Expect a shortage of crop inputs in 2013

Sunday, March 3, 2013

With U.S. corn acreage expected to jump and inputs from pesticides and fungicides to forage seed in short supply, growers will need to work closely with their suppliers to meet their needs

by PAT LYNCH

Some crop inputs will be sold out this year. Why? U.S. farmers plan to seed close to 100 million acres of corn in 2013, about seven million more acres than they seeded in 2012. To put things in perspective, there may be 3.5 million acres of corn in Canada in 2013. The increase in U.S. acres is twice the total Canadian corn acreage.

Shortages of inputs started with hybrid corn seed. Already many of you have been told that your first choice of hybrid is not available. You will now have a second or third choice. Forage seed is in a similar position with good varieties sold out. Some Western Canadian forage seed producers plowed up forages to plant more lucrative crops like canola.

Expect there to be shortages of pesticides. Last year, we ran short of Matador, a popular insecticide, in May. The rest of the year we scrambled to find replacement products.

Another reason for the shortage of pesticides is their low profit margins. There were a lot of generic pesticides, most notably glyphosate. The margin was so small on these products that some of the smaller companies producing generic glyphosate have exited the market. (They now produce non-agricultural chemicals.) This leaves more pressure on the main glyphosate manufacturers to make more products. The reality is that you cannot just start making more active pesticides. Many of the manufacturers "forecast" their pesticide needs 12 months ahead. During June and July 2012, manufacturers were gearing up to produce their products for 2013. During that period, we were still thinking there would be a reasonable corn crop in 2012 and corn acres for 2013 would be similar to 2012.

The product shortages we saw in 2012 – and which I predict we will see in 2013 – is what we can expect in the future. Inventory kills. Manufacturers or retail locations that have a large inventory at the end of the season lose money on that inventory, especially if the product drops in price due to new generics.

What can you as a producer do to increase the probability of getting the crop inputs you need?

Work closely with your input supplier. Put your order in early for products you are fairly confident that you will need.

I expect to see more fungicides used than the market can supply. Glyphosate will probably be in short supply. This is good in some ways since it will force growers to use actives other than glyphosate to control weeds and delay glyphosate resistance. But this shift from glyphosate to other actives will put pressure on some popular herbicides.

If you are a small or medium-sized grower, you are more vulnerable. Some larger growers shop around for the best price. This can greatly reduce a supplier's inventory. Often, retailers do not forecast inputs for large growers. If they suddenly sell to a larger grower, they can now be short of that product. I see no way to counteract this, other than having a good relationship with your input supplier.

The other thing you can do is prepare your own pesticide. It will need to be secured according to regulations.

Store products you know you will use. Do not expect to return these at the end of the season if they are not used. If you do, you may be charged a restocking fee. This is common in many other industries. BF

Consulting agronomist Pat Lynch, CCA (ON), formerly worked with the Ontario agriculture ministry and with Cargill.