What’s Happening In The Market – April
FAIL TO PLAN, PLAN TO FAIL
All industries, including Agriculture and Crop Protection, are now operating in a new type of market place post-Coronavirus. One thing that shortages over the past 6 months have taught us at Crop Smart is that stock is king and that planning makes kings!
This week we’ve taken the time to look back over the past 3 months and forward 9 months so that we can share how we are strategizing in this new world.
Its been a season like no other; factory closures had already set the season up to be tight with Trifluralin and Prosulfocarb in particular, being made only just in time.
Industry consolidation at the end of 2019 is redrawing supply chains, presenting unique challenges as uncertain market shares challenged forecasting.
After two years of drought, perceptions of what stocking levels were normal had been skewed downward, and stock levels reflected that.
Record rainfall through NSW and QLD in February created an unprecedented immediate demand for knockdowns and set the season up for wall to wall planting.
While the industry was scrambling to keep up, Coronavirus then caused shutdowns of entire towns and factories and halted shipping out of China.
Through all of this, the Crop Smart team has shipped and delivered record volumes of chemical to thousands of farmers. Up to the minute information and above all, communication has made it possible. Some delivery windows have been stretched, but we have made it work. Its been a fantastic effort by a highly skilled and dedicated team.
WE HAVE TO MANAGE NEW RISKS
Our concern is always procuring inputs in time for when you need them. What are we most concerned about now?
Number one is further shutdowns in countries that are integral to the AgChem supply chain. China, India, America, Malaysia, Thailand, and Singapore (just to name a few) are all suppliers of essential raw materials and inputs, and none of them can claim to have the virus under control. Just as we were starting to think China was on a path to recovery, we have seen further outbreaks and cities of 3 and 4 million people be placed into further lockdown. Also last week, Singapore, which until now was held to be an example of how to manage the virus, had its highest daily infection rates ever. In short, the world is still only able to control the virus through shutdowns, and the virus is not yet under control. We are not discounting further serious disruptions in any of these countries.
Number two is continued shipping delays arising from the shutdowns; once stock has been delivered to port, we have seen delays of up to 30 days to ship. At the wrong time in the season, these are material delays.
NEW RISKS REQUIRE NEW STRATEGIES
We are changing up how we operate to ensure supply continuity; where we used to plan out 3 months, now we are planning 6. Where we planned 6, we are planning 12 months out, and where we planned a year in advance, we are looking at least 18 months. We feel that a buffer of 6 months in most products allows us to recover from a 3 to 4-month-shut down somewhere in the supply chain.
Our strong advice to our customers is, don’t just rely on our planning – you need to take a new approach to your own procurement. We are suggesting that you pre-order at least two stages of the season ahead. That means that right now, you would have already covered post-emergent and fungicides, and are about to cover off desiccation (and potentially summer sprays for November and December). Some of our stores are already sold out of post-emergent chemical. If you’re unsure of volumes, usually we would say just order 50% or 70% of what you think you’ll need. This year we are saying order 100% and consider the extra a form of insurance.
The second part of the strategy is to only order from a reseller you trust to deliver on your agreed timeline. If you are not dealing with a business that controls as many steps as possible in their supply chain, the chances that you will be let down when they get let down get higher. Our sales team talk directly to our procurement team here and in China. No one is better equipped to help you plan and to deliver on your plan than a Crop Smart Sales Rep.
The third step is timing; just as you are planning and ordering earlier, make sure your deliveries are earlier. You should already have some of your post-emergents in the shed. Your fungicides should be on hand 6 weeks before you need them, and your summer sprays in the shed by September. This is the best insurance you have against the unexpected.
With an amazing start to the season in most districts, let’s ensure together we deliver on its full potential. We are here to help you.