Special FBN® Podcast: The State of the Global Supply Chain in 2021

FBN Network

Oct 26, 2021

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The state of the global supply chain is under significant pressure at the moment and is resulting in tight and volatile pricing on certain products requiring close management and ongoing communication between growers and suppliers.

In this special edition podcast, join FBN Co-Founder and Chief Innovation Officer, Charles Baron as he and other FBN experts discuss the current state of the global supply chain. 

Charles and his guests will zoom out from the current issue we’re facing and look at how the supply chain operates, how international shipping impacts farmers and the factors that have contributed to where we are today. 

From a practical perspective, we’ll dive into which crop protection active ingredients are seeing constraints and volatility and how farmers can plan ahead in order to navigate this dynamic and difficult situation. 

What you’ll learn

  1. What we’re seeing in the market

  2. What’s happening in the ag chemical supply chain

  3. What FBN’s been doing about it 

  4. Ways you can manage and think about this issue on your operation

Listen now

About the panelists

Charles Baron 

Charles is the Co-Founder and Chief Innovation Officer of FBN. His passion for farming helps him guide the development of FBN’s breakthrough farmer-to-farmer network. He’s been with FBN since we started, over 7 years ago. 

Jeff Thayer 

Jeff is VP, Operations & International Procurement at FBN. Jeff joined FBN 3 years ago after Willowood USA was acquired. With over 35 years in the Crop Protection industry, he has held a variety of positions in Sales & Procurement, Global Supply Chain, Product Development, and Sales Management throughout the ag industry.

Mike Snyder 

Mike is Head of North American Procurement and has been with FBN for over 6 years. Mike’s extensive experience in the ag industry spans 38 years. He’s worked in Sales, Marketing and Purchasing with some of the industry’s leaders.

Marc-Andre Fortin 

Marc-Andre joined FBN nearly 4 years ago and is currently Director - North American Crop Protection. Marc-Andre brings over 10 years of experience in Ag Retail and Wholesale.

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Audio Transcript

Charles Baron (00:00): Hi everyone, I'm Charles Baron, co-founder of Farmers Business Network®, and welcome to a very special FBN podcast on the state of the agricultural supply chain.

The supply chain has pretty much been the number one global business news story of the past month. It's impacting all types of consumer products. But it's been something that farmers have been feeling very, very closely here.

Now we know everyone is busy harvesting right now, and maybe it has a little time while you're in the combine. So we wanted to bring our experts to the table here. Give you a perspective as to what we're seeing in the market, what's been happening specifically in the ag chemical supply chain, what FBN has been doing about it and, and ways that you can manage and think about it on your operation.

So with that, we will jump right in and I will introduce our panelists who were joining me today who are really ag expert leaders in this category and have as good a view as to what's taking place as anyone in the ag industry.

With me tonight are Jeff Thayer, VP of operations international procurement, Mike Snyder, our Head of North American procurement and Marc-Andre Fortin who is our director of North American crop protection. Welcome gentlemen!

First, I'd like to ask Jeff what is going on here and how did we get here? What's causing the issues that farmers are seeing and specifically how these products actually reach farms all over North America.

Jeff Thayer (01:52): Hi everyone, hopefully you guys are having a good day out there and thanks for listening. And so obviously we're all keenly aware of the supply chain issues you've seen on television or on your computers.

It goes back quite honestly to 2018 when it started to happen and right, wrong or indifferent. It was the beginning of the trade dispute between China and the United States where soon thereafter tariffs went into effect. And so the supply chain started to get disrupted.

People were making kind of unnatural decisions based on higher inputs to pay tariffs coming into the United States. So as we were working through the fall of 20119 obviously the global pandemic started to roll out with a massive impact on the global economy. So in the first quarter of 2020, we started shutting down literally all economic activity, globally shipping intermodal ports, trucking, you name it.

That's where everybody pretty much went to work from their homes, with the exception of a few folks. And this had big implications over in China to begin with where most of the active ingredients are produced for crop protection products. So they shut down limited access. Their plants began to throttle back and the supply of materials was cut back significantly as we processed through 2020.

It continued to ripple through other parts of the world, Western Europe. We all remember the stuff on TV, which Spain, France, those folks, wherever it was really decimating those countries. And also over in India where a large percentage also of the active ingredients that we formulate and sell in the United States or manufacture. So a complete kind of slowing down of everything as it started to kind of come out of the pandemic when things at least factories were beginning to try to operate.

We were going into the first quarter of 2021 and folks will remember the Texas freeze. You know, it seems kind of isolated, but because of the concentration of the U.S. petrochemical industry and all of the inert materials that go into almost every product that is sold here in crop protection for agriculture comes through that, that geography. So that impact had a massive effect on the supply.

Once the materials got into the United States, certain factories that did kind of the finishing of these materials were shut down for months. You know, further pressure on the supply chain and obviously lack of supply results in higher and escalating pricing. So we tried to do our best during this time to pull through as much product as we possibly could.

Now, in addition to the supply of those inner materials, even in the United States, a lot of the companies that we work with contract manufacturing firms are having real challenges, getting their employees back to work due to COVID.

Jeff Thayer (05:31): And so their operations, instead of running in a 24 hour a day, five day schedule went to eight hours a day, five days a week. So two thirds of the domestic formulating packaging capabilities were offline here in 2021. So that has brought us to where we are today.

It's still the economies of the world are starting to fire up thus the surge in demand for goods across, you know, across everything, cars, chips, chemicals you name it. So this is having a ripple effect on the costs of getting these materials.

One area that you guys have seen on TV is shipping ocean freight, as an example, in the fourth quarter of 2019 to ship one of those big sea containers from China to say, Long Beach, California cost $3,000 a container. Today, that cost is $18,000 a container and this is still the same amount of weight that's in those containers.

Jeff Thayer (06:42): So you can see it's gone up six fold just on inbound freight, and that costs, we cannot control that we're doing our best to look at alternatives, to try to bring it into all of the U.S.. Everybody's trying to rush around from Long Beach to Seattle, to Houston to Savannah, like up to North Fork. And we're doing that to predominantly bring it into two ports.

Now we're accessing almost every port in the United States and in Canada to bring our products there. That situation as you guys generally know in the United States, there's a domestic trucking shortage. So you take the port impact, you take intermodal train impact, and then you get into trucking logistics impact.

All of these things have had just a compounding effect on the supply, not only of FBN products to the ag community, but all, all of our, all of the supply to the ag community from all companies, we're all struggling with this.

Jeff Thayer (07:48): We're looking for solutions. We've tried. We are ordering well in advance. So as an example, our shortest lead time from our China source would be 60 days from order date to an FBN warehouse today that is running, you know, almost six months. And in some cases, depending on the complexity of the process, it's nine months to a year.

Now we did hedge back in the first quarter of 2021 on ordering a lot of materials for the 2022 season. So you've talked about how did we get to where we're at and what is it going to look like going forward? I think we've done a decent job. We certainly can do better, but I think we've done a decent job on ordering most of our materials that were in our plan for the 2022 season.

Jeff Thayer (08:41): They're not all here. It's a little bit of a scramble in certain areas, and, but we'll get into some product specifics over the course of this kind of podcast, but I think the outlook is improving.

I still think you may need to be hedging a little bit on some key products that you fail. You absolutely must have it for next year. You're probably gonna want to do that, but I guess Charles, I'll just kick it back to you so that some others can comment and then I can fill in some other areas.

Charles Baron (09:13): Yeah, I think in understanding what's going on, I mean, what's, what's been in the news in the last few weeks has been the ports and, you know, the stackup of container ships Los Angeles taking 16 days to unload or containers sitting in at the port for 16 days now.

If you've been taking trains into various ports, they're so backed up and they can't get them out. So ports have really been the, the discussion but I think what you're saying and the way the ag market works is that there's a lot more that's going on here beyond the ports and really what's happening at the ports is also partly the surge in consumer demand, which is imports are up 30% this year as the economy comes back from COVID.

But in ag, you have a more complicated system because we of course have technical raw ingredients that go all the way back to China or India or other countries.

Charles Baron (10:06): There's various processing steps throughout that system. You then have the freight and the port issue. Then you have the internal logistics issue, and then you've had manufacturing constraints in the U.S. because with the Texas freeze and then the hurricane that it further compounded that.

And that's all, you know, conspiring at this moment you know, to cause some of the price shocks that people are seeing. So you know, I've turned them to Marc. Marc, tell us what you've been seeing about, you know, the rise in technical grade ingredients that are important in North America and how that's been impacting prices. You know, that are, that are flowing through the farmers are now seeing in the market.

Marc-Andre Fortin (10:47): Thanks, Charles. Again, thanks everyone for joining this call. I think you guys are gonna hear a lot of really valuable information that usually doesn't get disseminated with this kind of clear and concise messaging all the way to farmers. We're excited to kind of share this with you guys as part of the FBN family.

One of the things that I think Jeff didn't quite mention yet, and especially in probably the last 60 to 90 days, it's really exacerbated the problem from being kind of like a shipping logistics and demand issue paradigm with tariffs and, and you know, workplace issues to a Chinese energy crisis for an industry that's extremely energy intensive and its production of tech assets. So, the tech ingredients in China are produced at facilities that are hundreds of acres in huge manufacturing districts and a handful of select provinces in China.

Marc-Andre Fortin (11:41): These districts are massive. They have overhead pipelines of NH three and steam and other inerts that kind of flow from in-between factories. And these are extremely energy intensive areas that are heavily reliant on coal. And you've seen a massive surge in the price of coal in China.

At the same time, the Chinese government is trying to curb emissions targets under their kind of double control policy. So the price of electricity to generate these assets has been, you know, climbing and climbing and climbing. But the real story now is that a lot of these manufacturing sites are actually getting shut down by the government.

They're not allowed to produce, or they're producing at a reduced rate compared to their historical performance. So you've got, you know, yellow phosphorus, which is a key ingredient in many technicals, you know, that we import into the U.S. you've got you know, glycine that's going through the roof and many actives as well.

Marc-Andre Fortin (12:36): And all of these things are starting to compound. The things that Jeff kind of said has been like a slow boil for the last two years with all of the kind of supply chain constraints. And you're starting to see that is being stacked on top of this Chinese energy crisis.

Then you move from the energy crisis to how do you get it out of China while you've got all this, this, this backed up supply chain and we're heading into Chinese new year and the holiday season, and then leading right into the Beijing winter Olympics, which will curtail again, some further production from, from those facilities. So you have all that. You have the fact that you have kind of pretty historical highs on commodity prices for growers. So demand and use in the 2021 growing season was high.

You know, we had heavy insect pressure. We had heavy disease pressure, lots of use rates for those actives in North America more broadly some areas had drought. So you have some fungicide carry over, but by and large, we had a heavy use rate in 21. You have all of these issues Jeff was talking about, and then you have the additional tech prices that were already high, but are starting to climb even higher from there based on this Chinese energy crisis.

Charles Baron (13:50): Mike, tell us what are you seeing in the U.S. as prices are you know, the, the whiplash that's making its way through the system now reaching farmers this fall. What have you, what have you seen in U.S. pricing as you've been out? Sources?

Mike Snyder (14:08): Yeah, Charles, thanks. You know, it's been just like tennis shoes and everything else out there. We've seen prices skyrocket to records as a percent and also dollars we haven't seen before. For example, glyphosate. I'm going to tell you, last year we were purchasing and selling glyphosate in the $10 to $15 range. This is for people who were buying early, early December through March before the 2021 season.

And now we're looking at prices of approaching $50 on glyphosate in the marketplace. It's simple supply and demand. There's a lot less generic glyphosate. So it's dramatically a supply and demand is pushing the prices. We're seeing that with some basic components like Atrazine. Atrazine has gone up from about mid, mid $8 to almost $20 a gallon. So we're just seeing a massive increase. Anywhere from $13 to $14 a year ago, to close to $25 coming out of the gate right now.

Mike Snyder (15:14): We're seeing these prices escalate. And I think as the, as the general retail market wakes up, and they're all trying to stock because the initial reactions, just like the same thing, when you hear a snow storm coming in or a bad weather by runs to the store and grab supply everybody's going out and trying to secure as much of this product as we can. It's multiplying the shortage that we're seeing in the products and the prices are just starting to skyrocket.

One of the things that I've talked to several farmers that I know about pricing when they asked me because they know I'm involved in it. I said, once you see these prices and you fall off your chair and you have to slap yourself in the face, get back up in the chair and, and secure as much as you can early, especially some of the key things that you're going to need that, you know, you need from year after year because they will be short, they're going to be more expensive.

And you're going to, I think, start to look for alternatives when you realize you can't get the basics: glyphosate, Atrazine. Metolachlor is one of them that is very, very short in the marketplace. And it's also skyrocketing out there. We were buying it as an example last year in selling in the mid $20s. Today, I'm hearing prices close to $50 a gallon for standard Metolachlor.

Charles Baron (16:31): One basic question is the situation domestically in China, which is you know exacerbating a lot of issues. So the question for the group is educate us on the global system and, and where products are manufactured?

And I think you'll a lot of people may be saying can't you just get it in the U.S. and what is the state of manufacturing today that exists for how products are sourced by FBN?

Jeff Thayer (17:08): I'll take a shot at that. So generally speaking today in the last 15, almost 20 years, the process is to score active ingredients predominantly from China. And to some degree, India.

India is up and coming and then import it either as formulated product or as technical or concentrates, and then formulate and pack in the United States. Not that long ago, in my lifetime, we were synthesizing most of the predominant ag chem products in the ‘70s and ‘80s.

And in the ‘90s, what back then was what happened to a lot of industrial operations, it went off shore due to lower pricing, probably Chinese government subsidies. That pretty much took out a lot of the, you know synthesis chemical industry here in the United States. United States was a net exporter of crop protection products in the ‘50s through the early ‘90s.

Jeff Thayer (18:17): And so it's flipped. So now with this acceleration in costs and, and deliveries, I do think there is a need to take a deeper dive into what makes sense to protect the core part of the U.S. economy, which is U.S. agriculture. It really does need a deep dive by our folks in Washington, probably to get some industries that would take a risk on something like this. Cause these factories to build these plants as billions of dollars, it's not tens of millions, it's billions.

The only way to do that is through some government support systems, particularly when we're competing against China. So it's a process, and we're just beginning as FBN to take a look at that and who we can partner with, you know, in other parts of the world, Western Europe, some key areas in South America and India.

Marc-Andre Fortin (19:15): One thing, just anecdotally, I was in China visiting some chemical manufacturing districts a few years ago, and just the size and the scale of these facilities. And these plants are actually kind of overwhelming and you drive for hundreds of miles and it is steam pipelines. And these three pipelines overhead for, as far as the eye can see on both sides of the road, both sides of the river you know, the size and scale of these places that manufacture these places.

A lot of the glyphosate manufacturing facilities have their own coal import terminal onsite. So it's not like they just import the electricity, they actually manufacture the electricity onsite. So, you know, these are not small places. These are not, you know, little bathtub operations.

Charles Baron (20:00): I can't just decide to get into this and turn it on in a couple months here in the U.S.. Mike brought up a good point.

And some farmers actually asked this in our poll. We surveyed folks as to what they wanted to know, which is, is this like toilet paper? Is this basically what we saw going on in toilet paper with the pandemic started when people were running to Costco and, and you know, stuffing shopping carts full of toilet paper hoarding, like, are we seeing hoarding going on? What are you guys seeing in the market

Mike Snyder (20:38): I'll jump in because I've talked to a lot of different people in the U.S. and let Jeff handle it more globally. You know, I think it does add some energy when we talk about the prices going up and there's shortages or there's different people taking early stock of stuff. But overall the real issue is shortage of these products coming, as Jeff said, coming over from China.

When we start seeing limitations, everybody takes the opportunity and, and it's a simple supply and demand relationship as we have less and less product, I use the Metolachlor example, there's probably four or five major manufacturers that make that product. There's probably only two, two of the five have technical from China that can produce it. So it is a little literal shortage at this point in time on most of these products.

Bottom line, I don't think it's directly related to like a toilet paper scenario where you can go out and buy four years worth of your toilet paper in one weekend. And reduce the amount of product on the stocks, farmers aren't doing that. I don't think retailers are doing that. It's purely a shortage issue.

Charles Baron (21:45): And so Marc, you were talking about some other things that, you know, FBN’s put in place to also make sure that hoarding wasn't taking place, you know, in the purchasing on the store.

Marc-Andre Fortin (21:57): Yeah, for sure. We've added some kind of limitations on the amount of products growers can buy, especially on actives that are tight. You'll notice that when you go onto the FBN website you know, certain actives will get a tote limit. So it'll say, you know, especially for glyphosate, you can only purchase eight totes as a farmer.

We've been pretty diligent about making sure that, you know, we saved the inventory. Do you have you know, and, and Mike and Jeff has done a fantastic job of positioning FBN with a really strong supply position.

But what we want to make sure is that applied position makes it into the hands of our members and not into the hands of our competitors. Cause what we're seeing is there's, there's quite a few retail email handles creating accounts and trying to buy glyphosate from FBN currently. And we're making sure that we're limiting that volume and keep in mind that the cheesecloth, it's not a hard stop, but we are really focusing on getting that volume into the hands of farmers.

You know we're selling to farmers for cheaper than most people can buy in the wholesale market by a pretty significant margin. So right now, an FBN member is buying glyphosate at a preferred rate to somebody buying a hundred truckloads of glyphosate. And that's just completely upside down to what you see in the industry usually.

Charles Baron (23:09): Right. Which is, which is a great thing for growers. So let's talk about that for a minute, you know let's talk about what FBN is doing or it has been doing in the market to make sure that we've got supply for our members for planting. Most folks are still harvesting or they're in the middle of harvest and probably have a month left. And they're not thinking about next year, you know, on their herbicide plan, but many people already are. I think that's what we've already seen.

We've been seeing that in the market with an unprecedented amount of early buying taking place in the last month that is going on, that lots of farmers are buying early, but let's talk about, you know, what position we're going to be in to be able to serve our members and what our members can count on from FBN throughout the procurement, how they should be thinking about their procurement plans. So maybe I'll, I'll bounce that one back to Marc, but Jeff and Mike definitely jump in here.

Marc-Andre Fortin (24:09): Well, I actually want to take this opportunity to give kudos to these two guys because I know Jeff and Mike have been pestering me about getting the forecast for 2022, like last January. And I was kind of slow being like, why would I need to give you this forecast? We're not even through the year yet.

Our plan to procure for this year started in winter last year, right? We are, you know, 16 to 18 months into this procurement cycle. Because of the way we've gone from kind of tech to tote to farmer in as few steps as possible, not only do we have better visibility than our other retail competitors, but we also have more options on the table than they do you know, by owning the tech registrations, by working directly with our towing manufacturers, by having multiple tech sources on our labels.

It really gives us the advantage to have a longer lead cycle, really see issues coming with a longer lead time. And, you know, with that, I'll, I'll give it to the two guys that are making this happen so that they can give a little bit more detail.

Jeff Thayer (25:14): I'll jump in a little bit on the international sourcing side. So, yeah, Marc's correct. You know, historically, other than the last year, maybe two years, you know, we would wake up in July and start to work on the next year's budget and look, and really be able to look back at the previous season and say, how did we do and where do we want to tweak and what do we want to increase and maybe cut that we don't have those luxuries anymore.

And so we actually started in January of 2021 for hardcore planning for 2022 with purchase orders overseas and March for large volumes, that would be rolling in actually last month, the first big wave of some of our products just started to come in, which thank God we've got, we've got those orders in. And we have beaten the kind of chaos that some of the ports are in right now in the, such as the power crisis in China, that Marc outlined that started in early September.

Jeff Thayer (26:15): There's almost no space between the current year and next year. Now the treadmill never stops. It may, and it gets a little bit tougher to stay on the treadmill as we try to look towards the future and the growth of the company and our expanding portfolio.

When FBN acquired a small generic company in 2019, they acquired about 26 active ingredients as registrations are now, you know, and then since then, and in the next 12 to 18 months, we'll be coming in, in the low forties on active ingredients. That's a significant increase in investments to have a broad offering for our members. And we're really happy to do that. It's expensive, but it's what we're committed to do to keep farmers first in our thoughts going forward.

Jeff Thayer (27:10): But it's a full year. And as our volumes grow and our products grow like a glufosinate we're starting to get a little bit more seen at the table overseas helps in some negotiations to, you know, get as, as the competitive prices we can maybe get maybe not in first in line, but certainly in the first three in line to get a, a cut of that product when it becomes available.

But this company is still very young. We've got some good folks. I think the outlook for FBN is pretty good for next year based on our plan. Now, certainly the market can suck up all the, all the supply we possibly can have based on where we started in January, where fair to good shape for 2022

Mike Snyder (28:11): Charles, a couple of things that come to mind. Then I think we've done a really good job of preparing for this year. It's just that we went to the market early, but we started looking at products where we knew it was going to be short. As I mentioned, Metolachlor.

A lot of people know Dual, you know, as a pre-emergent for grass control, it's been pretty much one of the staples out there. We know it's going to be short. There's not going to be enough Metolachlor. Farmers are going to have to start looking for alternative sources for exempt, simple grass control. And glyphosate is probably one of the biggest ones out there for years.

Most farmers today, that's all they've done is put glyphosate over the top of corn and soybeans, but there have been looking for alternatives. Now that glyphosate is starting to have problems with obviously some of the broadleafs.

Mike Snyder (28:53): So we've started taking a position on some of those alternatives. Acetochlor is another product that many people notice. Of course, we'll have those different products in our stock as an alternative for a pre-emergent progress control. We're going to have the pre-emergence with Atrazine, which is a broadleaf product and there's alternatives for Atrazine.

Mike Snyder (29:46): Dicamba has been one that in my opinion, I think a lot of extension agents feel Dicamba is a better broadleaf product on a post application, but it has been more expensive. Well today, Dicamba is probably going to be more economical than 2,4-D. So put their thinking caps back on and look at alternatives for a good performance. Another way to get into the postseason is insect control. So looking for those alternatives, we've taken a look at that.

Hate to say it, but Jeff and I have probably got about 80 years experience between the two of us. So we know some of these products, even when they're the old brand name. So we went out and started buying and making sure we have stock of those alternative supplies.

The other thing that I think that they can look at FBN and Marc can add to this, but when you see it on the store, we have it available. We're doing our best to make sure we don't oversell anything. So we don't put farmers in a position where they think they have it and we can't deliver. So we're doing our best and saying, it's going to always be like that, but that's our goal.

Charles Baron (31:03): Yeah. I think the moral of the story is, you know, the team has been incredibly planful going back, you know, well over a year ago thinking about 2022 and getting ahead here. And so we do have product in stock.

There's been a lot of horror stories in the market. You've seen them on Twitter and other places, farmers saying, I signed up for a price and bought something that couldn't even get delivery a week later, you know, for something that I was told that was in stock from other folks.

We do not want anyone to be in that position with FBN. So we're taking a number of steps to make sure that that doesn't happen. So you know, when you see something on the store, if it's listed that means it's in stock, it's available for shipment.

You may see things that you know, are con products that are not on the store or they're, they're taken down. Marc, let's talk about how that's going work. So that folks don't think that no, that, that means that I can't go to FBN to get X, Y, or Z but that we're, we're managing that really closely. So if it's up there, you know that you can get it from us and then it's going to get to your farm.

Marc-Andre Fortin (32:08): I've really enjoyed kind of having this conversation out loud because these are the discussions Jeff, Mike, and myself have on a daily basis, but kind of framing it out this way was actually useful for me to kind of hear it broken out.

Two of the things I think that’s unique to FBN is the relationship between our production team, Jeff and the procurement team might write the information we get from our production facilities and China and India and elsewhere. When we start seeing some tightness in that market, Jeff has intel live and is able to act on the domestic market and start buying a bunch of different supplementary products to what Jeff can't produce. The next piece of what makes it really interesting is that we sell under a pretty unique frame at FBN called the value pick ecosystem.

Marc-Andre Fortin (32:55): If you're an existing FBN member, you'll understand this concept. But for those of you that are not FBN members or have not purchased from FBN, maybe get a little bit of background.

The value of that ecosystem is a guarantee on the technical analysis of the product and the package size you are buying. So we're going to guarantee that you're getting, you know, four pound glyphosate in a 265 gallon tote. What we're not guaranteeing is that it'll be Roundup.

We are allowing the procurement teams to really juggle what is the best price we can secure for that active ingredient for our growers. It allows us to better manage our skus. It allows us to pass along those savings to our growers and just gives us additional flexibility from our forecast, right, to be able to sell five or six different items on the same forecast line than trying to buy every single product to its exact quantity.

Marc-Andre Fortin (33:51): That's unique to FBN. The other thing that, you know, I'm responsible for and have been doing a lot of work on is not always on strategy. So this essentially means that we manage our position.

You might not always be on strategy. So we've got this concept called line of sight. That basically describes, you know, whether something is on hand, on PO the tech is here, you have the line time, every single one of these buckets that gets assigned a different risk category based on the individual active, you know, Mike's team does this Jeff's team does this. And we basically say, okay, well we feel really confident selling X percentage of our product that we have in this line of sight. And that's what's going on in the stores that volume at this price.

Marc-Andre Fortin (34:41): When you see something as an FBN member on the store, it's gone through this vetting of, of risk tolerance, tolerances, a mere bearish right now, right? We are making sure that we are, we're not overextending ourselves and we are not committing to grow our promises that we can uphold.

With Mike and Jeff's help, we're making sure that the products that's on our store and the prices that are listed on our store are what we're honoring as a commitment.

As we start selling above that line of sight does not mean that we're going to be out for the rest of the year. It just means that, Hey, we need to take a break from selling this until we get more information. As we get more information, more details, more product, it'll go back onto the store. What that means is that this year you know, the most important thing to do is to look at products that are on the store at the start of sales seasons and not on the last day.

Marc-Andre Fortin (35:29): Our AE's are usually pretty excited to close out a big sale season in the 48 hours. But this year we're really pushing the message that because something is there on the first day of a sale does not mean it will remain available for the duration of the sale. And it certainly does not mean that the price will stay the same during the duration of the sale. The market is so dynamic this year that we are just reserving the right to change availability and change price on the fly.

Charles Baron (36:00): Let's talk about that a little bit further. So right now we've got a major sale coming up, the biggest sale of the year for FBN, which is Cyber November. And it's historically when, you know, most farmers bought way ahead. We try to make sure our best prices of the year and really help our members lock in the best savings they can.

One thing that's been taking place this year is that farmers have already started buying for 2022 starting, you know, about 10 weeks ago or, you know, eight or nine weeks ago. And it's really ramped up astronomically here in the last three weeks even as people are in the middle of harvest. So we want to make sure people are ready for Cyber November so that they understand what's coming on with Cyber November.

Charles Baron (36:52): That's going to be November one. It's going to start on November one, but as Marc said that those products are moving so fast right now that you've got to be checking. You want to be checking the store as frequently as you can, on your phone, on the FBN app. You're going to see the prices and availability of the product updates going to update live.

We will, of course also there'll be texts that will be various price alerts or promotions around it. But let's talk about Cyber November and how growers should plan for that with what you just said there, Marc.

Marc-Andre Fortin (37:26): I feel pretty confident that a large percentage of our active ingredients that FBN has sold in the past will be online available for sale on November 1st. There's a pretty big cohort of popular products that I can’t guarantee will be on, on November 4th and 5th or 6th.

On November 1st, as we launch Cyber November it’s a pretty good day for a grower to be taking a look at what's available, looking at the prices, there's going to be some sticker shock.

We're trying to, you know, prep everyone for that. Cause we're going to be coming out to market a little bit sooner than our competitors in retail. But you know, it's going to be a good idea to lock in some products. The other thing that's really interesting too, is FBN's price guarantee policy, right?

Marc-Andre Fortin (38:09): Excluding glyphosate and glufosinate, all of the other FBN branded products come with a price guarantee that if the price drops between the date of purchase and the date of delivery at any point on the FBN website, the customer will get refunded a customer credit on account to be used on the FBN store.

There is some, a little bit of insurance there for buying early from FBN but that's really not the environment we're going with. So that's just not a risk that we foresee.

The name of the game this year is going to be making sure you secure your crop chem to grow the crop you need in FY22 because you've got really good commodity prices. You've got high fertilizer prices. You've got high chem prices. You've got high fuel prices, farm planning this year is number one.

Marc-Andre Fortin (38:58): And that comes with a good chem plan and a good crop plan. So if a farmer is trying to get ready for Cyber November, get to know your rotation, get to know yourchem needs and, you know, talk to one of our account executives or community builders.

If you need to get a handle on what year you should be looking for on November 1st and really just get those commitments in early, we're going to be putting volume limits on most of the products that are going to be a constraint. And as you know, the volume limits will allow like 80% of growers to be able to buy their entire needs from FBN.

We're not trying to limit farmers and buying products. We're trying to limit people from buying our inventory and then selling it to you at a premium. We want to make sure that the good prices go to you and not to other brokers and resellers.

Charles Baron (40:07): In getting ready for Cyber November that things are going to move fast this year, because they're already, the market is very dynamic and things are moving. You know getting things in order like the credit application getting, having those conversations about your crop plan, your rotation and what herbicide program that you should be thinking about and making sure you're having those conversations now so that you're best positioned as possible.

But Mike and Jeff, let's talk about alternatives cause you know, you're talking about again, you're not expecting us to be short on glyphosate or glufosinate that farmers should be able to get a product. But given the cost, people are looking at various alternatives.

What are you guys seeing, or, you know planning for putting together for alternative herbicide programs for growers who want to consider alternatives to glyphosate, glufosinate or 2,4-D.

Jeff Thayer (41:11): First over in soybeans. We do think it's important to get a pre-emergent down to maintain soil moisture in particular to some of the drought issues that certain regions face this year. So getting the pre out early we think is important if you're in a sequential program post.

And we would just if you're interested in looking at those you know, speak to your account executives, your AE's, your community builders, they'll have some real good information to tell you the best fit for your farms out there.

Jeff Thayer (42:22): The other product is an alternative, and it's really not an alternative, but you might want to think about it because glyphosate and glufosinate prices are extremely high in the burndown market.

The old standby is Paraquat. We do have Paraquat available; the price is trending up, but I think for the burndown activity you'll get, that could be a good option for you to consider, particularly with the availability around say glufosinate. It's going to be very tight again this season. And so you might want to save that if you've got it for in-season over the crop application. So those are two ideas to consider to balance your input costs and product availability. So Mike, you might have a couple of others.

Mike Snyder (43:11): Yeah. I think I mentioned some of those that I was talking about before. If you're looking at a pre-emergent we know Metolachlor is going to be short there and that's a, as many of us know, we call it our Metolachlor, which is your Dual product.

Some of the newer ones to Dual Magnums which is an S Metolachlor. S as in safe. And it's just another version of Metolachlor where we're stocking up on that as an alternative, knowing that we're going to be short on the Metolachlor, plus the Acetechlor products. We're going to be stocking up on those, those aren't an FBN brand, but we've been outsourcing those. So farmers do have an alternative for pre-emergent grass control and, and corn and, and different crops that they use a pre for. We mentioned the 2,4-D Dicamba switch.

Mike Snyder (43:56): There's quite a bit of farmers will be looking at broadleaf control or even burned down may want to consider economically using Dicamba the DMA version versus 2,4-D, which has been their old standby. We know Lambda is a very good alternative in that market.

One that I think we haven't talked about is the fungicide, which will be later in the season. I believe that right now anything with Propiconazole in it or Propiconazole itself is going to be relatively short or a lot more expensive.

Marc-Andre Fortin (44:46): It's going to be a little bit different this year than, you know, for existing FBN members last year. We were pushing our members to tank mix both individual products together to get that same kind of combined active.

But this year we're actually, you know, we're actually shorting our individual actives to produce more of the combined pre-Mix so, you know, we're going to probably run shy of the individual actives before we run shy of the combined product, which I think is going to be better.

It's a little bit more user-friendly to not have to tank mix and measure rates and get those on your spray trailer in two different jugs. So looking forward to having a higher number of that, but yeah, like Mike said, those actives are both, you know, going to be in, in critical supply in, in North America.

Given the high use rates that we saw in a lot of the parts of the U.S. right South Dakota is flooded and other areas of Montana where there's not a lot of fungicides used. You know, the rest of the country used quite a bit of fungicides last year. So there's not a lot of carry over.

Charles Baron (45:48): And let's the FBN brands that folks can find these under cause you mentioned all the actives, but you know, we have the Willowood brand and the Trio brand in Australia, but what brand names can folks find these actives under?

Marc-Andre Fortin (46:04): Well, actually these are, these are going to be on our value picks. Because Mike was able to secure some products. Jeff was able to produce some products. So in order to make sure that we're not shipping product all over the U.S. you know, and there's equivalent products sitting in the nearest warehouse, you know, to kind of cut down on our freight distances and get the product quicker to farmers.

We'll make sure that our AE’s and CB’s and in our product sheets have all that information, but, you know, you've seen these as, as other brands. Mike, maybe you can talk about some of the other brands in the market that we've been purchasing as well as our own Willowood brand, which makes up the majority of our supply.

Mike Snyder (46:49): Oh boy, you're really challenging me now here on some of the brand names. I mentioned some of them, which is Dual, Harness, which are the pre-emergent products.

Some of them don't even have brand names. I mean 2,4-D. I don't even know that it has a brand name anymore. It's so old out there and has been a consistent standard in the marketplace. Dicamba, a lot of farmers would know it as Banvel and so that you can you can still buy it, but there's several generics now that are out there as alternatives that are very similar.

Marc-Andre Fortin (47:19): I think one of the things that I would maybe point out Mike is as a grower, if you're looking for a product and you know, that brand name, you're looking for you just search that on FBN and we'll show you that product and its price history and anything we have about that product, the label, if you need to look it up but alternatively, it'll show you a window that says, hey, FBN sells this product.

You may not have exactly the product you're looking for, but we have an exact replica, and that will bring you to the pages that we do sell.

So you don't need to know exactly the right brand to search up, to be able to purchase on the FBN website, if you know, any of the brands that you've sprayed in this AI profile, before you just search that up, it'll bring up what FBN does sell.

And at the bottom of the page, it'll actually tell you what, what are the other products that are the exact same active as this? What are the other products that are the same actives, but in different concentrations?

So you kind of get that full transparency of what is the part of the industry that, you know, often tries to obfuscate, you know, all these brands at the same thing in them but they're sold by different retailers under different names.

Mike Snyder (48:21): The other thing I forgot to mention that I wanted to, you know, as, as we're stuttering through here, different brand names and there's regional different names out there, and everybody has different products used for crops is our Community Builder support.

We have over 300 Community Builders, which are local people that are experts in their specific markets. So the farmers can go to the members, can go to those Community Builders and find out not only what products are available, but what are good alternative products that they can use for a specific pastor weed that they're looking for.

Charles Baron (48:57): Right, and you can give us a call. We have agronomic support and you can also talk to our AE’s or go through our website where we have extensive libraries of products, labels AI’s and targets for thousands and thousands of products.

Just so everyone knows when we also talk about FBN brands with Willowood is FBN. So if you see Willowood active-x that's an FBN branded product and when Jeff referenced the 40 actives that we have, that means those are, those are actives that we can bring in under our own brand make sure that FBN is not interfered with in the market, which folks who've been following FBN for a long time, have been aware of make sure that we can access and can control our supply so that we can get it to our members farms.

Charles Baron (49:51): Well guys with that I wanna maybe ask one final closing question which is sort of the, the light at the end of the tunnel.

Folks are probably wondering, should I be acting now, should I be waiting for the prices to change in the spring? You know, how tightly do I want to play this? And you know, what, what green shoots do you see out there or light at the end of the tunnel, and then this system for going into the 2022 season and any final or closing advice you'd have for our members and thinking about procurement and making sure they've got what they need here for planting six months away now.

Jeff Thayer (50:36): My input folks is it's going to be challenging. Now, the FBN supply chain is looking good, but we're not the entire supply chain.

And so if you absolutely need to have a certain herbicide or herbicide program or insecticide or fungicide take a strong look at this Cyber November event that's coming up because that means we have some products it's probably going to fit a lot of what your needs are.

I do think it's going to be challenging. I hate to say this, but I do think there'll be areas in certain growers that are not going to be able to get products. And that will be somewhat impactful on the farm due to the tight supply and availability. So I'm not trying to have a stampede do it prudently with what you need planted out.

Jeff Thayer (51:34): But it's going to be we're here for you as best we can. We got our flag jackets on too. And again, if we can source products and get it here, you know, in season, we're going to try to do that.

We'll take some financial risks and have higher inventories, probably at elevator prices, hopefully. You know, that won't be too much of the case for us, but again, a recommendation from an international sourcing and getting it here on time things are starting to shut down in terms of lead time and getting things here certainly in the south for some pre-emergent products.

I mean, that's, you're talking late February, early March, and we are now in that time zone, where another month from now, it will be very difficult to get those products here.

Mike Snyder (52:23): Yep. Early is the best advice I can give right now. Okay. Whether it's an FBN purchase or anybody else's purchase, if you've got a product you want to have in your portfolio, buy it early.

And if you have kids that want a surprise at Christmas, buy their presents early too. Cause it's not just ag chem, that's in this, this situation. There's a lot of things that are going to be really, really short this year.

Charles Baron (52:49): Marc, any closing advice?

Marc-Andre Fortin (52:52): Same kind of sentiment as Jeff and Mike. I think we've done a good job to position existing FBN members to be able to buy their inputs from FBN like they have in the past.

You know, it's a situation where a lot of retailers on a percentage of their historicals as an allocation FBN, isn't there, right. We're still planning and Mike and Jeff have built the inventory and the supply to get us there. So it's not like we're, we're scratching and climbing right for the corners of the inventory of good supply.

But given that (a) we are a small percentage of the market share and (b) the fact that we've sold almost as much in the first 19 days of October of our fiscal year, which started October 1st, as we did in 2019 as a whole means that, you know, there's a lot of farmers out there making decisions.

Marc-Andre Fortin (53:41): We're getting a lot of new customers in the door. So I wouldn't just wait and assume that FBN has you covered. We have a lot of inventory and we're planning on selling it in November.

But to guarantee supply for any amount of time from there, I think is, is not something I'd want to do. And like Jeff said, one of the things that we hear is, well, price might come down.

This is not the year to try and be smarter than the industry on pricing and chem. We're not here reporting on things that may happen.

We are reporting on things that have happened and the window between buying something in China, getting it told and getting it to a farmer, you know, in time for spring season is really closing and in the foreseeable period, right? There's a lot of things going on.

Marc-Andre Fortin (54:30): There's Chinese New Year, there's the Beijing Olympics. There's all these other things that mean that we're not going to see relief, or we don't really don't expect to see relief in time for planting. So it's just a call to action, right?

If you go buy from somebody else, it's just to look after your farm, you know, plan your acres, secure your fertilizer, secure your can, and lock in some of your contracts for corn and soy into your other crops, because there's good pricing out there right now.

You know, take a look at our advisory service, you know, get help on how to best market your grain in such a volatile environment. And just really look at your whole picture.

There's a lot of opportunities to make money as a farmer this year, but it comes with planning and it's going to come with early decision-making.

Charles Baron (55:21): Thank you, guys. And to all the members listening, you know, we've been working very hard over the past year and more getting ready for 2022. And 2022 is just happening a lot earlier planting prep and, and getting things lined up is happening a lot earlier than historically it ever has.

But we want you to know that FBN is here. FBN is going to have product, we have product now. So it'd be checking now and check out Cyber November. Make sure you are checking every day as availability and prices are updated.

And if you happen to be listening to this later after November or after Cyber November be checking back as well, because, you know, we're constantly updating our site.

We are constantly updating our public information with our availability of product as the season goes on and by any means, or by no means if you've missed Cyber November, does that mean FBN is out.

Charles Baron (56:24): I’d definitely be coming back and FBN is here throughout the preseason as well as the in-season for all your crop protection needs.

With that, thank you very much, everyone. Thanks for listening. To all our members, remember to come visit fbn.com, call your Community Builder, or download the app, the FBN app and all the prices and product information for us, Canada and Australia are available there.

And there's a whole range of new features we have in FBN this year from the digital finance application to a host of new features in crop marketing and making the transaction and shipping as easy as possible and as transparent as possible so you can get the best product to your farm as soon as you need it.

Thank you very much and hope to see you soon. Have a great harvest and thank you.

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FBN Network

Oct 26, 2021

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