UPL Chats on Asia Glufosinate Supply Disruptions, Expansion

AgriBusiness Global sat down with UPL’s Brian Ahrens, Head of U.S. Sales, and Tom Mudd, Marketing Manager, Corn & Soybean Herbicides to discuss the rapid expansion of the glufosinate molecule and what it means for ag.

Can you talk about developments in the glufosinate space over the past year, and what you are expecting for ’21?
Brian Ahrens: With UPL being based in India, we are close to the Asian markets. When you look at countries like Vietnam and the Philippines, there were a lot of quick regulatory restrictions on active ingredients like paraquat and glyphosate.

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Brian Ahrens

Brian Ahrens

While we were coming into our summer last year and people were getting into harvest, here in North America, it was pretty quiet about glufosinate. But, as we started to prepare for our fall market, we were becoming aware that, because of those bans, there were quick surges of our supply going into Vietnam and neighboring countries. When that happened, in Brazil, Argentina, North America, and Canada we started picking up on those supply situations. Our price was still staying relatively low, but as we went into our campaign year of 2021, in September and October, the pace started picking up.

People started coming out with fall programs just like we did, and we soon realized that with that quick removal of supply that was supposed to be coming into the Western hemisphere, that those price points changed. Orders started really started coming in as we thought about what was happening here in the U.S. marketplace. People at that time were still unaware of what was going to happen with dicamba.

Tom Mudd

Tom Mudd

Tom Mudd: On the global perspective, we’re hearing that some of the generic suppliers here in the U.S. that usually source product out of China are struggling to get (glufosinate) supply. Part of that is, they are using more of the production domestically in China for their own needs, so a lot less is being exported out of China.

Of course, you compound that with what is going on in the U.S. market: We’re probably seeing glufosinate-traited acres double this year with the increase in new traits in soybeans, such as Enlist E3, LibertyLink GT, and XtendFlex. We are going to have a lot more crop acres that are enabled for glufosinate and that, coupled with the fact that we’re continuing to see an increase in glyphosate resistance is driving demand domestically here in the U.S.

With the glufosinate trait now added to Xtend and other systems like LibertyLink GT27, what is the dynamic with dicamba?
Mudd: It sounds like the XtendFlex trait is going to move pretty quickly to include glufosinate traits, and I think we’re going to see here in a couple years almost all of the soybean acres will have glufosinate traits. Here in the U.S. there’s a lot of pressure on managing dicamba. I think a lot of people are looking for a safer alternative to stay away from the issues that could happen from that.

Ahrens: The channel is going to have a lot of pressure, because a lot of dicamba did not hit the ground this last year. Now that we have the dicamba approval, there is a lot of pressure for those gallons to be applied in 2021. In addition, you have the increase in soybean acres; you have commodity prices going up – we’re at $13 to $14 price on beans – so, it’s not just the glufosinate piece. We have our other herbicides that are in that soybean acre metric: metribuzin, S metolacholor, sulfentrazone. All these other modes of action are quickly following. People are getting lined up for supply going into this coming campaign fall year.

Compared with dicamba usage overall this year in the U.S., do you expect that glufosinate will take a bigger share in ’21?
Mudd: With the rapid growth in glufosinate-enabled acres, pressure on dicamba, and concerns of weed resistance, I think glufosinate will take share from both dicamba and glyphosate in 2021.

Does most of your glufosinate supply come from your Indian plants? What about the intermediates?
Ahrens: Most of our supply comes from our multiple plants in India. Seven years ago is when they started mainline manufacturing glufosinate. UPL has done a good job of duplicating those plants and rapidly increasing production for the anticipation of these acres and the demand. In the California market, where we have very good market share, it’s not just the soybean and GMO acre, there’s also higher demand for alternative chemistries in the specialty market.

We’re trying to manage Lifeline in the specialty market and our Interline brand in the row crop market, so it’s a little bit of both that we’re trying to deliver on the expectations of historical demand and being a reliable supplier to the California team. At the same time, we’re following this upsurge trend on the row crop acre. We’ve been really leaning primarily on our Indian manufacturing facility.

Can you discuss how glufosinate is being used as an alternative chemistry in specialty markets?
Ahrens: In California, growers are using glufosinate as an alternative to products like glyphosate, oxyfluorfen, and oryzalin for orchard management. Paraquat used to be in that acre. California is looking for alternatives not only for (specialty) acres, but I think there’s also a little bit of the glyphosate lawsuit factor that’s moving that California market. PCAs are looking to rely on BASF and on us on Lifeline to be that mainline alternative.

Mudd: We were anticipating a normal growth year in the specialty market for the West coast, for our Lifeline brand. Our orders, similar to Interline, are just way outpacing what we anticipated in our forecast. We’re seeing it at all levels, from the grower to the retailer to the distributor, that everybody’s trying to make sure they get their product ordered and in position early this year.

So, we’ve shifted some of our early production to take care of that specialty crop demand that we thought we’d be producing for the row crop market, and we’re making sure we supply that market first since it is an earlier season.

Ahrens: I think some of our partners that have relied on Chinese supply for their private label or their source, or their other generic supplier have decided to go in another direction because of that whole summertime Asia response to demand.

How long do you expect the Asian supply situation to continue?
Ahrens: It’s going to take a while for the Chinese manufacturers to sort of catch up, and they will. With respect to the tariffs, depending on what administration does with China, it’s going to come off and price will move and there will be more suppliers coming in the marketplace. BASF is doing all they can to react to the market demand, too.

We also have heard some news out of Long Beach, CA, with ports and Covid concerns about containers leaving port, entering port, workers, and ports being open, so there is a bit of delay that is catching up with a year of being in Covid. At least on some of their key molecules, retailers are ensuring they’re working with their key channel distributor partners and getting supply staged in time, and not waiting around too long. You can start to hear some of these things coming up around trucking, logistics, port, containers, and freight – the noise is getting louder.

All of this is related to products coming from China?
Yes, but also Europe. If you’re coming into New York or California, things aren’t going as smoothly as possible with the government.

Regarding the regulatory question around glyphosate, is glufosinate perceived to be less environmentally risky? There doesn’t seem to be the kind of scrutiny around that active that we’ve seen with some others.
Ahrens: It doesn’t feel like any active ingredient is oblivious to what could be coming from a class action lawsuit. There could be certain molecules where facts or fiction kind of gets thrown out the door. Anything is possible to be re-reviewed. We just heard the other day the administration is re-reviewing chlorpyrifos – that review that just was done a few years ago. One could say, glyphosate has had a lot of attraction to and toward these lawsuits, could they continue to look at similar modes of action? That very well could be. We don’t get any indications around it and we’re very attuned to that potential. But we haven’t seen any sort of early indication of it on glufosinate – knock on wood.

You think about the number of regulations, and the amount of product applied. Far more glyphosate hits the ground than glufosinate. It’s probably about an 8- or 9-to-1 ratio of the amount of that molecule versus glufosinate, so it does get a bigger point of attention.

What other markets can you discuss with respect to glufosinate?
Ahrens: On the Brazilian front they’re in the same boat. They are a huge consumer of glufosinate, not only from a UPL perspective. Also in Argentina, the demand is in the same trajectory as it is here in the U.S. and Canada. It’s a bit countercyclical – as we’re coming into the summer, they’re coming into their harvest time. It depends on price on a per-unit basis, especially for Chinese manufacturers. If I can get an extra couple real or yen taking the boat to Argentina versus North America, that’s just how the world trades sometimes. If I can get a stronger value for my 280 gram/liter product and send it to Argentina, that’s the name of the game sometimes.

What other challenges do you see for the active this year?
Mudd: Stewardship is important. We need to manage glufosinate differently than glyphosate was managed in the past. When Roundup soybeans first came out back in ‘95, for years, everybody was just planting the crop, letting all the weeds come up and cleaning it up. I think now we’ve learned that what tools we have left, like glufosinate, we need to steward better. It’s key that growers need to get out there and put on a residual herbicide early and not just rely on a postemerge treatment to clean it all up. With overuse and relying too much on just a post application to clean it up, we’re just asking for trouble. I think that’s the message I want to communicate every chance I get.

Ahrens: Roundup Ready has been around for two decades, and it’s been an amazing learning experience. I think as people move on, the multiple modes of action and different types of actives used on the acre have been even more important. Whether that’s growers, universities, consultants, or manufacturers, the channel has really been preaching that. We can’t go back to a quart of Roundup followed by a quart of Roundup.

Do you have any other advice or take-home messages you’d like to share on how to keep this tool available?
Mudd: We need to keep best management practices in mind this spring – spray early when weeds are small, 3 inches or less. If you’re driving down the road and you see the weeds sticking above the crop, it’s too late.

Ahrens: The demand is really following into that Enlist acre. You listen to Corteva, and they’re really all about putting a companion product in with it. The preferred product is around that glufosinate acre with Enlist or Enlist Duo. As we’re managing our metolachlor or metribuzin brands, we feel like those are all following into that same footstep – they are in a complete program, versus ‘I’m just going to use this or this.’

Do you have other products coming out with glufosinate?
Mudd: We have a premix called Intermoc, which is a premix of glufosinate and S-metolachlor. We’re sold out for this season but we plan on bringing that back next year. We are definitely looking at what we could do for new innovations around glufosinate and premix opportunities in the future.

Ahrens: In the marketplace we’re one of the only ones that have a premix that contains glufosinate. There are very few premixes of glufosinate, which is interesting if you think about the soybean market.

Are Indian manufacturers still relying on China for some of raw materials for glufosinate?
Some have. I would say our leadership all the way up to Jai Shroff saw that many years ago. That’s why he decided UPL should start manufacturing its key intermediates, because he saw the writing on the wall with Chinese supply — the reliability one year and great cost, but the next year (maybe not.) He wanted to take out the variabilities and make those investments in the finished product as well as the intermediates. That’s the competitive advantage we have.

Can you discuss other notable progress and expansions at UPL?
Ahrens: We’re two years into the acquisition of Arysta Lifescience. Arysta was a manufacturer of clethodim, which is also another big product used in the soybean market. In late 2020 we announced we are creating another clethodim plant because we see that as another key molecule to help support that.

Especially where I live in eastern Iowa, the derecho we experienced in August was huge, so all corn acres are getting rotated to soybean. With retailers in this swath having experienced that devastating event, they’re going to be dealing with a lot of volunteer corn. I think people don’t know what that impact is truly going to be until June and July, but they’re going to see a lot of volunteer corn in that massive derecho path. We see that, too, and are trying to gear up to help on those volunteer corn acres.

Mudd: Since we have our own production facility in Kingstree, SC, and our business is rapidly growing especially in the soybean market, we’re definitely looking at expanding operations there. We produce our glufosinate brands, Interline and Lifeline there today, but we’re going to be expanding it to additional products in the near future.

Closing thoughts?
Ahrens: We’re knee-deep into thinking about not only this year’s campaign but really preparing for next year’s campaign, too. For the first time in five years, it just feels like the headwinds are relieving themselves with commodity prices being a little bit more positive; time will tell. There are good signs ahead. As long as we can get through, and unemployment is quite low, and interest is low, I think there a lot of positive signs for our retailers and farmers going forward.