Contrary to what some farm leaders predicted, input costs have followed commodity prices down. But there is one glaring exception.
While fertilizer and fuel costs have been falling, glyphosate prices have been on a steady climb for two years with no relief in sight, at least for the short term.
The retail price for Roundup Weathermax shot up 21 percent last year, according to Alberta Agriculture.
“They have probably gone up higher than what is typical for most herbicide products,” said Alberta Agriculture crop specialist Doon Pauly.
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And unlike fuel and fertilizer, glyphosate prices haven’t softened in the wake of crumbling commodity values.
“My understanding is they haven’t backed off a great deal, if at all, from what people were paying last summer,” said John Mayko, senior agronomy specialist with the Canola Council of Canada.
Ian Wishart, president of Keystone Agricultural Producers, a Manitoba farm group that keeps close tabs on input costs, recently attended the annual meeting of CropLife Canada, an umbrella group representing some chemical companies. He heard that farmers may be in store for a 30 percent price hike this year.
“There is a lot of thinking in the pesticide industry that these high commodity prices are still out there. I hate to break the news to them, but that’s not quite so,” he said.
A spokesperson for CropLife said there was no such talk about a pending glyphosate price hike in any of the formal presentations, adding that the trade association doesn’t typically discuss pricing.
Regardless of what the future holds, there is little doubt prices have been climbing.
A monthly farm input graph prepared by Alberta Agriculture shows glyphosate costs trended steadily upward between January and December 2008.
Trish Jordan, spokesperson for Monsanto Canada, said the increases must be happening at the retail level because the manufacturer hasn’t touched its price on Roundup brand herbicides since July 2008.
Glyphosate prices rose sharply in 2007 and the first half of 2008 due to overwhelming demand for the product spurred by record high commodity prices and slumping supply, due to an earthquake in China and production interruptions caused by the Olympics.
The outlook for 2009 is significantly different.
Droughts in Argentina and Australia are expected to soften demand. The supply scenario has changed with Monsanto having completed plant expansions and a number of facilities coming back into production in China.
Monsanto’s chief financial officer recently stated that revenue from its Roundup herbicide business will range from $2.4 to $2.5 billion US in 2009, but could fall to $1.9 billion by 2012.
Glenn Caleval, spokesperson for Farmers of North America, Canadian distributor of ClearOut 41 Plus, said he can’t see how glyphosate prices can stay high for long considering what’s happening on the supply side.
“I know, as a matter of fact, that at least a couple of hundred factories producing glyphosate opened in China during 2008.”
He is skeptical about rumours of a further 30 percent price hike.
“What they might be doing is trying to get farmers to pre-buy a bunch in anticipation of the price increase.”
Wishart said there isn’t much farmers can do to cut back on glyphosate when costs escalate.
“It’s a must-have, especially if you are zero or minimum till.”
That’s why producers need to encourage the entry of more players into the Canadian pesticide market and push for improvements to programs like the Grower Requested Own Use import program.
“Currently, GROU is, to say the least, a little disappointing,” said Wishart.
What started out as a promising program for bringing in cheaper pesticides from the United States has turned into a program with a limited list of importable goods.
“You end up with a handful of products that nobody wants,” Wishart said.
