Heavy pressure on summer corn fertilizer sales, late spring cold snap has limited impact

Focus this week

Since April, affected by cold air, some areas of our country have experienced a “late spring cold snap”. As to whether this affects agricultural input sales, reporters separately surveyed some grassroots markets in Hebei, Anhui, Shandong and Henan and learned that although the “late spring cold snap” delayed the start of this season's market, its impact on overall fertilizer demand is limited. At present, the compound fertilizer market is in a transitional stage before the launch of summer corn fertilizer, and its raw material nitrogen, phosphorus and potassium markets have no positive support and are trending downward, while the compound fertilizer market is turning quiet.

Limited impact of the “late spring cold snap”

Entering April, some areas of our country saw temperature drops of varying degrees, more or less affecting agricultural production. Regarding agricultural inputs, according to Wang Zhendong of Sinochem-Agro Company North China Department, “Overall temperatures in southern Shanxi are on the low side, and the start of the spring market was delayed by about 20 days compared with the same period last year. Even so, if temperatures rise noticeably later, fertilizer use for field crops can follow immediately, and fertilizer demand will show no obvious change compared with previous years.” Fang Xinglin of Anhui Longchen Fertilizer Co., Ltd. said: “The ‘late spring cold snap’ has some impact on agricultural production, but it is not serious, and farmers still buy fertilizer and plant as normal. It is only because the market is not very stable that very few people are buying or selling fertilizer, and compared with the same period last year, overall sales volume will decrease by 30%.” Wang Zongquan of Shandong Dongying Yuanguan Agricultural Materials Co., Ltd. said: “The temperature drop has limited impact on local agricultural input sales. The local area has saline-alkali land, and the main suitable crop is cotton. Because the state abolished unified cotton purchasing last year, some farmers adjusted their planting structure and switched to wheat and corn, farmers reduced their input in agricultural materials, and relatively speaking local overall fertilizer demand decreased somewhat.” Chen Yongtao of Anshi Group in Anyang City, Henan Province, when introducing the local agricultural input market, said, “This season's market is average, and it is relatively difficult to achieve a breakthrough on the basis of last year's sales. As for how the weather will affect things, as long as extremely severe weather does not occur, farmers will plant, and market fertilizer demand still has rigid demand.” Wang Chengxue of Guangrao County, Shandong, said: “Weather has limited impact on local agricultural input sales. Wheat fertilizer sales have already finished, and sales volume shows no obvious change compared with previous years. Although the local urea price is as low as 1500 yuan/ton, most local farmers go out to work, and local same-seeding-with-fertilizer is being promoted, so in fertilizer choice they mainly favor compound fertilizer, which saves time and labor.”

Intensified competition in downstream markets

Although a small number of plants in Shandong were shut down recently for environmental protection reasons, the impact on the market is limited, because social inventory is sufficient and China has a large number of fertilizer plants, with serious oversupply. Chen Yongtao said: “Although everyone's expectations for the compound fertilizer market are positive, judging from feedback from grassroots markets, the market is average, and market sales pressure is heavier year after year. Even though some plants have stopped because of environmental protection and other factors, there is no shortage of goods on the market, and everyone can only engage in price wars, hoping that low prices can increase sales.” As for the forecast for summer corn fertilizer sales, Chen Yongtao said, “The market is constantly changing, and manufacturers are under very great sales pressure. Following the traditional sales methods of the past, it is very difficult to maintain sales volume. Now competition in grassroots markets is very fierce, and various manufacturers or dealers have many promotional methods, such as giving cards, liquor, washbasins and many other things, just to satisfy farmers' mentality of seeking small bargains.”

⟦NL> Enterprises increase investment, agrochemical service comes first

According to the reporters' survey, farmers' enthusiasm for science and technology falls into two types: first, those growing field crops are not enthusiastic, because apart from natural disasters, fluctuations in their agricultural income will not occur because of a lack of agricultural technical knowledge; second, those growing cash crops, guided by the idea of high input and high return, have a very strong desire for agricultural technical knowledge. Chen Yongtao said, “Farmers growing cash crops are indeed willing to invest, but because they lack relevant knowledge, they make mistakes in fertilizer selection. Only a small portion of farmers are relatively loyal to brands, while most farmers are not highly loyal to brands. As long as a small manufacturer advertises to them more, they will easily change, and this is rather troublesome. Science popularization is a long-term public welfare project, and one enterprise cannot accomplish it.” Wang Zhendong said that at present all major compound fertilizer manufacturers are actively distributing goods downstream and introducing various promotional policies for dealers and farmers. “Promotions change every year, and as farmers' desire for agricultural technical knowledge becomes stronger, manufacturers will also increase relevant investment in agrochemical services, and agrochemical service coming first will become a basic factor in improving enterprises' competitiveness.”

Reporter's observation

Overall, although this season's compound fertilizer market is not as good as imagined, it is not that pessimistic either. It is only because there are too many manufacturers, too many channels, and the market is unstable that the agricultural input market is becoming harder and harder to do business in. Manufacturers are also constantly extending the industrial chain to enhance their own competitiveness, and elimination and integration still require a long process.

According to land transfer results in some areas, very few of those contracting large areas of land can make money, and most are part-time farmers, so land transfer still needs to be based on market needs. Transfer carried out in order to obtain state subsidies or certain policies, without truly solving the problem of farmers' abandoned land, is not advisable.

At present, farmers' desire for agrochemical knowledge is unprecedented, especially among farming households growing cash crops, whose demand is even more urgent. The more they value output, the greater their investment of manpower, materials and energy in the early input stage.