world agriculture down on the farm
agricultural services pedigree livestock news dairy beef agricultural machinery agricultural property agricultural organisations
Stackyard News Mar 06

news index

soil links

    New Outlook Report Predicts Major agrochemical Price Pressures

Mainstream agrochemical prices could well rise sharply across the country this season following two years of dramatic world oil and gas price increases, warns a newly-published industry outlook report. But the scale of the impact is likely to vary widely from product to product.

enigma marketing research

“The cost of oil and gas, which are the basic building blocks of agrochemicals as well as the main energy sources for their manufacturing, has nearly doubled in the past two years,” points out report author Dr Nigel Uttley of Enigma Marketing Research.  “Escalating oil and gas prices have also pushed up the cost of surfactants, other formulation ingredients, paper and plastic packaging and, of course, transport.

”At the same time, many of the chemical intermediates employed in agrochemical production are also used for a variety of other, higher-priced manufactured products,”
he adds.  “On top of the basic material cost increases, therefore, competition from higher value end uses means a ‘double whammy’ for agrochemicals.”

Despite these global pressures, Dr Uttley’s report  ‘Agrochemical Pricing Outlook 2006 and Beyond’ foresees considerable variability in their impact on individual product prices.

“For some active ingredients, higher oil and gas prices are relatively insignificant,” he notes. “But for others, with complex and very energy-intensive manufacturing processes, it’s a different story. And high volume, off-patent products are particularly vulnerable given low manufacturing margins less able to absorb cost increases.”

Dr Uttley highlights glyphosate as an example of an agrochemical especially sensitive to oil and gas prices by virtue of the combination of steps involved in its manufacture and their energy intensity - not least as a result of the large amounts of costly-to-produce chlorine and phosphorous required.

”While there’s little or no justification for increasing sulphonylurea prices on the back of oil prices, there certainly is for glyphosate,” he stresses. “Having said that, though, I would expect to see the extent of price rises varying widely depending on the type and source of the product.

“Approximately 75% of glyphosate from China is produced by the glycine process in which energy is estimated to account for at least a third of the overall active ingredient cost.  Equally, developing economies like China and India, where most of the generic glyphosate is made, are also currently suffering very serious economic pressures, as well as having to raise their environmental standards.”

Although it’s difficult to predict precise prices for the coming season, industry sources are expecting to see the price tag of generic glyphosate rise by 15-20%. This compares with an anticipated rise of around 5% in the price of key brand, Roundup.

link Latest Ultra Early Variety Extends Maize Growing Options
link New Environmental Scheme Seeding Guidelines
link Costs Hit Cereal Farmers Hard As Production Falls Again

    home | agri-services | pedigree pen | news | dairy | beef | machinery
property | organisations | site map