Chinese production problems | Farmers could do well securing supplies early
Glyphosate prices are likely on the rise in North America, according to the region’s largest input retailer.
A senior executive at Agrium Inc. was asked about prices during a conference call announcing the company’s second quarter results.
Dave Tretter, vice-president of procurement at Agrium, said global glyphosate prices are up 16 percent over a year ago due to higher prices for generic glyphosate from China.
He said there hasn’t been a dramatic increase in North American prices but he expects that will happen later in the year.
Agrium spokesperson Richard Downey added context to Tretter’s remarks in a phone interview.
“Clearly, product out of China, which is where most of the generic glyphosate comes from, costs have gone up and therefore prices have risen,” he said.
Manufacturers are paying more for electricity and specialized sulfur, which are key raw ingredients in the production of the most popular herbicide in North America.
Downey receives a report on China’s agricultural chemical industry where manufacturers have been bemoaning the hard times they face.
“It was very clear they were losing a lot of money and they were complaining their costs had been going up. So you could sort of see (the price increase) coming,” he said.
“They used to bleed red ink like mad and I think a few people have gone out of business, so there has been some consolidation within China.”
Bob Friesen, vice-president of government affairs with Farmers of North America, said several Chinese glyphosate makers were caught inappropriately dumping waste water and now the entire industry faces increased scrutiny surrounding environmental regulations.
“The government has decided to crack down on compliance and in fact some manufacturers have shut down to retrofit, which is supposed to cost a lot of money,” he said.
The idled and closed plants are restricting supply, driving up prices. FNA recently bumped up the price its members pay for generic glyphosate and more increases could be in store.
“According to what I’m hearing and according to what we’re seeing in China, yeah, there could be more upwards pressure on the price,” said Friesen.
Alberta Agriculture tracks prices of a variety of farm inputs. The data shows a modest three percent increase in the price of Roundup WeatherMAX glyphosate between July 2012 and July 2013.
Doug Chorney, president of Keystone Agricultural Producers, said prices started to creep up at retail outlets in Manitoba around the beginning of July.
“It’s a concern because it’s such an important tool for farmers across Canada,” he said.
Farmers in his province are using more of the chemical than ever due to the surging popularity of glyphosate tolerant soybeans and corn.
Chorney said competition from generic product has made the herbicide the cheapest it has been in his lifetime.
“Glyphosate is one of the most economical products we use on a cost per litre or per acre basis,” he said.
“It’s at the low end of the scale, so a 16 percent increase there is not nearly as dramatic as say something like a fungicide that’s $20 per acre.”
However, a huge volume of the chemical is applied to the vast majority of acres in the Prairies for spring burnoff, in-crop application, desiccation and post-harvest weed control.
“I’ve heard of one farmer bigger than me in our area take a whole semi-trailer load in one delivery to his farm,” said Chorney.
That’s why a 16 percent price increase in the product would sting.
Chorney bought his supplies for next year and part of the following year in June when a retailer told him that a price increase was coming.
“I would say to farmers to secure a supply as far out as you can manage to store it and pay for it,” he said.