File photo

The Chinese pesticide industry could see a V-shaped recovery, as countries from East Africa to South Asia have launched a battle against billions of encroaching locusts.

The rising sales, of both pesticides and plant protection equipment such as sprayers, are welcome for an industry still reeling from years of overcapacity, the unintended consequences of a nationwide chemical industry shakeup in 2019 and the outbreak of COVID-19 that has disrupted supply chains.

Starting from East Africa, the locust plague threatens the food supply for hundreds of millions of people. But it also boosted hopes for increased exports to countries along the route of the locust invasion, including Kenya, Pakistan and India.

Fan Liqiang, a pesticide expert with the China Council for the Promotion of International Trade, told the Global Times that the locusts will drag exports of Chinese pesticide specialized for locust killing in the short term. In the long run, the fight against locusts will bring more opportunities for Chinese pesticide exports, Fan said.

Industry experts said that Chinese pesticide exports have stayed at 1.5 million tons a year, with 500,000 tons made for domestic use. In 2014, the overcapacity-laden industry had a peak output of 3.4 million tons. China this week flew a planeload of emergency aid to Pakistan, with 50 tons of malathion, an organophosphate insecticide that has a great effect in killing locusts.

China's has about 30 pesticides registered under the Ministry of Agriculture and Rural Affairs, which can be shipped to countries in need, Fan said.

Zhang Yuan, chairman of Shandong Luba Chemical Co and the only maker of malathion in China, said fighting the locusts with Chinese pesticides will create new opportunity for Chinese pesticide makers to prove that the quality of their products and services are equal to US and European brands.

Short-term demand has already picked up. In Shijiazhuang, North China's Hebei Province, the customs office cleared 133 tons of pesticides heading toward Pakistan as of March 6, valued at $3.84 million, local media reported.

Fan said the domestic production capacity was limited first by the Lunar New Year holidays, then by the sudden outbreak of COVID-19. "In the short term, output could not be lifted to a desirable level," Fan said.

Looking forward, a V-shaped recovery can be expected this year when major global buyers began to replenish their stocks in June, Fan said. "Their inventories are low."

Not only pesticides, Chinese sprayer makers are also seeing a surge in sales. 

Zhang Zhishi, general manager of Shandong-based Huasheng Zhongtian, a leading pesticide machinery maker, said he is expecting a 20 percent increase in the number of units to be sold in 2020 for the industry because of the locust plague. 

For his company, sales are particularly good. Zhang's company is working on a single contract with a foreign buyer for 1 million units. In 2019, whole-year sales stood at hundreds of thousands of units. 

Huasheng's product lineup ranges from tractor-based giant sprayers to the more usual lightweight sprayers that can be carried by a single person, with prices ranging from $20 to $1 million. On average, units sold at his company are valued at $60.