Shangguan Shuangyue, Fang Xiangming, 2, Chen Yu, He Zixuan, Zhou Ruyin, Qu Mengmeng, Cao Bingwei, Wu Lihui, Huang Xinhe, Wu Houbin

Letter

Index Calculation and Analysis of China’s Pesticide Import and Export During 2011–2020

Shangguan Shuangyue1, Fang Xiangming1, 2, Chen Yu1, He Zixuan1, Zhou Ruyin1, Qu Mengmeng3, Cao Bingwei3, Wu Lihui3, Huang Xinhe3, Wu Houbin4

(Academy of Global Food Economics and Policy, China Agricultural University, Beijing 100083, China; School of Public Health, Georgia State University, Atlanta 30303, United States of America; Institute for the Control of Agrochemicals, Ministry of Agriculture and Rural Affairs, Beijing 100125, China; Shennong Technology Group Co., Ltd., Shanxi 030813, China)

Using the trade data from the General Administration of Customs of China between January 2011 and December 2020, we estimated the index for China’s pesticide import and export, including annual import and export pesticide price index, quantity index and value index. We also calculated the terms of trade (TOT) of pesticide in total and by trade regions. First, China’s import and export value indices of pesticide showed N-shape trends during 2011–2020, and the trend of the export value index was mainly affected by the changes in the export price index. For the import, the price index and quantity index were fluctuated with opposite trends from 2011 to 2020. Second, compared to the pesticide technical materials, the pesticide formulations accounted for a large proportion of the total import value of pesticide, while generated lower total export values. However, started from 2016, the import total value and quantity of pesticide formulations decreased. Third, during 2017?2020, TOT of pesticides improved with TOT rising above 1, and China showed increasing competitive advantage in the pesticide trade with other countries in Asia, Europe and South America. Our findings suggest that China’s supply-side structural reform and environmental protection inspection implemented in 2016 have promoted the transformation and upgrading of the pesticide industry, and the pesticide industry structure is being optimized to improve its competitiveness in the global pesticide market.

The pesticide industry is an important part of the fine chemical industry in China, and it plays a vital role in promoting agricultural development and ensuring food security (Ye, 2013; Wang and Shao, 2020). As one of the world’s largest pesticide producers and exporters, China plays an important role in the world’s pesticide market. Although China is a leading pesticide producer, China’s pesticide industry needs to strengthen its competitiveness in the global pesticide market. Affected by overcapacity, the pesticide industry faces challenges such as the issue of being large in size but small in influence, outdated production technologies and lack of industry integration and concentration (Xu, 2019; Wu and Li, 2020).In addition, the overuse of pesticides and fertilizers has been a rising concern in China, and started from 2015, the Chinese government adopted a Zero-Growth Action Plan with an objective to achieve zero growth in the use of pesticides in the country by 2020 (MARA, 2015). Influenced by national policies, the overall development of China’s pesticide industry has showed a gradual slow-down in the domestic market. How to enhance the development of China’s pesticide industry and improve the international competitiveness in the global pesticide market has become a major challenge in China’s 14th Five-Year Plan period (2021–2025). China’s supply-side structural reform and environmental protection inspection implemented in 2016 provided a new opportunity and impetus for the transformation and upgradingof China’s pesticide industry. Policy questions are raised such as whether these policies have affected the trade pattern in China’s pesticide, and what are the development trends of China’s pesticide industry?

Previous research on China’s pesticide trade can be categorized into four areas: The first type of research focuses on the current status and trends of pesticide trade and summarizes its development characteristics (Ecobichon, 2001; Hoi et al, 2013; Holzman, 2013; Sola et al, 2014; Liu and Guo, 2019). China’s pesticide products have relatively low prices in the global market, and the lack of high-tech products leads to our vulnerability to foreign technical barriers to trade (Li et al, 2015; Guo et al, 2020). However, these studies mostly employed qualitative analysis or simply summarized the quantity and total value of import and export of pesticides, lacking rigorous data processing and analysis. The second type of research analyzes the international competitiveness of pesticides by calculating the world market share, normalizing trade balance and revealing comparative advantage index (Zhang, 2006; Qiao and Yi, 2008). However, these trade indicators fail to reflect the important information of trade price. Additionally, the revealed comparative advantage index cannot take the role of imports into account. The third type of research empirically analyzes the factors that influence pesticide usage and foreign trade. For example, Qiao (2019) used the Constant Market Share Model and found that competitiveness is the most influential driving factor for the growth of China’s pesticide export as opposed to demand product structure and market structure. Zhang and Huang (2012) used a simultaneous equation model and found that agricultural trade liberalization can help reduce the use of chemical fertilizers and pesticides and reduce their negative environmental impacts. The fourth type of research focuses on the impact of pesticide regulation, such as the impacts of Maximum Residue Levels of pesticides on agricultural product trade (Sun et al, 2007; Drogué and DeMaria, 2012), agricultural product quality (Jiang and Yao, 2019) and public health (Gray and Hammitt, 2000; Rosenthal, 2005). However, these studies mainly focus on the impacts of pesticide regulations and provide weak guidance for the transformation and upgrading of the pesticide industry or increasing competitiveness in the global market.

Our study fills research gaps by providing the first estimates of indices on China’s pesticide trade per year from 2011 to 2020. Using pesticide import and export data from the General Administration of Customs of China, we calculated the annual import and export price indices, quantity index, value index and TOT.Following the guide of index calculation on China’s external trade issued by the General Administration of Customs of China (2019), we used the Fisher price index to measure the import and export indices of pesticides (File S1). The indices helped reflect the trend and the fluctuation of import and export pesticide prices, quantities and total values in the study period. Also, the indices provided comprehensive information on China’s pesticide industry and helped us gain valuable insights into the global pesticide market.

For the exports of pesticides, the value index presented an N-shape during 2011?2020 (Fig. 1-A). During 2011?2014, the export value index of pesticides increased from 100.8 to 128.8, with an average annual growth rate of 9.26%. The export price index and quantity index also increased. The price index increased from 101.2 to 117.6, with an average annual growth rate of 5.40%. The quantity index increased from 99.6 to 109.6, with an average annual growth rate of 3.35%. The export price index had a higher increasing rate than the quantity index, suggesting that the export prices contributed more to the increase of the total export value of pesticides during 2011?2014. The total export value started to decrease from 2015 to 2016, and the value index fell to 111.6 in 2016. This is because the export price index dropped sharply in these two years, counteracting the effects of the increased export quantity index. The export value index increased from 2017 to 2020 and reached the highest value (138.3) in 2020, with an average annual growth rate of 2.65%. The export price index showed an increase first from 2017 to 2018 and then a decrease during 2019–2020, while the export quantity index dropped first from 2017 to 2018 and then increased during 2019?2020.For the import of pesticides, the value index showed a slight N-shape during 2011?2020, with the largest value of 140.3 in 2020 and the smallest value of 101.8 in 2017 (Fig. 1-B). Also, we found that the import price index and quantity index were fluctuated with opposite trends from 2011 to 2020, and the import quantity of pesticides was affected by the import price. Thedecline in the price index during 2015?2016 could be largely influenced by international markets. In 2015 and 2016, the international pesticide market was stagnant, and had significant negative effects on China’s pesticide industry, with decreasing import and export value indices of pesticides. One possible reason could be related to the decline in global crop areas, and the demand for pesticides decreased, which led to a decline in global pesticide prices. Also, global oil prices were in the range of 40–60 US dollars per barrel for a long time. Given the cost of the biofuel crops was estimated to be around 70 US dollars per barrel, the low oil prices placed pressures on supplies of biofuel crops in South America and North America (Wu and Li, 2020). Therefore, the global biofuel crop areas declined and the demand for pesticides decreased, resulting in lower global pesticide prices.

Pesticides include pesticide technical materials and pesticide formulations. Compared to pesticide technical materials, pesticide formulations have lower negative environmental impacts and higher profit margins. Pesticide formulations are high value-added products that account for a large component of the global pesticide market (Guo et al, 2020). Considering the production and research and development gaps of pesticide formulations between China and developed countries, the development of pesticide formulations has become the main target of national policies in China. For the export, the total value of pesticide technical materials was higher than that of the pesticide formulations (Fig. 1-C). The export quantity of pesticide formulations continued to increase while the export quantity of pesticide technical materials slowly decreased from 2012 to 2016. For the import, the pesticide formulations accounted for a large proportion of the total import value (Fig. 1-D). Started from 2016, the import value and the quantity of pesticide formulations decreased. Compared to the export of pesticide technical materials, the export value, quantity and price indices of pesticide formulations showed more fluctuations (Fig. 1-E and -G). In the contrast, the import indices of pesticide technical materials showed more fluctuations than those of pesticide formulations (Fig. 1-F and -H). The results implied that the pesticide industry has been witnessing a stage of transformation and upgrading during 2011?2020. With supply-side structure reform as the theme, the 13th Five-year Plan of the Pesticide Industry (CPIN, 2016) focused on improving China’s pesticide industrial structure, implementing innovative technologies and achieving the goal of sustainable growth. Following this plan, the government and pesticide enterprises paid more attention to the research and development of new pesticide formulations, which help reduce the dependence on imported pesticide formulations.

TOT was smaller than 1.0 in 2011?2016 (except 2014), and larger than 1.0 in 2017?2020 (Fig. 1-I). These changes were mainly caused by the changes in TOT of pesticide formulations. Compared to pesticide formulations, TOT of pesticide technical materials was relatively stable, with TOT larger than 1.0 during 2012?2020, suggesting that the trade of pesticide technical materials was in a dominant position in the world market. TOT of pesticide formulations fluctuated and was at a disadvantage from 2011 to 2016. After 2017, TOT of pesticide formulations exceeded 1.0.On one hand, the country focused on optimizing the industrial structure, implementing capacity management and eliminating the outdated production capacity in the pesticide industry. On the other hand, affected by the national environmental protection policy, the whole industry has entered the stage of integration and structural adjustment. A variety of policies force pesticide enterprises to innovate, improve product structure and product quality, thus enhancing the international competitiveness of China’s pesticide industry (Li et al, 2015; Han, 2019; Xu, 2019).

Fig. 1. Export and import indices of pesticides in 2011–2020.

A, Export index of pesticides in 2011–2020. B, Import index of pesticides in 2011–2020. C, Export index of pesticide technical materials and pesticide formulations in 2011–2020. D, Import index of pesticide technical materials and pesticide formulations in 2011–2020. E, Export index of pesticide technical materials in 2011–2020. F, Import index of pesticide technical materials in 2011–2020. G, Export index of pesticide formulations in 2011–2020. H, Import index of pesticide formulations in 2011–2020. I, Terms of trade (TOT) of all pesticides, pesticide technical materials and pesticide formulations in 2011–2020. J, TOT of pesticide technical materials among different continents in 2011–2020. K, TOT of pesticide formulations among different continents in 2011–2020. The units of quantity and value are 10 000 t and 100 million US dollars, respectively in C and D.

We further examined TOT of pesticide technical materials and formulations among different trade regions (Fig. 1-J and -K). Among the four trade regions included, China exported the largest amounts of pesticides per year to countries in Asia and South America and imported the largest amounts of pesticides from countries in Asia and Europe from 2011 to 2020.For the pesticide trade between China and other countries in Asia, TOT of pesticide technical materials was larger than 1.0, indicating that China was in a more favorable position in pesticide technical materials than the other countries of Asia. Especially for years after 2016, TOT of pesticide technical materials continued to increase. However, TOT of pesticide formulations fluctuated around 1.0 during 2011?2017, and after 2017, TOT of pesticide formulations showed significant improvement and reached an advantageous position compared to the other countries in Asia. Europe countries are another major trade partner for pesticides in China. TOT of pesticide technical materials was significantly higher than 1.0 with small fluctuations during 2011 and 2020. For pesticide formulations, TOT was smaller than 1.0 during 2011?2017, and TOT exceeded 1.0 from 2018 to 2019. For the pesticide trade between China and countries in Europe, the export of pesticide technical materials in China had a comparative advantage while the export of pesticide formulations in countries of Europe had a comparative advantage. Also, for the pesticide trade between China and countries in South America, TOT of pesticide technical materials fluctuated around 1.0, and TOT of pesticide formulations was larger than 1.0 (except in 2012). For the pesticide trade between China and countries in North America, TOT of pesticide technical materials was below 1.0 in most years, a similar pattern was found for TOT of pesticide formulations. This indicated that China had been at a disadvantage in the pesticide trade between China and the United States for a long period. In summary, after 2016, TOT of pesticide technical materials and formulations between China and the other countries in Asia, Europe and South America showed increasing trends, implying a gradually increased international competitiveness of China’s pesticides. However, in recent years, TOT of North America of pesticide technical materials and formulations were decreasing. This could be due to the trade frictions between China and the United States of America in recent years.

Our findings suggested that China’s supply-side structural reform and environmental protection inspection implemented in 2016 have promoted the transformation and upgrading of the pesticide industry, and the pesticide industry structure has been optimized remarkably (Han, 2019; Chen and Wang, 2020). On one hand, as guided by the supply-side structural reform in the pesticide industry, pesticide enterprises are encouraged to increase efforts in better scientific research and innovation, strengthen the participation in market share, and enhance the overall international competitiveness. Therefore, outdated capacity is gradually phased out, new capacity is contained and industrial structure is constantly optimized. On the other hand, the environmental protection initiatives inspired pesticide enterprises to transform from production-oriented to a research- and-development style, which helped improve enterprises’ strength and competitiveness. As a result, the size of production, level of centralization and capacity utilization have been much improved. With accelerating integration in the pesticide industry in China, pesticide enterprises can produce upstream and downstream intermediates by themselves. Moreover, they are upgrading themselves from being technical enterprises to formulation enterprises and innovators of new products. Formulation manufacturing is already a focus of Chinese pesticide enterprises, which helps forge formulation brands and boost future exports. Also, the implementation of precision agriculture has gradually become a major strategy for sustainable development and modernization of agriculture in the world (Fang and Li, 2018), and therefore, the modernization (such as precision pesticide application, aerial crop protection with drone, e-commerce and integration of pesticide and fertilizer) and the fine chemicals (such as pesticide customized service) can be an important direction of China’s pesticide industry in the future.

Our study contributes to the existing literature by estimating the index for China’s pesticide trade in the period of 2011–2020, including annual import and export price index, quantity index and value index. We also calculated TOT of pesticide in total and by trade regions. Through presenting the trends of pesticide trade, these indices provided measurements for better understanding the domestic and global pesticide markets. For future studies, empirical analyses are needed to examine the reasons underlying the trend of indices on China’s pesticide trade, thereby exploring strategies to improve the international competitiveness of China’s pesticide industry. Besides, the physical quantity of pesticides was used in the calculation. For future studies, especially for the calculation of indices related to pesticide active ingredients, it is necessary to consider the quantity 100% consistency and price 100% consistency of pesticides.

SUPPLEMENTAL DATA

The following material is available in the online version of this article at http://www.sciencedirect.com/journal/rice-science; http://www.ricescience.org.

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Fang Xiangming (xmfang@cau.edu.cn)

25 February 2021;

16 May 2021

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