FOCUS- ‘Off the charts’ chemical shortages hit U.S. farms

By Tom Polansek

CHICAGO, June 27 (Reuters) - U.S. farmers have cut back on using common weedkillers, hunted for substitutes to popular fungicides and changed planting plans over persistent shortages of agricultural chemicals that threaten to trim harvests.

Spraying smaller volumes of herbicides and turning to less-effective fungicides increase the risk for weeds and diseases to dent crop production at a time when global grain supplies are already tight because the Ukraine war is reducing the country's exports.

Interviews with more than a dozen chemical dealers, manufacturers, farmers and weed specialists showed shortages disrupted U.S. growers' production strategies and raised their costs.

Shawn Inman, owner of distributor Spinner Ag Incorporated in Zionsville, Indiana, said supplies are the tightest in his 24-year career.

"This is off the charts," Inman said. "Everything was delayed, delayed, delayed."

Shortages further reduce options for farmers battling weeds that developed resistance to glyphosate, the key ingredient in the commonly used Roundup herbicide, after decades of overuse in the United Sates.

Prices for glyphosate and glufosinate, another widely used herbicide sold under the brand Liberty, jumped more than 50% from last year, dealers said, padding profit at companies like Bayer AG BAYGn.DE, BASF SE BASFn.DE and Corteva Inc CTVA.N.

The U.S. Agriculture Department said it heard from farmers and food companies concerned about whether agribusinesses are hiking prices for goods like chemicals, seeds and fertilizer to boost profit, not simply because of supply and demand factors. The agency has launched an inquiry into competition in the sector, and some watchdog groups said it is moving too slowly.

Agrichemical companies blame the COVID-19 pandemic, transportation delays, a lack of workers and extreme weather for shortages. Fertilizer and some seeds are also in short supply globally.

SUPPLY CHAIN STALLED

More difficulties are on the horizon, as BASF, which formulates glufosinate, told Reuters the supply situation will not improve significantly next year.

"It's going to take more time than what our customers, farmers and retailers would have thought," said Scott Kay, vice president of U.S. crops for BASF.

Tennessee farmer Jason Birdsong said he abandoned plans to plant soybeans on 100 acres after waiting months to receive Liberty he ordered from Nutrien Ag Solutions. He ultimately received less than half his order for 125 gallons and planted corn on the land instead. Birdsong said he is better able to control weeds in corn than soybeans.

Nutrien NTR.TO said numerous events stalled the supply chain during the pandemic and the company provided alternate solutions to customers.

Birdsong said he needed Liberty to fight weeds that are resistant to glyphosate in soy fields. He said he ruled out a third option, a dicamba-based herbicide from Bayer, because of extensive federal restrictions on when and where dicamba can be sprayed.

"With the dicamba technology being so strict, Liberty is the go-to," Birdsong said.

The Environmental Protection Agency approved new restrictions on dicamba use this year in Iowa and Minnesota, two major farm states. The herbicide, approved in 2016, faces stricter regulations because it drifts onto neighboring farms and damages crops other than Bayer soybeans engineered to resist dicamba.

The rise of a rival Corteva soybean variety, Enlist, is further adding to glufosinate demand because the crop can be sprayed with glufosinate, among other chemicals, dealers said.

Generic versions of glufosinate-based Liberty sold for about $100 a gallon, up from $32 a gallon last year, said Dion Letcher, owner of Letcher Farm Supply in Garden City, Minnesota. The increase reduces farmers' profits from lofty crop prices.

Shortages of Liberty and other products began last year as distributors used backup supplies to offset supply disruptions in 2021, Letcher said. Now, there are no reserves, he said.

"Anything from BASF is short this year," Letcher said. "I'm worried about next year."

AGRICHEMICAL PROFITS CLIMB

For glyphosate, prices reached $50 a gallon to $60 a gallon, up from less than $20 a gallon in mid-2021, said Inman, the owner of Spinner Ag Incorporated.

Bayer reported sales of glyphosate-based products were "particularly strong" in the first quarter as prices increased and volumes declined. Overall, its herbicide sales soared 67% from a year earlier to 2.5 billion euros ($2.64 billion).

BASF's agricultural solutions unit posted quarterly sales of 3.4 billion euros, up 21% from a year earlier. Corteva also sold more than $2 billion worth of crop-protection products, up 23% from a year earlier, as prices rose 11%.

BASF is seeking to acquire raw materials earlier to avoid future shortages, Kay said. Bayer said it broadened its supplier base for raw ingredients and added bulk trucks to deliver products more efficiently. Farmers who cannot find glyphosate and glufosinate are switching to alternatives, Corteva said.

The supply limitations have caused practical headaches for growers.

Indiana farmer Denny Bell said he did not receive Liberty in his usual 250-gallon containers. Instead, he spent seven hours emptying 2.5-gallon jugs into a larger vat before spraying. Bell said he also waited six months for a popular BASF fungicide, Veltyma.

Reduced usage of herbicides this summer could allow weeds that escape crucial early sprayings to grow and spread their seeds in fields, leaving farmers with more weeds to fight for the next two years as the seeds sprout, said Scott Nolte, Texas A&M University weed specialist.

Iowa corn and soy grower Brent Swart said he is opting to use less glyphosate in the mix of chemicals he sprays due to short supplies, but does not expect it to hurt yields.

"There's definitely a different feel to this year," Swart said. "We've never seen as much supply issue."

($1 = 0.9488 euro)

Reporting by Tom Polansek in Chicago
Editing by Caroline Stauffer and Matthew Lewis