COVID-19 shouldn’t impact 2020 seed, fertilizer, and chemical supplies
Farmers seeking to find any good news revolving around the new coronavirus disease 2019 (COVID-19) will find some regarding 2020 supplies of seed, agricultural chemicals, and fertilizer. In most cases, supplies should be adequate and even plentiful.
“We had all inventory in place before this started,” says Charles Baron, cofounder and chief information officer of Farmers Business Network, a San Carlos, California, firm that sells farm inputs online. “We already had sourced material coming in from foreign sources, and we have them in our U.S. facilities.”
“We don’t see any supply disruptions for N (nitrogen), P (phosphorus), or K (potassium),” says Jeff Tarsi, vice president of North American operations for Nutrien Ag Solutions. “We have a vast amount of storage facilities, whether it’s for UAN, urea, NH3 (anhydrous ammonia), potash, or phosphate.”
Complementing this is a fair amount of carryover from 2019, particularly in chemistry, Tarsi says. Some of this goes back to the fall of 2018, when prolific precipitation carried into the spring of 2019 and nixed some burndown and preplant herbicide applications.
“Our biggest concern is that we’d like to see the weather dry up so we can start the application season,” Tarsi says. “If we can get some dry weather, we are ready to go.”
“From a distribution standpoint from UPL, I don’t think you’re going to see much impact,” says Brian Cardin, UPL director of sales. “From an inventory perspective, we’re in pretty good shape,” he says. “There may be some minor products that come out of Europe that may be affected, but I think that impact will be felt more this fall and next spring.”
He adds there may be shortages of specific seed varieties, but that’s not out of the ordinary, as this can happen in normal years.
China does manufacture agricultural chemicals and chemical components. In UPL’s case, though, most of its manufacturing facilities are located outside China and remain fully operational, Cardin says.
“We have 27 formulation facilities that are strategically located all around the globe,” Cardin says. “So, I think we’re well poised to address this from a logistics and supply standpoint.”
Planning is Key
One factor that’s helping the agricultural input supply situation is that many farmers already ordered seed, chemical, and fertilizer before COVID-19 hit. Farmers who haven’t nailed down their inputs should speak with their suppliers now.
“Communication is key,” says Cardin. “It’s probably stating the obvious, but if I were a grower today, I would not wait until the last minute to make production decisions. They need to have ongoing conversations around key inputs that they need.”
“Planning is an absolute key,” says Tarsi. Farmers who haven’t formed an agronomic plan should quickly consult with their supplier or an agronomist. Ideally, this is best done in the fall prior to the next cropping year. Digital tools can aid farmers in this process.
“I can’t emphasize this enough,” he adds. “With our digital platform, we have (digital) crop planning tools that enable one of our agronomists to sit with a producer and plan out a crop, regardless of whether it’s corn, wheat, cotton, or sugarcane.”
Potential Trucking Issues
One factor that could complicate supplies this growing season is trucking.
“From a general industry perspective, there is concern about backhaul situations coming out of the West Coast,” says Cardin. “The good news is so far, it has not been disruptive.” Nor have concerns about backhaul popped up in the rest of the country, he says.
There also is potential for some states to adjust trucking regulations in order to improve the flow of farm inputs, adds Tarsi.
FBN customers will be able to garner lower seed and chemical prices this year. During the week of March 22-28, FBN cut seed prices by 15% and cut prices of the chemicals it sells, too. Price cuts for these chemicals include:
- Paraquat, 12%
- Glyphosate, 8%
- Glufosinate, 7%
“We saw growers facing challenges in loss of demand on the ethanol side with corn prices weakening,” says Baron. “So, we went ahead and reduced prices on a number of products to give them relief and put them in the best (financial) position possible.”
Baron says that FBN also was able to offer lower interest rates this month for loans including farm operations through its FBN Finance division due to Federal Reserve interest rate cuts made in mid-March.
“We were able to pass through those rate cuts to growers, so we had a surge in demand for growers rushing to refinance in order to lock in these rates,” he says. “It is something unique (FBN has), due to our low-cost national virtual model for financing.”
Savings can be substantial, particularly for land loans, says Baron. FBN’s rates are now two percentage points lower for a 30-year fixed mortgage compared with 15 months ago. “This is a historic moment to lock in very low rates and generate an enormous amount of interest savings,” he says.
How Delivery Will Change
One difference between this year and previous years is the amount of chit-chat and hand-shaking that went on between farmers and suppliers is gone.
Baron says he’s detected a change in perspective among farmers regarding COVID-19 in late March compared with early March.
“There was not a lot of concern (about COVID-19) among growers,” he says. “Last week (March 15-21), it changed pretty dramatically.” He notes a dairy he had lined up earlier in the month for a visit informed him it did not want anyone on the farm and no interaction occurring.
In response, FBN took steps like initiating drive-throughs for farmers who want to pick up product at one of FBN’s business hubs. In this case, a farmer honks his or her vehicle’s horn and FBN personnel load the truck in a touchless fashion. FBN has also ordered personal protective equipment (PPE) for its personnel and increased cleaning for its facilities, says Baron.
Many retailers have mandated that truck drivers stay in their cabs and wait for retailers to approach them, adds Cardin.
“They’re following all CDC (Center for Disease Control and Prevention) rules around social interaction,” he says. “Most of our workforce is communicating by phone or computer to avoid as much personal interaction as possible.”
Nutrien Ag Solutions has also boosted the level of hygienic cleaning in its facilities, says Tarsi.
It’s also segregating office workers at its facilities from warehouse workers to help prevent spread of COVID-19.
“We’re also trying to keep foot traffic at our branches to a minimum,” says Tarsi. “We’ve cut out all third-party visitors to our branches. If farmer-customers feel they need a face-to-face meeting, they are being encouraged to use Skype or some other type of virtual tool.”
He adds that farmers can still pick up products on branch facilities, but they are advised to let Nutrien personnel know they are coming to ensure a touchless pickup of product.
“We are also set up to deliver products to them,” he says.
Tarsi says Nutrien Ag Solutions also enables customers to pay bills online.
“Our digital platform has put us in a position of limiting the amount of face-to-face contact,” he says. “It’s critical that we keep employees working at our branch facilities so we can continue to service growers.”
Like all major events, the impact of COVID-19 will linger beyond 2020. Cardin advises farmers to examine a suppliers’s backward integration capabilities. He says UPL’s products feature this concept, meaning it also manufactures intermediate products that go into its chemical products rather than being dependent on other sources.
"The further you can be backward integrated, the more sustainable you can be,” he says.
Baron says that COVID-19 brings out benefits of e-commerce that were not initially apparent. “We never thought that sanitation would be a benefit of ecommerce and online buying,” he says. “It is an incredibly safe way to purchase products in the new world.”
Another outcome will be an upgraded interest in agriculture and a reliable food supply, says Baron.
“Here in California, supermarket shelves are clearing,” he says. “It is a reminder of what farmers and ranchers do. You will not run out of food. America’s food system is incredibly resilient.”
Farmers have the ultimate work-at-home businesses, and this may transfer to other businesses, Baron believes.
“I think it will change fundamentally whole sectors of the economy when they realize that ‘Hey, you can work from home and make it work,’” he says. “It is still important to meet customers, but business travel has almost been done out of reflex, to jump on a plane and go and meet someone.”
Now, virtual meetings may substitute for a share of business travel, he says.