China’s insecticide demand to increase 8.5% in 2009

China’s insecticide demand is predicted to amount to 152,700 tonnes in 2009, up 8.5% over the previous year, according to China Crop Protection Industrial Association (CCPIA). Peasant’s growing enthusiasm to plant crops, arable land concentration, economic crop planting area increase and serious pest insect occurrence are four factors to result in China’s insecticide demand increase in 2009.

There are four key insecticides in China, namely organic phosphorus, carbamate, pyrethroid and acaricide. Except acaricide, the demand of the other three is predicted to rise in 2009. China’s insecticide demand growth in 2009 is mainly attributed to the following four factors. First, Chinese peasants’ enthusiasm to plant crop will be raised greatly in 2009, as Chinese government will step up the minimum grain purchase price significantly in early 2009. Take wheat as example, its minimum purchase price will be raised by 13%-15% to USD243.0/t~USD254.8/t in 2009. Second, China’s economic crop planting area is predicted to continue to grow in 2009. The expansion of economic crop planting area is one of the key factors contributing to the rise in insecticide demand, as the applied amount of insecticide on economic crops is five to six times of that on grain crops.

China’s economic crop planting area has been growing for successive four years with the rise in Chinese consumption level. The following figure shows the planting area change of vegetable and fruit, two key economic crops in China, from 2000 to 2008.

Third, Chinese government released the policy of Land Circulation in late 2008, which is expected to push up insecticide demand.

China’s fragmented arable land is expected to be gradually concentrated after the release of Land Circulation policy. With the concentration of China’s arable land, mechanization cultivation will be further promoted by Chinese government, which will increase insecticide demand.

Four, China’s insect pest occurrence in 2009 is predicted to be more serious than 2008 as the weather in the winter of 2009 will be warmer than that in 2008, which will lead to rise in insecticide demand. It is predicted that the global economic recession will have little impact on China’s insecticide demand in 2009, according to Wang Lvxian, the honorary chairman of CCPIA. That is attributed to two reasons. One is China’s insecticide consumption has maintained uptrend these years. The other is that insecticide consumption is less related to GDP, as insecticide cost only accounts for less than 4% of China’s total agricultural cost, much lower than fertilizers and seed which account for 44% and 12% respectively.