Why do fertilizer companies see an increase in operating revenues, but a fall in profitability?
At present, fertilizer sector in China still is a low-end manufacturing industry with fierce competitiveness, and most of them lack core competitiveness and occupy the market only through a price war. Although few companies are developing new-type fertilizer and improve R & D capacity through overseas mergers and acquisitions, yet they can’t form effective competitiveness in the short time.
The same as fertilizer and pesticide, fertilizer is only an agricultural production material, for field crops, vegetables, fruits, tea trees, etc. Only providing various excellent service to the farmers, cutting farmers’ inputs and increasing their revenues, various agricultural material producers can improve the market share of their products, which is fundamental to improve competitiveness.
Some domestic companies have started to build agricultural service platforms, for example: Kingenta’s Jinfeng Community, Stanley Agricultural Service Co., Ltd., Sinofert’s MAP Modern Agricultural Service Platform, etc., but, they are still in the pre-design and pilot stages, so it takes a long time to become a real integrated service platform involving in techniques, finance, agricultural materials, marketing, etc