At the 2022 Council of Producers and Distributors of Agrotechnology Adjuvant and Inerts Conference, agribusiness leaders weighed in and reflected on how long the tail of COVID and supply chain constraints will hang heavy on ag retail.
Brett Bruggeman, Winfield United president, said, “With supply, you’re a hero if you have it, and you’re a zero when you don’t.”
Each leader shared how the past two years have been driven by partnerships through the supply chain—from the manufacturers to the farmer customers.
Jeff Tarsi, president for global retail of nutrien ag solutions, says no one could have guessed two years ago that the ag retail businesses would still be struggling today the way they are to work through the challenges.
“I’m not like unlike any of our other colleagues,” Tarsi said. “We battle on a daily basis. I’m very thankful that over the last 10 years we spent a lot of capital in our supply chain distribution centers for efficient equipment and our warehouse staff and transportation. That has helped us, but it hasn’t cured the issue.”
Forecasting the demand and facilitating the flow of crop inputs has changed the way these businesses are operating.
“We never would have predicted how early we would have to make decisions to have product,” said Eric Cowling, Helena, president and CEO. “Having more visibility of where you are in managing your inventories becomes a huge responsibility for all of us.”
Specific to crop protection he added, “everybody takes a position, but to work in the environment that we’re in today takes a lot more intelligence on understanding the crops that are planted. When acres shift a couple million acres and that comes out of another crop—it could mean you’re in a bad spot.
Referring to the environment today, the leaders share they are making decisions now for product availability for June 2023. And that’s just not business as it has been normal.
The mindset has changed to focus on taking care of the customer in a new way. And to remain flexible, it has added cost to the system.
“If you think about the cost that gets added to all of our businesses because we’ve added in our businesses try to keep track of this situation we’re in is probably unbelievable,” Cowling said.
The prices of crop protection products has risen, as of course has fertilizer. And that is weighing heavy on these leaders, and their working capital.
“If I look from a year ago, across every ton of fertilizer we were holding in inventory to date, the value increase in that has been about $300 a ton. And that is an enormous increase,” Tarsi said. He added a similar story could be shared about high demand crop protection products such as glyphosate and glufosinate.
The increases to working capital may be the most surprising element no one could have forecasted as part of this long tail the leaders said.
As for when things will level out—or be deemed some kind of new normal.
Tarsi quipped, “The supply chain situation will end and it’s likely going to when we’re not expecting it.”
The leaders all agreed that 2023 will have continuing carry over of trends we are seeing today. No one shared their crystal ball beyond that.
