Agricultural Supply Side Reform: Three Directions

Recently, the seminar on the transformation of agricultural enterprises and the Disco Symposium organized by China Chemical Industry News’s “Agricultural Resources Herald” was held in Beijing Jingxi Hotel. The conference gathered well-known enterprises, industry associations, media and experts in the agricultural capital industry to jointly discuss hot issues such as how the fertilizer companies conduct supply-side reforms.

De-capacity is not as good as optimizing productivity

It is well-known that China’s grain production has increased for many years, but at the same time as food production has increased year after year, the environment and soil have also paid a heavy price. Vice Minister of China Chemical News, Yan Qiu pointed out that the agricultural non-point source pollution caused by the irrational use of fertilizer, pesticide, agricultural film and other agricultural products increased year by year. These have become the bottleneck restricting the sustainable development of China's agriculture. Therefore, the Central No. 1 Document, the Ministry of Agriculture, the Ministry of Industry, the Ministry of Environmental Protection and other ministries and commissions have successively introduced a number of policies to promote the sustainable development of agriculture. As one of the main bodies for promoting the sustainable development of agriculture, agricultural capital enterprises shoulder important responsibilities in the process of transformation and upgrading of agricultural and agricultural resources in China.

For the fertilizer industry, the key word for 2015 is undoubtedly excess capacity. De-capacity has naturally become the core task of 2016. Liu Shulan, former chairman of the China Nitrogen Fertilizer Industry Association, pointed out that the issue of overcapacity in the nitrogen fertilizer industry is very prominent. The profit rate of product sales is only 1.65%, which is lower in the fertilizer industry. The "Thirteenth Five-Year Plan" is the best period for resolving the problem of overcapacity. It requires the promotion of the market's survival of the fittest. What is more important is the need for strict government access policies, the strengthening of government supervision, and the establishment of a long-term exit mechanism for backward production capacity. However, exiting outdated production capacity still encountered certain problems. Liu Shulan said that the number of zombie companies is very large and they are unable to return because they cannot afford to return. Problems such as employee placement, debt processing, and removal of hazardous chemicals are in sight.

Wu Xiyan, Honorary Chairman of the China Phosphate Compound Fertilizer Industry Association, also believes that it is difficult to simply withdraw production capacity from backward production capacity. In some large state-owned enterprises, the issue of worker placement will become more prominent. Wu Xiyan also pointed out that this year's phosphorus and compound fertilizer industry situation is not as good as before. Now, the output of diammonium phosphate has dropped by 2.9%, sales have dropped by 15.9%, monoammonium phosphate production has dropped by 0.8%, and sales volume has fallen by 6.1%.

Simply optimizing capacity is not as good as optimizing production capacity. The optimization of production capacity can be product innovation and upgrading, product structure adjustment, and marketing model innovation. There are many ways to achieve this. Fertilizer companies should choose their own innovation based on their own advantages and development.

China's agriculture is also undergoing reforms in its development. This is because this special period has brought many opportunities for fertilizer companies. Sticking to conventions, difficulties will occur frequently, reforms and innovations will have opportunities every day. Gao Xiangzhao, chief expert of the National Agricultural Technology Extension Service Center of the Ministry of Agriculture, analyzed relevant policies of the Ministry of Agriculture in recent years and pointed out that in the future fertilizer companies should carry out product innovations in the production of new fertilizers, improved fertilizer technologies, and improved fertilizer utilization.

Soil testing and fertilizer trend

In the current industry context, how do companies innovate? Experts on this focused issue have also given their answers. Gao Xiangzhao, Wu Xiyan and other experts have proposed that the focus of the transformation and upgrading of enterprises in the future is to promote soil testing and formula fertilization. At present, the utilization rate of chemical fertilizers in China is low, and the soil carrying capacity is limited. Excess nutrients will not only cause soil compaction, but also cause water pollution and eutrophication. This is undoubtedly a waste. Soil testing and formula fertilization can truly be targeted, crops need to be smashed, and the farmers can apply it. Strive to achieve zero growth in fertilizer use in 2020.

China’s Inorganic Salt Industry Association’s secretary general of the Trace Elements Industry, Miao Zhaoying, also stated his point. “Zero growth does not mean that we don’t use chemical fertilizers. Instead, we coordinate various macro elements, trace elements, and beneficial elements. Matching, in this case, the excess elements will naturally decrease."

What is new fertilizer? What is good fertilizer? Zeng Xiancheng, chairman of the China Humic Acid Industry Association, believes that only soil-friendly fertilizers are good fertilizers. Under the background of zero growth in fertilizer use, the development and utilization of fertilizers should be based on the premise of “harmony between soil and fertilizer”. The cultivation of soil fertility should adhere to the principle of a glory and glory, and should not be sacrificed at the expense of one for the other. According to data from the Chinese Academy of Sciences and the UN Environment Agency, agriculture contributes more than 30% to air pollution. For example, the utilization rate of nitrogen is only 33% on average in the whole country, but only 24% in Shandong, and the soil has great influence on atmospheric haze. In the future, fertilizer innovation needs to be controlled by carbon, low carbon, high efficiency and ecological. Only with the combination of the atmosphere, can we really go to the high end. According to Bai Youlu, a researcher at the Institute of Agricultural Resources and Regional Planning of the Chinese Academy of Agricultural Sciences, in terms of innovation, in addition to ensuring comprehensive nutrition, fertilizer products must also pay attention to the synergies of fertilizers. A good fertilizer can do the right amount, suitable ratio, suitable form and suitable additives.

Liu Jianming, director of the Solid Mineral Resources Research Department at the Institute of Geology and Geophysics, Chinese Academy of Sciences, used a technique he studied to demonstrate innovation for future companies. He said that the team is currently working on a new technology that can turn stones into nano-sized mineral particles that can be dissolved by the plant's root acids, so that the nanoscale mineral particles can be directly planted. absorb. The nutrients in the stone are comprehensive and there are over 80 species that provide all the elements needed for the plant. Nano-sized particles not only provide nutrients, but also can regulate the soil ecological environment.

Innovation is not a matter of talking on paper, nor is it an empty talk. Innovation must be grounded. Wu Lishu, member of the Plant Nutrition Diagnosis Professional Committee of the Chinese Society of Plant Nutrition and Fertilizer Sciences, pointed out the problem of innovation and pointed out that the innovation of Chinese fertilizer companies is more than forms, and the reason for this is first of all that the owners of many fertilizer companies think of fertilizers. It is very simple and does not pay attention to research and development. Then there is a lack of talent. At present, most of the fertilizers are plant nutrition specialties. Plant nutrition and fertilizer are actually two different directions. Wu Lishu also said that Chinese companies invest more in advertising than in foreign countries, and what companies should do now is to be innovative and to "send ads on the earth."

The problem of innovation landing. Lou Zhaoying also gave his own views on innovation, and she said that plant nutrition has become a big concept. Many companies are developing in this direction, but they can't make innovations in this area. Yan Zhaoying believes that in order to innovate in agriculture, it is necessary to classify various economic crops and field crops because the same crops are planted in different cities in China. Because of different soils and different climates, the fertilization schemes are not the same. It is possible to try to classify the main economic crops. The fertilization plan will be based on the type of cash crops. Instead of investigating all the economic crops in a big way, companies should focus on a few types of research. Companies should be small and sophisticated, and it will be faster and more effective. Therefore, if companies want to innovate and want to stay ahead of the industry, the core is to truly innovate.

Change from producer to service provider

If a fertilizer company is only staring at the two links of production and sales, then it is destined that the development of this enterprise will not be long-term, because this development concept has not met the development needs of modern agriculture. Why a lot of fertilizers produced by enterprises will be difficult to popularize, and many fertilizers that are considered bad sell very hot. The problem here is to understand the needs of farmers. Is the more expensive the fertilizer the better? The answer is of course negative. Just as Bai Lulu said: “The peasants need to carry on, we will produce!”

How do you know what kind of fertilizer farmers need? This requires companies to do a good job at the grassroots level. Some large-scale fertilizer companies in foreign countries are based on the needs of the bottom, providing services from the demand side and improving service quality. If the company’s fertilizer service does not keep up with it, and does not tell farmers how to use it, the sales situation in the later period will be very severe. Bai Lulu gave an example: After a modest scale of operation, blended fertilizer companies must transform and transition from production to service. There is no evidence that the fertilizers blended by farmers themselves and factories are different if they are under such nutrient conditions. Therefore, if these companies do not become service-oriented companies, they may not have production space in the future.

Yin Liyong, director of the Technical Trade Service Center of the China Minmetals Chemicals Import and Export Chamber of Commerce, stressed that supply-side reform is the production of market demand products, and the market demand products are the products the company wants to produce. How to deepen service-oriented companies? In China's territories, the demand for each place is different. It is necessary to further study the demand for different plots of different crops so that companies will have a market in this area.

Under the tide of changing industry conditions, the reform of agricultural capital enterprises is imperative. However, in the process of reform, there are some problems that require enterprises to pay attention.

Cui Xuejun, president of China Chemical News, pointed out that the transformation of fertilizer companies first needs a clear direction. The agricultural industry needs a transformation. When the transformation of enterprises is more critical, because the industry is composed of companies, what type of business is now, what type of future is, and needs to be clarified. Second, the transformation of enterprises requires management-oriented methods. It is unthinkable for a company to have no management. In the past, production-oriented enterprises became sales-oriented enterprises, and they evolved into service-oriented enterprises. They even became full-scale, full-industry-chain, full-solution solutions providers. In this process, companies need to properly study management methods and innovative methods. In addition, the development of fertilizer companies requires the use of cutting-edge technologies, and attention must be paid to the integration and intelligent manufacturing.