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According to information by Reuters journalists Heather Schlitz and PJ Huffstatter, American farmers, facing declining incomes and low grain prices, are switching to more cost-effective generic pesticides in anticipation of spring planting next year. Market analysts believe that such a decision could negatively impact the financial position of agrochemical companies, including Bayer, and signs of these financial consequences are already being observed. Bayer's shares sharply fell to a 20-year low on November 12th, last Tuesday, after the chemical company warned that weak global agricultural markets and a downturn in the US economy are likely to continue to pressure profits.
The farmers themselves note that, despite saving money, generics may have their drawbacks, as manufacturers of generic pesticides usually do not cover the costs of re-spraying if the product does not yield results, reports Reuters, citing Caleb Hammer, a corn and soybean farmer from Iowa. Nonetheless, Midwest distributors claim that clients have reduced their budgets for spring pesticides, including herbicides.
"Some farmers are moving away from branded products, while others are investing in precision agriculture, which is aimed at combating weeds and pests and treating fields, allowing them to use fewer pesticides overall," says Matt Carstens, CEO of the farmer cooperative Landus and agricultural finance company Conduit, quoted by Reuters. - It all comes down to what farmers really need. Do they need a well-known brand with protection and complaint review policy? Is it worth paying for it?"
When it comes to agrochemicals, the purchasing decisions of American farmers usually depend on seeds. Farmers typically buy chemicals by choosing seeds with specific traits, such as herbicide-tolerant traits that destroy weeds without harming plants.
Mack Marshall, founder of consulting firm Balcony View Consulting, believes that "if it’s possible to replace branded herbicides with generics, and the farmer has seeds tolerant to these herbicides, it makes sense to choose the cheaper product."
The number of generic offerings available to farmers is growing. In 2000, the patent for glyphosate, the active ingredient in Roundup and the most widely used herbicide in the world, expired, report agricultural analysts Owen Wagner and Sam Taylor of Rabobank.
They note that over the past five years, more than twenty patents for active ingredients have expired, leading to an increase in the use of off-patent products, currently representing about 80% of the agrochemical market share.
Taylor emphasizes that now, as US farmers are facing low profitability, they are likely to seek ways to save money through fertilizers or plant protection products.
