The increase of glyphosate prices in mid-2021 is indeed quite worrying. How come?
Throughout the first semester of 2021, the increases in glyphosate prices gradually climb from 4.10 US dollars to close to 8.00 US dollars. The consistency of this increase is due to a series of events that began in early 2020. The main thing that is still looming until now is the Covid-19 pandemic. The emergence of the first case of Covid-19 in China in early 2020 marked a price increase that led to panic buying of glyphosate in the market. Although, in the end, the stock of this active ingredient is still safe and lasts in the price range of 3.00 US Dollars until mid-2020.
Based on the analysis of the Pandawa Agri Indonesia team, the marathon of glyphosate price hikes started in August 2020. The cause was flash floods in China due to the overflowing flow of the Yang-Tze River, paralyzing cities along the river, including the area of important agrochemical industrial in this country.
Pandawa Agri Indonesia realizes that since the increase in glyphosate prices in August 2020, the gap in price increases has been increasing consistently and progressively. This condition makes more sense when China as a supplier of 60% of the world, is entering the recovery phase after the flood.
Other than that, the Covid-19 pandemic has also had a more consistent contribution to the phenomenon of rising glyphosate prices. The implementation of a lockdown policy, for example, exactly has an impact on supply chain management around the world.
Conditions have not changed much in 2021. The rise of Covid-19 cases in China has become a major obstacle to global economic growth. In January 2021, exports of agrochemicals include glyphosate, increased sharply under the public data from ICAMA (Institute of the Control of Agrochemicals, Ministry of Agriculture) with most of the demand comes from the domestic market.
Apart from China, in early February 2021 in the United States, precisely in Texas, there was an electricity crisis caused by the state’s energy-generating equipment malfunctioning due to a winter storm.
The incident prompted power producers in Texas to increase demand for natural gas to restore electricity in the area. The demand for natural gas in large quantities has an indirect impact on the agrochemical industry. Because natural gas is also needed as a component of the production of glyphosate.
After the winter storm, Pandawa Agri Indonesia noted that the increase in glyphosate prices was still creeping up at US$ 4.56 as of February 25, 2021. This condition illustrates the impact of the energy crisis in Texas previously as one of the contributing factors.
As one of the world’s suppliers of glyphosate and at the same time the main supplier of the Latin American agrochemical market, United States has not been able to optimally meet export demand since the crisis hit. As a result, the Latin American agrochemical industry has shifted the demand for raw materials to China. On the other hand, China’s agrochemical raw material producers will, of course, not be fully prepared to meet the doubled demand. The imbalance of demand and availability of glyphosate is inevitable.
The increase in the price of glyphosate finally has an alarming trend throughout semester 1 2021. Pandawa Agri Indonesia recorded 4.56 USD in February 2021, and by July, it was already in the range of 7.90 to 8.00 USD.
Based on all the above events, this increase is the worst since 2008. Agrochemical experts are concerned that the current number could continue to rise and even touch the record price of 11 USD as in 2008. Several sources say that the increase in glyphosate prices is predicted to continue until mid-2022, just like Covid-19 is predicted to continue until next year. Besides that, the unbalanced demand and availability of glyphosate altogether will have an unpleasant impact on the agrochemical industry.
Many questions arise. When the price of glyphosate will go down again? The answer, of course, is still only a prediction. Supposedly, the focus of this question leads to the point of whether the number will return to the range of 3.00 USD as at the beginning of 2020? Of course, it is still a concern to see all related sectors are still in the recovery stage.
Interestingly, the price of Ammonium Glufosinate is also monitored by Pandawa Agri Indonesia will continue to rise (we will discuss further in the next post). What will be the impact for us if the price of these active ingredients goes up? There are 3 things that we need to be aware of, selling prices in Indonesia that will also increase, the prices that will change rapidly (monthly or even weekly), and limited supply.
As we all move towards recovery in global conditions, the importance of innovation as an alternative to the rising prices of glyphosate can be the hope of how we will face this crisis.
One of the innovative solutions that can be done is to reduce the dose of herbicides using reductants. Reductants have the function of reducing the number of herbicide doses without reducing their efficacy in controlling weeds.
The use of reductants at the same time can reduce the unfavorable impact of the use of herbicides on the environment. In addition, the use of herbicides in smaller quantities can, of course, reduce costs.
This innovation can ultimately provide a better way for consumers of agrochemical products to manage the risk of purchasing raw materials costs. This is good news for us to face the rising of glyphosate prices and an important point to stay focused on sustainable agriculture.