Thursday, December 20, 2012

Government's pesticide procurement gets hot in 2012

Lin Yanru, a researcher from Shandong Plant Protection Station, revealed that government procurement is the general development trend of China's agriculture industry. The coverage of government procurement ranges from rice, wheat, cotton, vegetable to fruits and some other cash crops, and its investment will be raised year by year. 

Since 2011, government pesticide procurement was in full swing. "Its coverage area and crop range have been gradually expanded. In 2001, Chinese government began to procure pesticides; the Ministry of Finance allocated about USD16.06 million (RMB100 million) every year for purchasing pesticides to control rice plant hoppers, rice stem borer, wheat rust, locusts and other pests and diseases", said researcher Lin Yanru.
According to Li Yanru, in recent three years, the investment for government pesticide procurement has quickly increased. Many provinces growing wheat, rice have spent over USD16.06 million (RMB100 million) on pesticide procurement since 2009. Hebei Province is the most prominent one and it invested USD32.12 million (RMB200 million) every year during 2009-2011. Another big rice-growing province—Jiangxi also invested over USD16.06 million (RMB100 million) every year during 2010-2011.
In 2012, the investment for government pesticide procurement has reached a new peak. According to the Ministry of Agriculture of China (MOA), the investment merely on wheat has reached about USD253.2 million (RMB1.6 billion) which has been allocated to 11 winter wheat-planting provinces and areas for the control and prevention of pests and diseases of 21.33 million ha. wheat in China.     

Generally speaking, government procurement has the following advantages.
First, pesticides with low toxicity, high effectiveness and environmental friendliness will be given prior consideration. Therefore, product mix will gradually become more reasonable.
Secondly, large purchasing amount attracts many suppliers, and favourable procurement cost will adjust pesticide price and make it more reasonable.
Thirdly, centralized bid improves the efficiency of marketing and creates mutual benefit for participants. 

With Chinese government's increasing attention on government pesticide procurement year by year, domestic pesticide enterprises start to realize the importance of anticipating and obtaining bid invitations. Once winning the bid, pesticide enterprises can largely reduce costs and raise profits.
Jiangsu Anpon Electrochemical Co., Ltd. (Jiangsu Anpon) is one of the bidding pesticide enterprise, which has successfully bid in Hebei, Jiangxi, Shandong and Anhui in recent years. For example, in Oct. 2011, Jiangsu Anpon's pymetrozine (brand name: Feidian) successfully bid for the demonstration project of government procurement for high yield rice in Anhui Province. In June 2011, Hebei Province purchased a batch of pymetrozine formulations from Jiangsu Anpon to control wheat aphid; Jiangxi Province also purchased 300 tonnes of pymetrozine formulations from it to control rice plant hoppers in Sept. 2010. Another bid pesticide enterprise—Jiangsu Kwin Group Co., Ltd. also bid in Yunnan, Shandong, Henan and other provinces in recent years. 

In fact, for the bid of government procurement, many pesticide enterprises still can't get involved, even for some large pesticide enterprises. Manager Shenyangfeng from Shaanxi Sunger Road Bio-Science Co., Ltd. expressed that many enterprises had difficulties managing government procurement. Taking county-level procurement bid for example, the bid application usually needs to be sealed from village government to country government and it involves sealing cost every procedure. Only enterprises that have comprehensive social networks and bravery to compete for the price can act like a duck to water.
The procedures of bid invitation are cumbersome and lots of pesticide enterprises lack the experiences of preparing for bid materials. Many pesticide enterprises had to give up the bid when they found that it was impossible to fetch the necessary materials in a short time as they treked a long way to other provinces for the bid invitation.
In addition to the cumbersome procedures, high threshold set by local governments was also a big obstacle to pesticide enterprises who want to obtain the bid invitation, especially those medium and small sized ones.
Lastly, some overseas pesticide enterprises also see government procurement as a big opportunity and want to participate. Though government favors domestic pesticides, it is believed that some foreign pesticide enterprises will benefit from government procurement thanks to excellent effect of imported pesticides and their increasing cooperation with the government. For example, spinetoram and spinosad from Dow AgroSciences have been selected in Jiangsu government procurement in 2012.

Source: Insecticides China News 1212

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