Growing a healthy, productive, profitable potato crop takes a lot of work. But more than that, there are a lot of inputs involved that your average consumer doesn’t think about. Even growers, who very literally know more about the process than anyone, might not know all the answers about the origins of all those inputs.
But understanding what that supply chain looks like is important for U.S. growers, says Bob Trogele, chief operating officer and executive vice president of AMVAC Chemical Corporation.
The global ag chem market’s 2 to 3 percent steady annual growth rate may not sound like a huge number, combined with evolving regulations and overall economies, that growth rate can lead to a lot of change at the farm gate. Globally, about 60 percent of the active ingredients for agrochemicals come from India and China. According to Trogele, about 12 percent of AMVAC’s business is exposed to the Chinese market; that number may be as high as 70 percent for some chemical manufacturers. Around 90 percent of all chlorothalonil produced in the world comes from China. Together, China and India produce about half of the world’s metribuzin. Seeing those numbers, it’s easy to see why it’s important for U.S. growers to have a basic understanding of the goings-on in those foreign agrochemical markets.
“As an agrochemical company, you’ve got to bring ease of use and economic benefit to today’s growers,” says Trogele. “These are large producers and production units and they’re interested in increasing efficiency—time, money, environment. They’re businesspeople. Our objective is to make them more money and more competitive on a global scale.”
AMVAC, which recently celebrated 50 years in business, runs its business on what it calls its four pillars: technological innovation; international expansion and market access; precision application; and operational excellence. Trogele says those four organizational pillars drive every decision the company makes, especially when it comes to the ends of the chemical supply chain—the grower, of course, and the original source, both of whom have ever-evolving expectations and requirements.
China, in particular, is becoming an increasingly more difficult place to produce agrochemicals, for better or worse. In 2018 alone, Trogele says, some 180 factories were shuttered because of new, stricter environmental and compliance laws. That has naturally led to price increases for products coming out of the country. Trogele expects those costs to trickle down the American growers at a noticeable rate this year.
“We’ve invested in the Chinese market with both contracts and relationships,” Trogele says. “Right now, with all the changes happening, the relationships are more important than the contracts.”
So what does all this mean for a potato grower in Idaho or Florida or Washington or Wisconsin? Most importantly, Trogele says, what’s happening in China at the moment likely means a global shortage of pesticides and intermediates over the next several years. He expects supply and demand to balance out again in three to five years, depending on how markets like Brazil, Europe and the U.S. react.
Whatever might be in store for the market as a whole, Trogele expects agrochemical companies to become increasingly cognizant of the challenges facing growers, and continue to develop solutions that improve farms’ bottom lines.
“We’re very sensitive to grower economics,” he says. “For us, a healthy industry—which doesn’t happen without a healthy grower—is the most important thing.”