WITH seeding in Western Australia just around the corner, higher than normal input costs are front of mind for growers and the significant supply chain challenges across the globe aren't doing anything to allay those fears.
Freight services worldwide have increased in cost and become increasingly hard to source, reliability of shipment dates has reduced and production of crop protection active ingredients has been constrained in key countries.
Combine all of that together and the agricultural chemical industry is facing never before seen challenges when it comes to global supply chains.
Nufarm Australia commercial general manager Peter O'Keeffe said there were a few factors at play starting with global supply, as molecules including 2,4-D and glyphosate have been tight globally in the second half of 2021.
He said the second reason was due to demand in Australia being very strong as a result of much of the country being subjected to a prolonged drenching, leading to a massive weed control effort.
"Thirdly, because pricing has been much higher than the 10-year-average for many crop protection products, customers are probably baulking at proactive offtake," Mr O'Keeffe said.
"I suspect some growers are delaying offtake as long as possible, in the hope of chemical prices softening and this means retailers are hesitant to keep taking preparatory deliveries themselves.
"This is completely understandable given the situation, but I urge growers to keep drawing product through the supply chain so all participants can keep playing their role."
While prices are higher than normal, the most expensive chemical will be the one that holds up a grower's seeding program in April.
In reality, there is only a very short window now for the supply chain to do its thing before the seeding rigs start to roll.
Grain Producers Australia chairman and Miling grower Barry Large said the additional costs were putting immense pressure on growers' bottom lines and ensuring they closely scrutinise potential application rates and benefits, versus potential returns.
"Growers will be making some tough decisions to ensure they manage and measure these risks appropriately, along with hedging strategies," Mr Large said.
"The big question is whether grain prices will stay high enough for long enough, in order to absorb some of these risks - but then it still has to rain.
"The last thing we want to see is growers taking high-cost risks to plant this crop, with significantly higher than average input prices, but the final yields are down while the prices also drop."
With resurgent global demand and raw material shortages, coupled with increased manufacturing and shipping costs, the impact on prices through 2022 is unavoidable.
While key ag-chem companies have continued to manufacture a significant amount of crop protection volume locally, the influence of global disruptions on raw material and freight availability has increased the price of raw materials and will lead to supply disruptions.
Mr O'Keeffe said one of the key emerging issues was triallate - a common mix-partner for pre-emergent residual herbicides with the molecule likely to be in short supply.
"Nufarm is still waiting for confirmation of how much active ingredient will be supplied in time for the upcoming season, which is now not that far away," he said.
"Nufarm continues to be 'hand to mouth' with a number of big ticket items such as the key 2,4-D products (Amicide Advance 700 and Estercide Xtra 680) as well as being crucial in the glyphosate space.
"There are significant volumes of these products being despatched and heightened demand continues to keep the pressure on Nufarm to manufacture at well above our normal summer run-rates."
When it comes to the way forward, the country's key ag-chem companies all had a similar message - be well-planned and commit early to your preferred retailer.
They recommend growers secure their requirements early for winter crop, to make sure they either have line of sight on the products they want to use, or so they can move to a back-up plan before seeding starts.
That will also flush out any potential upside requirements for non-preferred chemistries, where growers can't get their first choice.
BASF head of agricultural solutions, Australia and New Zealand Gavin Jackson said the company's mitigation plan includes early shipping and increasing local manufacturing.
"We understand the pressing needs of our farmers in Australia and through this uncertain period, we have put robust supply contingencies in place including using air freight where necessary and we are expecting to meet our planned volumes," Mr Jackson said.
"We're monitoring the situation on a regular basis and we're in close communication with our global supply chain and retail distribution network across Australia.
"We appreciate the close relationships that we have with our farmers and for the upcoming season, we ask that they engage us early in discussions and we will do everything we can to assist."
A Syngenta spokeswoman said their long-term global supply relationships across Europe, Asia and the United States have them in a good position.
"However, having absorbed much of the price increases to date, pricing on some of our products will increase as we pass on some of the cost impacts," the spokeswoman said.
"Syngenta plans for the supply of our products using a robust forecasting process that takes place months ahead of when the product will be required for use, however increases in demand and lead times due to strong seasonal conditions can cause uncertainty.
"We are also committed to giving up-to-date information on availability and timing of supply to our retail customers so that they can manage their business and customer expectations."
At this stage, it's still expected for supply to be maintained but growers will be watching the market intently and looking for positive price signals.
However, pricing of many crop protection products will be higher year-on-year, not because of lack of supply, but because the costs of active ingredients, raw materials and freight spiked in 2021.
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