13 Dec 2023 Crop Protection Product Market Outlook: Shifting Supplies and Volatile Logistics
Another wild ride: That’s what’s in store for the crop protection product marketplace in 2023. But as the marketplace continues to rebound from past years’ challenges, a new set of variables will start to emerge amidst the scant product availability and supply chain logjams common in the last three years.
Entering 2023, the crop protection industry still finds itself in a game of catch-up that began in November 2019 when product supply began to tighten, later exacerbated by the COVID-19 pandemic and resulting shutdowns. The symptoms — namely limited availability and logistical challenges — will linger in the new year. Amidst these challenges, some chemistries like glufosinate and glyphosate will see prices soften.
They continue to put a premium on the kind of strategic partnerships with manufacturers, distributors and others across the supply chain that are fundamental to how Aligned Ag Distributors (AAD) and its independent ag retailer owners uniquely ensure the right products get to growers when and where they need them.
A new potential product inventory situation
The industry continues to work through issues like broken supply chains and limited product available in getting back to “normal.” That recovery — along with global market and geopolitical volatility in the coming months — could spawn altogether different challenges in the crop protection marketplace, according to AAD President Mary Tolke.
“A year from now, product supply likely won’t be an issue unless something changes globally, like war or trade issues in China,” she said. “The tough part is manufacturers are producing for next year, and they probably don’t have great line-of sight-for inventory and are banking on a ‘traditional’ year.”
Continued supply chain volatility
Getting key crop protection products to retailers and, in turn, their customers will continue to be a challenge. Logistical issues in play in the last three years will continue to weigh on the crop protection product market in 2023. Given many products originate overseas, Tolke said even though there could be more product available in the new year, hampered supply chains will still cause hiccups disrupting retailer availability, especially with new factors like a potential nationwide railroad strike that could limit product movement in that key transportation system.
“So many of these products come in from overseas, so while we still expect to see issues in the global side of the marketplace, there are other domestic factors that could influence supply in the coming year,” Tolke said. “Going into 2023, domestic logistics will continue to be a challenge at first because we’re still struggling to get trucks and drivers domestically. Then add the rail strike and potential lapses in production plants from things like COVID, and we could still see bottlenecks in getting product from the factory to the farm in 2023.”
How to manage through 2023 challenges
The convergence of all these factors clouds the crystal ball even more than it already was heading into 2023. While general product supply is expected to gradually rise, that doesn’t equate to improved availability in all cases. And production of all active ingredients won’t ramp up the same way as transportation logistics remains a wild card. This combination is a call for retailers and their customers to stay in close communication to ensure the right product — or a viable alternative — is available on every acre when it needs to be there in 2023. Providing the intelligence and guidance necessary for productive, informed product decisions for its ag retailer owners is a major priority for AAD in the new year.
“Aligned Ag Distributors monitors global, national and regional inputs and costs, so we try to minimize the risk for our owners. While all active ingredients were short two years ago, we’ll have some products on which you might be upside-down and others you can’t get in the right quantities,” Tolke said. “We’re advising our owners to make sure they’re planning with growers, because those who plan and communicate often are in better supply situations. And be flexible; If you can’t get ‘Product A,’ can you get ‘Product B’ or even ‘Product C’ or ‘Product D?’ Create a plan that will allow you to manage through any supply challenges at the retailer and farm levels.”
Local impact with a global presence
Tolke said AAD will continue to monitor all dynamics affecting crop protection product markets from the global to local levels, informing AAD owners — regional, independent ag retailers around the country — of changing manufacturing trends and logistical issues that could affect product availability at the retail level. Such information will be critical to track moving through 2023 so AAD owners can be confident in navigating the evolving crop protection product marketplace.
“When I look at our AAD owners and independent retailers, their greatest strengths are knowing what their growers need. Achieving success in crop production is a local exercise in applying the right seed and products at the right rates to the right soils,” Tolke said. “At the same time, our owners can count on AAD to continue providing a global perspective that will continue to enable them to get those products, serve their customers and stay competitive in the national crop protection marketplace.”
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