What's behind glyphosate and Roundup price hikes?
Since transgenic seeds became available in the 1990s, glyphosate and seed prices headed in opposite directions. As trait-stacked seed prices racheted upward, glyphosate prices declined.
No more. Generic glyphosate prices recently increased $12 per gallon, and brand name Roundup by Monsanto in February increased in price by 30%. In some areas, farmers report they pay double for glyphosate what they did a year ago.
"We have seen some significant price increases in glyphsoate around the world the last 12 to 15 months," says Jim Zimmer, vice president of Monsanto's branded business. "From a glyphosate standpoint, global demand is accelerating faster than global supply. We just started experiencing it some in the U.S."
Zimmer says Monsanto raised its branded Roundup price in response to generic glyphosate price hikes. This helped preserve Roundup branded product for those growers who had already requested it, he says.
"It was getting to a case where the cost of generics were getting considerably higher than the Roundup brands," says Zimmer. If farmers flocked to buy branded Roundup that was considerably less expensive than generic glyphosate, he adds Monsanto would have been challenged to supply growers who had already ordered branded Roundup to apply in a Roundup Ready system.
"We made a commitment to those farmers to be a reliable supplier," says Zimmer. "If a farmer chooses the Roundup Ready system, and he chooses the Roundup formulation, we want to be in a position to supply it."
Zimmer notes China manufactures much of the generic glyphosate farmers apply in the United States. Several developments there have pinched supply, Zimmer says.
China's hot economy is using lots of energy, Zimmer says. Like the United States, thereâ€™s only so much energy to go around in China. Glyphosate manufacturing plants arenâ€™t running at full capacity, since China is diverting power elsewhere.
More environmental regulation is also occurring. "It's an environmental revolution similar to what we went through in the U.S. in the early '80s," says Zimmer. "The government is stepping in where (glyphosate manufacturing) plants are not meeting environmental requirements and is shutting them down."
There's also been a shortage of raw materials used to make glyphosate. "Phosphorus is a key ingredient that has a tight supply," says Zimmer. "The price has gone up significantly in the past 12 months."
Accelerating demand also has played a role. Conservation tillage that goes hand-in-hand with glyphosate use has grown rapidly in Brazil and Argentina.
"Any time there is conservation tillage, there is a higher use of glyphosate," says Zimmer.
Eventually, more glyphosate and Roundup will come on the market to help stabilize the market.
"A year ago, we saw a tightening of the market," says Zimmer. "We saw a buying pattern shift by farmers who were locking it in earlier than normal. We tried to work with distribution to communicate what the demand would be, and have enough supply (of branded Roundup) to honor that."