Internet Agriculture Welcomes Policy Dividends as Agricultural Input E-commerce Players Race to Capture the Market
Internet agriculture welcomes policy dividends
According to media reports, since “Internet Plus” was proposed, the first special action plan, “Internet Plus Circulation,” will be released on May 15. Among the six key tasks, the first is to promote e-commerce into rural areas.
Coincidentally, the “Opinions on Vigorously Developing E-commerce to Accelerate the Cultivation of New Economic Momentum” issued on May 7 emphasized the need to actively develop rural e-commerce and encourage agricultural means of production enterprises to develop e-commerce. The “Opinions” proposed strengthening the integrated development of the internet with agriculture and rural areas, introducing modern management concepts and methods such as industrial chains, value chains and supply chains, studying and formulating opinions on promoting rural e-commerce development, and issuing supporting policies and measures.
With the rapid penetration of the internet and policy support, agricultural input e-commerce is entering a golden period of rapid development. Shen Yunchang, a researcher at the Chinese Academy of International Trade and Economic Cooperation under the Ministry of Commerce, predicted that the future landscape of agricultural input e-commerce will show four major trends: e-commerce oligopolization, remote services, industry segmentation and centralized warehousing. Faced with the continuous sinking of agricultural input terminals, if existing distributors can integrate technical services, business services and platform services into one, they will stand out in the e-commerce era.
Sun Zhonghua, Chief Agronomist of the Ministry of Agriculture, recently revealed that the Ministry of Agriculture will list the development of agricultural e-commerce as one of its 20 key tasks for the future, and take promoting the development of agricultural e-commerce as an important measure to transform the agricultural development model and build modern agriculture.
Industry insiders believe that in 2015 the main battlefield of internet finance will be concentrated in vertical segmented fields, among which “Internet Plus Agriculture” has also become a hot spot of market attention. Recently, the Ministry of Agriculture stated externally that it will promote information access to villages and households in 2015 and build an “Internet Plus” demonstration project, which will undoubtedly have a positive effect on the demand for internet finance, especially agricultural credit.
Stimulated by the news that agricultural e-commerce will receive another round of heavyweight policy support, yesterday Noposion and Xiantan shares hit the daily limit, while Stanley and Siert and others all showed strong performance.
Agricultural input e-commerce players scramble for a trillion-yuan cake
Agricultural inputs are essential inputs and the starting point of agricultural production; just the three categories of chemical fertilizers, seeds and feed alone exceed one trillion yuan in scale. Industry insiders estimate that the agricultural input market exceeds one trillion yuan in scale, and leading agricultural input e-commerce companies have room for revenue growth of more than tenfold.
From the perspective of agricultural production factors, agricultural machinery, chemical fertilizers, pesticides, veterinary drugs, seeds and the like are agricultural input products, most of which can be standardized, fit the characteristics of repeat purchases, and are suitable for sale through the e-commerce model. Against the background of rapid internet penetration and favorable policy support, the external foundations needed for the development of agricultural input e-commerce are mature, and the major trend of agricultural input e-commerce has already taken shape. China's traditional agricultural input circulation system is welcoming disruption and transformation by the internet, entering a golden period of accelerated transformation and innovative development.
At present, leading enterprises in China's agricultural input sector have long begun to venture into e-commerce business, such as Stanley and Kingenta, which lead in all aspects of compound fertilizers, Dabeinong, which leads the feed industry in marketing team size and has a good balance between revenue and profit, and Noposion, the only company with pesticide formulations as its main business. In addition, companies such as Agricultural Products and Huifeng shares have already laid out plans in the e-commerce field.
Institutions are bullish on agricultural input e-commerce such as chemical fertilizers and pesticides becoming a new blue ocean for the e-commerce industry. China Merchants Securities pointed out that agricultural input enterprises, conforming to the general trend, are embracing the internet one after another, optimizing supply chains, reducing circulation costs, and transforming from sellers into comprehensive service providers, which will open up new growth. Agriculture is entering an era of transformation; leading agricultural input companies possess advantages in products, channels, marketing, services and many other aspects, have the ability to adapt to agricultural changes, and can become leaders in the development of the agricultural input industry. The agricultural input market exceeds one trillion yuan, and leading agricultural input companies that successfully transform will have room for revenue growth of more than tenfold in the future. Among A-share rural e-commerce concept stocks, Batian shares, Kingenta, Noposion, Stanley and others deserve close attention in the near term.
Essence Securities pointed out that the internet's ability to integrate everything is accelerating the process of transforming traditional agriculture into modern agriculture. The internet penetration rate and the number of rural netizens are steadily rising, and the rural e-commerce consumer market has enormous potential. It is expected that the total market size is likely to exceed 460 billion yuan in 2016, and agricultural input e-commerce will enter a period of rapid development.