According to CCM’s China Crop Protection Monthly Report 1310, in view of the development of the specialized farmers' cooperatives during these years, some pesticide enterprises have been actively promoting their business with the cooperatives. For instance, in March 2012, a matchmaking conference was held for some pesticide enterprises and large-scale pesticide consumers in Beijing City. There were more than 300 specialized farmers' cooperatives and farmers at the conference. At last, they had signed 42 agreements of intent with pesticide enterprises, with total trade value adding up to USD6.08 million (RMB37 million). Specifically, a cooperative named Hebei Junyin Specialized Farmers' Cooperative signed an agreement of intent with Dalian Regar Pesticides Co., Ltd. on pesticide purchase, including herbicides for corn field covering 667 ha. and insecticides for cotton field covering 100 ha.
Another example is that Sino-Agri Leading BioSciences Co., Ltd. (SAL BioSciences), one of the largest pesticide distributors in China possessing 9 branches and 21 distribution centers, adopts the "corporation+ cooperative" mode whose core is comprehensive agricultural service for specialized farmers' cooperatives.
Although some pesticide enterprises have already enjoyed commercial opportunities from specialized farmers' cooperatives, it is not always easy for them to maintain partnership with the cooperatives. Actually, pesticide enterprises may face difficulties in trading with specialized farmers' cooperatives.
First of all, pesticide enterprises would probably be confronted with the serious problems concerning fund security and cash flow. In most rural areas, farmers get used to taking goods from local operators without immediate payments, which means payments are usually made at the end of a planting season, regardless of whether they purchase pesticides from individuals or the cooperatives. Pesticide enterprises, however, adopt the direct sales model in which they can get payments as soon as possible in order to avoid deadbeats as far as possible. In this case, the contradiction between farmers and pesticide enterprises occurs. In the future, if pesticide enterprises accept credit sales, there is likely to be a big potential risk for the enterprises in fund security and cash flow. This is what pesticide enterprises should beware of.
Besides, those pesticide enterprises expecting to make a deal with specialized farmers' cooperatives are supposed to distribute a large amount of huge human and material resources among rural areas. As planting situation varies with areas, pesticide enterprises are required to possess strong service abilities when providing the cooperatives with comprehensive agricultural services, so that they could snatch more market shares. Therefore, the companies are in need of more professional employees proficient in agricultural expertise and sales in the future, compared with the previous product distribution pattern.
In a word, as the structure of pesticides supply chain are getting simplified, pesticide manufacturers and provincial dealers have to undertake more work which was unnecessary to them previously. The promotion of specialized farmers' cooperatives would provide pesticide enterprises with more market opportunities which is also considered as a big challenges on innovation.
Table of contents of China Crop Protection Monthly Report 1310:
Number of specialized farmers' cooperatives skyrockets since 2007
Corporate-like management for specialized farmers' cooperatives
Specialized farmers cooperatives to boost China's agriculture
Irregularities and lack of funds hinder the development of cooperatives
State policies seek to boost the development of specialized farmers' cooperatives
Specialized farmer cooperatives drive direct selling of pesticides
Enterprises should try to turn challenges into opportunities
China Crop Protection Monthly Report, a monthly publication issued by CCM, will keep an eye on the most important or the latest occurrences or the hottest topics in China’s crop protection industry, and select one or two topics out of these news and information to compose an in-depth feature article. You can obtain professional and insightful intelligence, covering market dynamic, industry development, government policies and more by going through the features articles every month.
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