The farm chemical scene in Australia

Broad acre farming in Australian is increasingly based on “no-till” technology, a change that has resulted in the substitution of cultivation machinery with increased use of herbicides.

The knock-down herbicide of choice is glyphosate (Roundup), a product that is becoming increasingly important with the adoption of Roundup Ready (RR) technology.

Farmers have been quick to adopt research findings on how to cope with herbicide resistance, a problem that could have world-wide repercussions if glyphosate were to break down.

So, although farmers typically use other knock-downs in their herbicide rotations, the cost-effective glyphosate remains the most important link in the knock-down chain.

Australian grain yields are generally lower than most other producing countries, increasing the importance of the cost-effective glyphosate to Australian farmers.

Farm chemical manufacturers tried for many years to convince the Australian government to extend the patent period on new products, so many farmers see their continued call for tariff protection as a replacement policy for this political failure.

Their actions are understandable given the rapidity with which Australian farmers have taken advantage of the massive savings possible with the use of generic products, mostly from China and India.

But in the bush, tariff calls are seen as a means of increasing the profit margins of local manufacturers, not to help them compete with imports.

The only exhaustive inquiry into farm chemical imports back in 1993 found that there should not be any tariffs applied to farm chemical imports, a finding that has been studiously ignored by successive Australian governments.

Presently, there is no tariff on imports of glyphosate acid, but fully formulated glyphosate attracts a five percent tariff.

Nufarm, the major Australian manufacturer, has with another company made application to the Australian government for a dumping duty to apply on fully formulated glyphosate.

Nufarm, which is 20pc owned by Sumitomo, currently imports its glyphosate acid, whereas smaller companies like my own (4Farmers) import fully formulated glyphosate, the target of the Nu-Farm application.

The availability of low-cost generics has forced all suppliers to match the prices, but price comparisons between products and suppliers is very much an “apples versus oranges” exercise.

The Australian regulator allows a plus or minus five percent variation from stated concentrations, so it is possible to overcome the effect of the tariff cost by producing to the lower standard.

Varying the amount of surfactant in the finished product can also provide the appearance of price competitiveness, but tariff calls can also be “doctored”.

The cost of production includes both the product and the packaging, but the price charged by Chinese manufacturers when dealing with export orders and local retail sales can vary considerably.

An individual annual usage of 10,000L of glyphosate is not uncommon with West Australian farmers, with 70pc of glyphosate sales by 4Farmers being in 1000L containers, hardly the story in China.

Sales of generic farm chemicals have boomed because prices for the first time are based on cost of production, not “what the market will bear”.

When 4Farmers entered the farm chemical market, it was not uncommon to undercut the traditional suppliers by placing our product on the market at a half or a third of their regular price.

While the Australian regulator is spending its time seeking, inadvertently I hope, to boost the profit margins of a couple of local manufacturers, it is not carrying out its more productive task of quality control.

Although statisticians treat “imports” as one line, there are a wide variety of manufacturers and a wide variety of qualities on offer.

When buying their major input each year, farmers should be confident that they are buying the best quality, not the cheapest.