Does crop protection follow the price of fertilizer?

In many crops, GBMs are the largest or second largest (after starting material) cost item, according to the balance calculations by Wageningen University & Research. If we compare crop protection with fertilization costs, it turns out that for the cultivation of one hectare of ware potatoes in 2019 (the last available year) the fertilization costs amount to €362 and those for crop protection are €739. For onions this is €318 and €807, beets €177 and €452 and for wheat €155 and €252. More expensive GBMs therefore weigh heavily on the balance.

Lots of variables
It is almost impossible to make general statements about the GBM market. This does not mean that there are no general trends, but the various resources are more or less sensitive to this. Producers of GBMs are very cautious about making statements about the consequences of the recent price increases on the energy market, but wanted to lift a glimpse of the challenges they face.

In the production of GBMs, energy (mainly natural gas and electricity) amounts to a percentage of the cost price. According to insiders, exact figures are difficult to provide, because this varies greatly per active substance and/or factory. The disruptions in logistics chains also play a major role in what is going on in the market. The production planning for factories is completed months in advance. Raw materials and consumables are often produced at other locations by suppliers, often in other parts of the world. Problems with a delivery, such as the closure of a factory in China (for example because the power is cut off in that province) or a shipment that is stuck because there are no containers, can have direct consequences for a factory in Europe or the US. This can therefore delay the availability of a drug.

Grain prices are relatively high and do not appear to be dropping anytime soon. Farmers, especially in the US, therefore dare to invest in cultivation. One of the consequences is that growers order GBMs very early. Production and logistics are squeezed, while demand is high. In addition to energy prices, this also has significant consequences for the price.

Major differences between active substances
These consequences are most noticeable on the global market for the drug glyphosate. China is a major producer and concerns about scaling down production caused prices to skyrocket. The wholesale price for glyphosate as a semi-finished product, in bulk and ex-factory, has almost quadrupled in one year.

Glyphosate is the most extreme climber. Prices for other active ingredients have also risen, but remain somewhat within limits. Difenoconazole (the active ingredient in Spyrale, Narita and Amistar Top, among others) rose 23% in price last month, but still remains below the level of the first half of 2020. This is more in line with the price movements of other active ingredients.

Insiders say it is difficult to predict what this means in concrete terms for Dutch growers. For the time being, an average 'mid single digit' (approximately 5%) price increase may be taken into account. But with major differences between means, insofar as they can and want to say something about it. For the final cultivation costs, the course of the growing season and which resources should be used at what interval and quantity are at least as important.