Glyphosate Continues To Take a Beating
2 September 2011 Market forces are starting to hurt Chinese glyphosate producers like never before.
First, oversupply has created a race to the bottom for pricing for the ubiquitous active, and profitability is suffering tremendously.
Competition has driven prices down to less than US $2 a liter in many cases, according to respondents to the recent FCI State of the Industry Survey (results published in July).
Further complicating profitability is recent RMB appreciation compared to the US dollar in conjunction with inflation in China and the rise in prices of raw materials. Also, the seasonal mid-summer slump in sales for glyphosate depressed prices compared to earlier this year.
Now adding to the avalanche of costs, the central Chinese government raised the loan interest for the third time this year, which means the production cost of glyphosate will be increased, according to the July issue of Glyphosate China Monthly Report, a report by China Chemicals Market.
Further complicating the US market, Monsanto is being investigated by the US Securities and Exchange Commission for anti-competitive practices concerning rebates and incentives paid to agriculture distributors for selling Roundup.
Our USA Report last year (“Monsanto moves to capture US hearts, minds and market share”) discussed how Monsanto’s rebate and insurance programs helped them isolate Chinese glyphosate to fringe growers. That philosophy is working, by and large, but US regulators could rule that the practices are monopolistic, making competition easier.
— David Frabotta, Editor
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