Extending to the Upstream and Downstream of Fertilizer Industry and Acquiring Horizontally Become the Main Directions fo

By CnAgri2018-03-16 13:40:04 Print On the one hand, fertilizer industry is facing the pressure from external environment such as overcapacity, plan of zero growth in use of fertilizer, environmental pressure and a drop in profits; on the other hand, along with the outstanding of scaled agriculture and the rising of new-type operating entities, there is diversified demand for supply and service, etc. So, transformation and upgrading become inevitable choices of fertilizer industry. The main directions are as follows:   
 
(1) Extension to the upstream: It is convenient for fertilizer companies to control the upstream resource, which can ensure resource supply and low-cost production, so fertilizer companies all begin to be involved in upstream resource industry, especially phosphorite. For example: Winture acquired Leibo Kairui Phosphorus Chemical Co., Ltd in 2013; Sierte acquired Zhengli Mining Industry Co., Ltd in 2016; Yuntianhua acquired Yunnan Three Circles Sino Mosaic Fertilizers Co; Ltd in 2016.     
 
(2)Horizontal acquisition: acquiring similar companies aims to enrich product structure, expand capacity rapidly and gain marketing channels. Century Sunshine Group acquired Hongri Akang; Kingenta acquired COMPO EXPERT; Batian acquired AMMS, etc. These buyers all have complete production lines and marketing channels, and strong innovation, so BOABC thinks the companies with poor operation performance and weak strength would be merged by the giants in the future.    
 
(3) Transformation into an agricultural service provider: along with the expanding of operation scale of agriculture, there are higher requirements on service and operating entities of fertilizer companies, so fertilizer companies all are transforming into an agricultural service providers from existing simple fertilizer suppliers, extending industrial chain and value chain, establishing subsidiaries that provide comprehensive solutions to agriculture. For example: Kingenta gathered together with famous companies and set up Jinfeng Community that would become a model of agricultural service providers.   
 
(4) Extension to agricultural production-supply-marketing: in recent years, Stanley, Kingenta, Xinyangfeng and Sinochem have started to acquire or set up downstream agricultural service companies, and invest in modern agricultural projects. Especially, Sinochem set up Sinochem Agriculture in order to fully integrate agricultural materials, planting techniques, finance and agricultural product selling business; Stanley is speeding up transformation obviously. Stanley was named Stanley Agriculture Group in 2016, transforming into a comprehensive agricultural service provider from a single agricultural material supplier.