Pesticidal herbicides fall the most, when will the pesticide price war stop?

Price war is a commonly used technique in business wars.

As long as there is a market, there will be price wars, and price wars are also a way to distinguish competitors.

Price war is a big knife, master well, will be invincible; If you don't, you hurt yourself.

The trend of fast moving consumer goods hard discount swept the industry, affecting every platform, supermarkets, businesses or active or passive to meet, but also to the dull offline retail industry has brought a bright color.

Sometimes the price war is high and straightforward, directly pulling the price from the high to the cost line, in order to achieve the purpose of occupying the market in the short term.

Sometimes the price war is grass snake gray line, volts thousands of miles, we can see is the price war, can not see is the potential layout of the enterprise.

The purpose of participating in the price war is not the same, so each enterprise's strategy is also different.

Perhaps this is that some enterprises will be considered to destroy the price system of the industry, and some enterprises will be praised as the king of cost performance; Some companies can only be disrupters, and some companies are the reason why they are pioneers.

In recent years, the concentration of the agricultural materials market is improving, and the national layout of major enterprises has also reached the time to release production capacity at full speed in the next 2 to 3 years. Market competition will be more brutal, do not rule out the determination of enterprises to carry out the price war to the end.

Is there a price war in the agricultural materials industry? Can the price war really be invincible? How to fight a valuable price war?

If you want to fight a quality price war

Price wars can certainly be fought.

After all, it can distinguish rivals, is a quick capture of the market.

As marketing guru Philip Kotler said: there is no brand loyalty in the world that cannot be offset by a price cut of two cents. Price, there are still advantages in bulk products.

Although many compound fertilizer companies have said that the hard cost of compound fertilizer production is getting higher and higher, profits are increasingly diluted, and the industry has not supported a price war, but it can not stop the pace of enterprises want to go further.

Similar products than quality, the same quality than price.

When many companies want to release production capacity and spread the market, they usually use a certain advantageous product to open the way and quickly occupy the market with price advantages, forcing competitive products to retreat.

However, this advantage is only useful when the price is cheap, and it will not exist once the price recovers. To maintain a long-term market advantage, we need to fight a quality price war.

So, how to fight a quality price war?

1. Low cost is an advantage

Low price is not an advantage, low cost is.

Achieving low cost is the solution to the price war.

The premise of the price war is the product, and the product must be a good product with good quality. Rather than to match the price, the quality of the product will be lowered to ensure profits.

Companies generally use to fight price wars are ordinary, bulk products, such as chlorine-based 15-15-15 compound fertilizer. Why can universal products be used to fight price wars? Because the price of general products is basically transparent, there are comparative advantages.

Pupin can achieve low prices must be because it can rely on its own scale advantages, industrial chain advantages, management advantages and technical advantages, etc., to compress production costs, seize the market with low prices, and enhance market concentration.

On the one hand to benefit the people, on the other hand to force out the opponent.

The beneficiaries of the price war are naturally users, and high cost performance is naturally more popular.

Although it is unknown to say that the price war, but several resource companies in charge of chatting, they all said that the product structure will be adjusted this year, the price of basic products will be more friendly to the people.

To reduce the cost, not every enterprise has such strength. Either scale, or management, brings cost advantages.

On the other hand, the price war has also promoted the progress of the industry, and promoted enterprises to constantly reconstruct low-cost advantages in technology, costs and products. You need to be able to compete on price.

Enterprises that participate in competition need to be able to afford to play and move, so that they are not easy to go out.

Many say the price war has shut out small businesses. Small enterprises have the practices and advantages of small enterprises, and they can do differentiation and innovation.

2. A price war supported by high-end products

Then again, well-run resource-based enterprises have the strength to fight price wars, but there are few enterprises that can insist on fighting quality price wars.

Why can't the price war last? Who doesn't know that one season may only work for one season? Many people say that as soon as the price of the product is reduced, customers come to run; Once the price is raised, customers gravitate to other stores. Want to continue to reduce the price, but it is not profitable.

Profit is the foundation of enterprise survival.

In order to get a shock market effect, the price must be in place, in the cost, the factory price is almost transparent today, can be used to fight the price war of the product must not make money or even lose money, who can bear this for a long time?

Many companies envy fat companies to make money, although sales are not very high, but high profits. In contrast, most fertilizer and pesticide companies do not have the profit support of high-end products.

Without the profit of high-end products to hedge the loss of price war products, the price war can not be fought.

Therefore, many companies propose to high-end, but high-end is not only the high price, high-end is not only can be completed by Shouting slogans, it is to continue to change the product through technical means to achieve product restructuring. In order to achieve profitability, fertilizer companies basically realize the functionalization of large fertilizers, and pesticide companies are also increasingly entering the bureau of special fertilizers, which is to hope that there can be differentiation in products.

Creating differentiated and competitive products can fundamentally solve the pain points of growers, achieve high-quality planting, achieve color transformation, stress resistance and other functions, and use better services to match the price and quality.

3 Tactical low or strategic low

Enterprises can do tactical low prices or strategic low prices according to different purposes.

Tactical low price is the price policy implemented by an enterprise in a certain period or in a certain region to achieve a certain market purpose by using a tactical price war to the main customers.

The strategic low price is also a strategic cost advantage.

Just like in the market, a company looks like it has been playing a price war, in fact, it is playing a "price + structure" war.

It should be known that enterprises with strategic cost advantages generally design the proportion between diversion products (price war products) and profit products (medium and high-end products or differentiated products), which is a price war supported by high-end products to achieve total cost leadership.

Why can some enterprises insist on a price war, so that people are "unattainable and daunting"?

Is to do a good job of product structure layout and positioning. With different products, to achieve different strategic purposes.

Perhaps, the price war is also an important step for some large enterprises to get rid of the low-end positioning of their products?

Basic products can be very low in price, and then use high-end products to raise the research and development grade, and mid-end products to achieve profit. Use a large number of mid-range product profits to make up for a small number of basic product losses.

Let's see, now you can remember the king of Shuanghui, as for the general ham sausage now? Millet, known as the price butcher, has now got rid of the positioning of low-end products?

Price war has always been a strategy, not a goal.

In addition, agriculture is so large, there are so many crops, and the demand is so large that not one or several products can be fully satisfied. As long as it focuses on user needs, launches differentiated and competitive products through innovation, every company has the opportunity to win.

There is no winner in the price war, and pesticide companies must fight the value war

The word "price war" has become the most common vocabulary of China's agricultural materials market, over the years seems to have scraped into a climate, fertilizers, pesticides, seeds, etc., are "you sing I debut", has become one of the most commonly used ways of enterprises.

2023 for the agricultural materials industry, especially for the pesticide industry, is a relatively difficult year, but also the most intense price war year.

In 2023, 80% of enterprises have joined the price war

According to ZhongNong Lihua original drug price index data, in 2023, 92% of all pesticide original drug products tracked fell in price, 8% of the product prices were flat, and there was no increase in varieties, and the index fell 37% last year. Among them, the price index of herbicides fell by 42%, and the top five varieties fell: phosphine glyphosate fell by 58%, enketone fell by 56%, glyphosate fell by 48%, 2, 4-drops fell by 45%, isometolachlor fell by 40%, and insecticide became the hardest hit area.

As of December 24, 2023, the price of glyphosate has reported 26,000 yuan/ton, and the price of oxalammonium phosphine has quoted 68,000 yuan/ton, both of which have fallen off a cliff compared with the highest price in 2022, creating a historic low. It can be said that the overall price of pesticide in 2023 has fallen "hemp", and the corresponding price war of terminal preparation products is also crazy.

According to industry insiders, the retail price of 20% ammonium phosphine 100 ml in 2023 has fallen to 3 to 5 yuan/bottle, and some small manufacturers even sell prices lower than this, which will benefit farmers in the short term, and the application cost of weeds will be reduced by at least 20%. But in the long run, the damage is also farmers, because under the blindly low price, the products are mixed, the quality is uneven, and the effect is difficult to guarantee.

The sales director of a large agricultural chemical enterprise said that the continuous decline in the price of raw drugs has made many enterprises miserable, especially to the "double grass" enterprise. In 2023, 80% of enterprises have joined the price war, agricultural distribution channels and enterprises are in the price war game, difficult to extricate themselves, performance is generally under pressure, and profitability is weakened.

In other words, in this competition, whether it is agricultural channels, famous brand large enterprises or weak small and medium-sized enterprises, most seem to have lost the initiative, are involuntarily pulled into the "price war" vortex.

In the first three quarters of 2023, pesticide listed enterprises generally faced a double decline in revenue and net profit compared with the same period last year, among which, the net profit of "Shuangcao" enterprises represented by Xingfa Group, Xinan Shares and Lier Chemical fell by more than 70%. They all said that the decline in performance was mainly due to the large overall channel inventory of raw drugs and intermediates in the agricultural chemical industry, the sharp reduction in incremental customer demand, and the impact of the company's main core products by intensifying competition, resulting in a sharp decline in product sales prices year-on-year.

2 There are no real winners in the price war

At present, there are only two situations in the pesticide market to provoke a price war: one is that some small manufacturers of miscellaneous brands rush to see that a product is profitable, reduce costs by fake and inferior means, implement low-price dumping, and attract some farmers; Another situation is the general move of "big fish eat small fish" between industries, that is, some enterprises use their own advantages in capital, technology and other aspects of the industry, trying to squeeze out or destroy some relatively weak enterprises through the strategy of price reduction, so as to achieve the purpose of industry monopoly. But no matter what kind of factors caused the price war, in the long run, is not conducive to the normal operation of the agricultural market.

In the view of Zhao Xinwei, general manager of Anhui Baixiu Agricultural Technology Co., LTD., in 2023, with the continuous increase of pesticide excess capacity and the constant bottoming of the price of the original drug, the survival pressure of enterprises has increased sharply, and the price war is inevitable, in fact, most enterprises are not willing to participate in the price war, but once someone launched the price war, they can only actively respond. Therefore, the price war is very clever, but it has its inevitability, and it is indeed a double-edged sword, both to defeat opponents, but also to kill themselves. There is no real winner in the price war, especially with overdraft product quality and service in the way to participate in the price war, this kind of mutual fighting at the cost of damaging the enterprise brand, the final outcome can only be mutually destructive.

3. Take the value route to have a future

Will the price war between pesticide industries stop in 2024? Zhao Xinwei believes that under the tide of pesticide price reduction, under the pressure of not participating in the price war, companies want to jump out of the war circle, no less than out of the earth's gravity. As of mid-late January 2024, agricultural enterprises are collecting funds to ensure the off-season operating rate, making full efforts in winter storage, and dealers at all levels have basically stocked up on advantageous products, which are the cost of their next participation in the price war, as for whose price is more advantageous, it is still unknown. It can be predicted that in the first two quarters of 2024, even if the price of the original drug bottomed out, the situation of the crazy price war will not be changed before the winter storage products have not been digested.

Price war is a vicious circle, want to stay out of the price war is not easy, but blindly fight price war is no future, because price is not the only factor to attract consumers, is not the most effective factor. As Liu Xinzhao, an industry marketing expert, said, in 2024, if enterprises and channel operators want to go further, they should return to the essence of the agricultural materials industry and take the "value sales" route.

This requires the first return to the essence of the market, to effectively understand the needs of farmers, to solve the planting pain points of farmers, to provide high-quality product solutions, to bring value-added effects to farmers; Second, explore a new model of technical marketing, provide professional technical services above the price, and provide scientific solutions to key diseases, pests and grasses; The third is to build a channel ecology of integrated manufacturers, create a long-term cooperation manufacturer model, do a good sales closed loop through win-win and multi-win, develop together with suitable dealers, and train to improve dealer capabilities; Fourth, rebuild the product ecology, create advantageous and differentiated categories, rely on original drugs or technical barriers, cultivate categories with corporate characteristics or cost advantages.