DUPONT+ DOW, SYNGENTA+ MONSANTO?

[fudge]

can you explain pls?

Well just look at all the different products available containing the same ai. Combine this with a "tailored" approach to agronomy farmers tend to buy expensive products "just in time". Whereas a planned buying would make cooperation more effective IMO.
Of course some might say if it isn't broke don't fix it!

 

[Feldspar]

Can you buy products out of season at lower prices than if you want them tomorrow?

 

[fudge]

Can you buy products out of season at lower prices than if you want them tomorrow?

We don't know do we?

 

[Roger Perry]

Agrium and Potash Corp merge,now the largest fert co.........Dow and DuPont...........Chemchina buy Syngenta...........now Bayer and Monsanto.

With the collapse in farm prices now at less than cost of production the consolidation will only continue in the supply side, not good for production agriculture producers.

 

[ollie989898]

Well just look at all the different products available containing the same ai. Combine this with a "tailored" approach to agronomy farmers tend to buy expensive products "just in time". Whereas a planned buying would make cooperation more effective IMO.
Of course some might say if it isn't broke don't fix it!

It is hard enough to get many farmers to pay for stuff 3 months after it has been delivered. Now you are saying you want to take delivery of your entire fungicide package in December, with absolutely no idea of what disease pressure in season will be like? I guess you want the ability to send that same product back if you don't use it by July as well??

Come on, lets be realistic here.

 

[ollie989898]

Can you buy products out of season at lower prices than if you want them tomorrow?

No. Because they simply will not exist in any meaningful quantity.

Unless distributors forecast what they are likely to require over the next season, it won't even be manufactured. Neither the manufacturers nor 'retailers' of agchems have endless stocks of the stuff (or their precursor materials in the case of manufacturers) in store all the time- it is not necessary (some products are highly seasonal) and the cost is insane. Meaning if you wanted that kind of supply system, you would have to pay more for it (going to be popular that) and it would put smaller companies at a disadvantage- which makes it a circular argument because people are complaining about big companies taking over the game.

 

[ollie989898]

On the OP, I think these people who think some day farmers are all going to be rich due to rising populations, China eating more meat, etc., are engaging in pie-in-the-sky thinking. Yes, we might see higher prices, particularly in the odd year due to increased climate volatility, but if there is a general trend upwards you can be sure that input prices will follow close behind.

Big agrochem companies will know how much money farmers are making probably better than the farmers know themselves. With a large number of supply companies there will be more of tendency to compete on price, thus bringing the price of their products to a level where they make enough money to bother making them. In this instance the farmers will see quite a big benefit from using agrochemical products and could be really quite profitable.

At the other end of the scale, with very few companies -- and less than five is very few IMO -- the tendency will be towards collusion (and this can happen in very subtle ways) that causes the price of their products to rise to a level where the farmer makes just about enough money to bother farming, but in this case it will be agrochem companies who are laughing their way into the bank.

I have just been reading The Prize by Daniel Yergin on the history of the oil and oil companies and you can quite clearly see both of these dynamics throughout history.

My feeling is that, whilst the second scenario prevails, a farming system that can divorce itself from products -- which are supplied by a few very large companies who have vastly more power than the individual farmer -- the better the long terms prospects for that farming business.

Looking at previous opportunities, the successful farming business needs to make sure it keeps one eye on efficient crop production, but to keep another looking out for anomalous opportunities. I think selling land for houses was one a while back (now S106 agreements are clawing back a lot of the money made from selling land in this way), and I think renewable energy and FiTs were another (now also gone, or least very much reduced). Both of those options were more the benefit of the land owner and not the farmer, which leaves the farmer facing quite a different long term prospect to that enticing picture of sky high commodity prices and rock bottom input prices.

The thing that still amazes me is the spread between the bottom 25%, average and top 25% farms. Whilst we still have this big spread, I still see a way of farming and making reasonable money for those at the top, assuming that the price of inputs will be pitched at a level that makes the average farmer still want to get out of bed in the morning.

The oil industry model is surely not one you want farming to follow?

 

[shakerator]

No. Because they simply will not exist in any meaningful quantity.

Unless distributors forecast what they are likely to require over the next season, it won't even be manufactured. Neither the manufacturers nor 'retailers' of agchems have endless stocks of the stuff (or their precursor materials in the case of manufacturers) in store all the time- it is not necessary (some products are highly seasonal) and the cost is insane. Meaning if you wanted that kind of supply system, you would have to pay more for it (going to be popular that) and it would put smaller companies at a disadvantage- which makes it a circular argument because people are complaining about big companies taking over the game.

I know distributors who have to submit "plans" to manufacturers so they take on the risk of "holding the baby"

 

[ollie989898]

High time we bucked up then and consolodated all our buying groups into two, or even one, to fight back?

This sort of sounds like a monopoly situation which is not legal?

I think buying groups are a great idea. They make me feel less guilty every time I shop in Tesco.

Has the thought occurred to you that maybe the manufacturers do not want their heavily developed and costly products touted out for zero margin to all and sundry?

 

[ollie989898]

I know distributors who have to submit "plans" to manufacturers so they take on the risk of "holding the bag"

You have to submit forecasts. And I suspect next years fungicide requirement is probably being discussed and will be finalised by December if memory serves me correctly.

If this stuff is not forecast for, it simply won't be available come the spring. The raw materials and percursors won't be sourced, and the Chinese plants won't make it. Which is what happens when we get a dirty disease season, you guys go out lashing on higher than usual rates and suddenly there is no more CTL etc available and the big names will not have a huge amount to simply dispose of to the nearest buying group.

A certain amount of low value stock one can carry from one season to the next, but pallet after pallet of the newest SDHI fungicide? Rather you than me.

Of course you have to remember also that with the regulatory environment today some of this stuff could lose it's approval from CRD with little warning as well.

 

[fudge]

It is hard enough to get many farmers to pay for stuff 3 months after it has been delivered. Now you are saying you want to take delivery of your entire fungicide package in December, with absolutely no idea of what disease pressure in season will be like? I guess you want the ability to send that same product back if you don't use it by July as well??

Come on, lets be realistic here.

The terms of business in our buying group are payment the following month. Groups also have bad debt insurance. Bulk early orders should be cheaper because they are easier logistically. Realistically farmers should think about this because although the industry is well served by the distributors ATM consolidation on the supply side shifts market power in the direction of the manufacturers. I take it you think cooperative buying is a bad idea? If not cooperation between buying groups seems logical.

 

[ollie989898]

The terms of business in our buying group are payment the following month. Groups also have bad debt insurance. Bulk early orders should be cheaper because they are easier logistically. Realistically farmers should think about this because although the industry is well served by the distributors ATM consolidation on the supply side shifts market power in the direction of the manufacturers. I take it you think cooperative buying is a bad idea? If not cooperation between buying groups seems logical.

I think the idea of farmers taking delivery of their entire agchem spend in a single month, eons before they ever need to apply it, is mental basically. Yes, it is a bad idea.

You won't save that much on logistics. You will have to store, and keep secure a vast amount of chemical stock for months on end- not something your cashflow, insurance company, the EA or local fire brigade are going to like. Thieves meanwhile, will hit the jackpot the moment they open the door.

I think we need to recognise the reasons that industries consolidate, merge or acquire competitors. Streamlining is how businesses react to changing market conditions. Obviously the various parties in these mergers have decided it is economically advantageous for them to amalgamate their operations, for whatever reason.

What I don't get is that you are rightly complaining that the industry is going to be effectively at the hands of a tiny number of huge companies who develop and manufacture the inputs you need, and yet you are also saying buying group- which, in effect, is an entity that exists solely for reasons of economics. Can you appreciate the irony of this then? It is two ends of the same stick surely, if you want to pursue that method of operating your business, what is the logical outcome of that? You will basically end up with one huge company to which you are entirely dependant upon for everything- there will be no competition.