Chinese shutdown pressures spray stocks


Agribusiness
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WA growers are being urged to communicate with their herbicide suppliers as the impacts of China’s environmental crackdown is felt.

WA growers are being urged to communicate with their herbicide suppliers as the impacts of China’s environmental crackdown is felt.

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It comes after a tumultuous six months in China and the closure of tens of thousands of factories, as the country worked towards its 2013 plans to reduce emissions from heavily polluting industries by 30 per cent by the end of 2017.

The environmental regulations introduced by the Chinese government have increased compliance costs for manufacturers and reduced their capacity, pushing up prices on most pre-emergent herbicides between five and 30pc.

Similar price increases are expected for post-emergent products.

With summer spraying underway across most of the WA grainbelt following widespread rain in mid-January, WA Landmark merchandise manager Zach Walsh said it had been a difficult few months locking in pricing and ensuring adequate stock was available.

“It has definitely been more challenging for our procurement team with China and getting pricing and confirming supply than what we have seen before,” Mr Walsh said.

“Growers are going to be affected by the price rises that they’ll see, but we’re confident we will see our required volumes despite the issues – it certainly hasn’t been all smooth sailing behind the scenes.”

“They (Chinese government) closed a lot of factories and intermediate suppliers over their winter,” Mr Walsh said.

“That’s not ideal timing for Australia because we’re getting all of our product made and shipped in that November to January period, so we really had to try and bring things forward where we could.

“It’s not a cause for panic but I would encourage growers – if there was a year to get your programs organised with your agronomist and get an early order in to your reseller – this would be your year.”

Elders farm supply specialist agchem, Brendon Joss, said although most suppliers were managing the situation adequately to ensure demand was met, growers could also do their part.

“I think most retailers – certainly us – have really understood the tightness of supply out of China,” Mr Joss said.

“We were actively purchasing in the market back in September for glyphosate particularly and trying to get ahead of the curve of the price increases.

“I don’t necessarily believe the growers have felt any shortage at all, I think they were well organised and retailers were well organised and got their clients in a position where they had products in the sheds.

“Retail sheds have adequate supplies right now but that doesn’t mean growers shouldn’t let their retailer know what they want forecast and make commitments.

“We are encouraging our growers to give us an indication of what they might need, we understand that may change as the season moves on but it gives us an opportunity to have what they want in store ready for them.”

Mr Joss said while there had been a considerable jump in herbicide prices across the board, he expected prices to plateau in the pre-emergent market.

He said post-emergent chemicals may continue to rise in price, but “not in great amounts”.

“I think farmers will see an increase in their post-emergent herbicides from 2017 prices, so growers will feel that and they also would have felt some increases on their pre-emergents that they’ve already locked in with their retailers from the last two or three months,” Mr Joss said.

“In the pre-emergent market from this point on there’ll be slight increases but not significant increases.”

With the Bureau of Meteorology forecasting a wetter than average three months from February to April in WA, Mr Joss predicted a better than average start to the season for knockdown and pre-seeding chemicals.

Mr Walsh said the outlook was positive for the 2018 season.

“I would expect a significant crop to go in again after growers had a better than expected finish to the year in most areas of the State,” Mr Walsh said.

“I think growers will be pretty bullish about their cropping programs and hopefully they can get off to a good start in April.”

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