nutritional solutions.
    Increasing technological innovation and improving agrochemical service levels are the two main cards for leading fertilizer companies to break through.
    As a representative of state-owned enterprises, Sinochem Corporation has developed intelligent fertilizer manufacturing and comprehensive agricultural service systems based on its own characteristics and supply chain service channel advantages.
    In layman's terms, it is to use intelligent machinery and equipment to automatically select various fertilizers and pesticides according to the crop growth cycle, weather and humidity, etc.
    , and machine mixing.
    Through the pipeline, the crops and the fruits and vegetables in the greenhouse are accurately dripped.
    Tube fertilization.
    While reducing the amount of chemical fertilizer, it also improves fertilizer utilization.
    Wang Baojie, Chief Agronomist of Sinofert Co.
    , Ltd.
    Shandong Branch: For example, we need to water tomatoes today, 4 mu of tomatoes, I need 10 catties of amino acids for 1 acre of land, and 40 catties for 4 acres of land.
    I set them up here.
    It must be completed, and then through ours, after replanting it in this way, it will be hit into the ground.
    Right now is the spring plowing season, and the two brothers Ding Junshi, planters of the Changshengyuan Ecological Farm in Anqiu City, Shandong Province, are busy in the vegetable shed that is contracting more than 200 acres.
    In the past, one acre of land used about 100 catties of chemical fertilizers, but now more than 30 catties of chemical fertilizers are enough, and the amount of chemical fertilizers has been reduced by more than half at once.
    Ding Junshi, a grower of the Changshengyuan Ecological Farm in Anqiu City, Shandong Province: The effect of using 50 yuan of fertilizer for 1 mu of land is better than the original effect of using 200 yuan for 1 acre of land.
    The quality of the crops and the growth of the crops are still better.
    Okay, there are fewer diseases.
    Ding Junshi is happier that the operation of the intelligent fertilizer distribution system is simple and convenient.
    Not only can it be operated offline on the machine's display screen, but also an APP software can be downloaded from the mobile phone, and it can be operated directly by remote control to automatically complete watering and fertilization.
    Ding Junshi: I just want that.
    Once I turn on this device, I turn on No.
    2 again and click on this or something.
    Okay, now it's watering, and it flows out naturally through a small mouth.
    It's very simple and convenient.
    And save labor and time.
    Ding Junqing, a grower of Changshengyuan Ecological Farm in Anqiu City, Shandong Province: Yield, you can say that one mu of land can produce, including tomatoes, which can produce 10,000 catties per mu of land.
    Now through this smart fertilizer, you can produce 2 Wanjin, doubled.
    Qin Hengde, President of the Agricultural Division of Sinochem Corporation: We are now in 95 intelligent fertilizer distribution stations across the country.
    We now supply more than 10,000 tons of chemical fertilizers, but have reduced the cost of agricultural production by more than 4 million.
    So we made a preliminary calculation, one year I We can reduce the use of chemical fertilizers to more than 400,000 tons.
    That means that we can save costs for farmers, more than 1.
    5 billion yuan, then this effect is obvious.
    "The crops and flowers are all dependent on fertilizer.
    " The development of modern agriculture is inseparable from the support of the fertilizer industry.
    However, the current demand for fertilizers is declining, and the prices are also falling.
    Business losses have become the norm.
    Therefore, the structural reform of the standard supply side is the most important topic of the fertilizer industry.
    Speed ​​up the elimination of backward production capacity, accelerate the cultivation of new strategic growth points, vigorously develop new products with high efficiency and low risk, and move from "manufacturing" to "intelligent manufacturing".
    At the same time, it is necessary to accelerate the innovation of new methods of agricultural services, from simply providing products to providing overall solutions for products and technical services.
    Only in this way can the fertilizer industry, which is beset on all sides, be able to win this breakthrough war.
    This article is an English version of an article which is originally in the Chinese language on echemi.com and is provided for information purposes only. This website makes no representation or warranty of any kind, either expressed or implied, as to the accuracy, completeness ownership or reliability of the article or any translations thereof. If you have any concerns or complaints relating to the article, please send an email, providing a detailed description of the concern or complaint, to service@echemi.com. A staff member will contact you within 5 working days. Once verified, infringing content will be removed immediately.

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