The cost of agriculture inputs are expected to continue rising as new challenges in the global supply chain emerge.
Notwithstanding, two of Jamaica's providers of agricultural inputs have indicated that they have implemented measures to mitigate the increasing costs.
In addition to an increase in the cost of freight and raw material, Graham Dunkley, managing director of Caribbean Chemicals and Agencies (Jamaica) Limited, cited geopolitical tensions as a contributor to the jump in input costs.
"We have witnessed political upheaval in the US, UK, France, Germany; old and new tensions such as China versus Taiwan, US versus Russia, US versus Belarus...The pandemic alone would have been a major disruptor of how nations interact to buy, sell, and transport raw materials and finished products around the world. Add in increasing nationalism and trade of products, agricultural products become both an important factor and a major bargaining chip in how nations fortify themselves in a changing world order," he told the Jamaica Observer.
Moreover, Dunkley said that mergers and acquisitions of players in the global farm supplies industry had resulted in the "significant consolidation of production and intellectual property," that had also tapered the supply of raw material. He pointed to two acquisitions in recent years - Bayer's purchase of Monsanto and ChemChina's takeover of Syngenta - that had a major impact on global industry.
Coupled with the pandemic, the mergers and acquisitions have pushed up the prices of herbicides by as much as 300 per cent and fertiliser by 175 per cent. Added to this, Dunkley said, freight charge has increased from US$4,500 to US$22,000 per container.
At the local level, Dunkely said the Caribbean Chemicals has also had to grapple with the depreciation of the Jamaican dollar and high importation costs.
Despite the challenges, he shared, "...we have managed our supply chain risks by leveraging our top-tier relationships with reputable suppliers, assured geographical spread of our supply chain, and maintained continuous close monitoring of the supply market."
"We have mitigated increases to the farmers by tightly managing our operations, shelving capital projects and ensuring prudent purchases of inputs," the managing director continued.
While noting that in some cases Caribbean Chemicals has had to not purchase some items, Dunkley said the measure will have the adverse effect of reducing options for farmer and, therefore, reducing their productivity. However, Dunkley emphasised that the company was committed to reducing costs to farmers and improving their productivity with the introduction of new technologies, training and development, clear communication and distribution of products in the market.
Like Caribbean Chemicals managing director, Hi-Pro Farm Stores Business Development Manager Dayne Patterson highlighted the dramatic increase in raw material for farming inputs. Between January 2021 and November 2021 the costs of inputs at the outlet have risen by as much as 240 per cent.
As a result, he said, "Hi-Pro has not been passing on the extent of the increase to farmers. Our strategy has been to compress our margins and increase our on-hand inventory."
"Previously, we would have inventory on-hand for between six and eight weeks, but these days in order to secure the best prices and maintain some price stability, we're securing inventory for up to eight months in some cases, depending on availability and other factors," Patterson stated.
