24 August 2001

COULD YOUR CHEMS COME CHEAPER?

Everyone has a favourite story about buying a spray input at less than the market price.

But how about buying all your agchem cheaper than the average market price?

That is what Brown & Co offers its clients. Charles Abel reports

ARE you paying too much for your crop protection products? According to farm management consultancy Brown & Co, too many growers are doing just that.

Its database of on-farm prices shows some growers spend up to 60% more than their neighbours for everyday agrochemicals.

Big sellers tend to vary most. Last year, Starane (fluroxypyr) ranged from £16.50 to £26/litre, while Landmark (kresoxim-methyl + epoxiconazole) cost from £31.50 to £46.10/litre. Those prices represent differences of 57% and 46% respectively. And generic glyphosate ranged from £1.76/litre to £3.49/litre – a difference of 98%.

Although part of such differences can be accounted for by service, the full database separates serviced from non-serviced prices, so growers can compare like for like.

The savings to be had can do a lot to boost farm profits, says database co-ordinator Mark Grubb, who also operates Brown & Cos First Agronomy service and agrochemicals buying group.

"One farm, with almost 3000 acres, discovered it was paying near the top of the range for agchem. By buying at lower prices through the buying group, it has cut £16,000 from agchem costs in one year."

Other farms wishing to retain their distributor agronomist have used the figures to seek rebates, says Mr Grubb. "Several have received cheques where they have been over-paying."

Widely used sprays show the biggest variations in price between identical products, as distributors find themselves long or short on popular brands.

Added-value products

However, differences can be greater still where products with identical active ingredients but different formulations are compared. "Some distributors have their own added-value products, which growers find difficult to compare with other products. They are often the best margin products for the distributor because the grower is locked in through the serviced business."

Generic products offer further scope for savings. Last year, phenmedipham as Betanal Flo 160g/litre cost an average of £4.89/litre compared with the £2.18/litre cost of Stefes Forte 2 114g/litre.

Allowing for the lower active ingredient content in the generic product, the price difference is still an unjustifiable 84%, he says. "The products do pretty much the same job, although the Betanal Flo formulation is safer when used in adverse conditions."

Brown & Cos database records prices collected by growers once trust deals and rebates have been finalised. Farm size and location is noted and individual farms allocated confidential codes before the results are issued as a comprehensive report in October.

Although data is historic, it shows what savings can be had and that can be extrapolated to the current season, assuming a general level of price cuts across the trade, says Mr Grubb.

That and the buying power of his First Agronomy buying group, which represents 6000ha (15,000 acres), allows the group to source products at less than the lowest price recorded in the previous season.

Significantly, farm size has very little to do with the price paid for sprays. "Bigger farms are often paying more than smaller ones, possibly because the smaller farm spends more time ringing round whereas the larger farm accepts the price."

DATABASECUTCOSTSEVENMORE

ONE grower who has benefited from Brown & Cos agchem database is Chris Brown, who farms 2225ha (5500 acres) with neighbour George Gitus as Arista Farming Company, near Bury St Edmunds, Suffolk.

"We used to get competitive prices when Mark Grubb managed the farm for us, but joining the Brown & Co service has probably helped us shave another 5% off costs compared with most farms," says Mr Brown.

"We spent a long time examining ways of cutting fixed costs, which led to Arista Farming," he says. "But it makes little sense to chase fixed costs to the last £ and ignore variable costs. We need to look at every part of the business, especially when wheat has been down to £60/t."

Variable savings

But variable cost savings must not be at the expense of yield, he says. Average yield across the 1400ha (3500 acres) of first, second and third wheat for feed and milling is 8.6t/ha (3.5t/acre), on land varying from sandy clay loam to calcareous clay loam.

"We need yield to dilute costs," says Mr Grubb. But yield must not be bought through variable costs. So cheaper input buying has considerable appeal.

Mr Grubb admits to being surprised how much variation there was on product prices, particularly for popular products. "Even though I had been buying widely I wasnt getting the lowest prices. Now we have the information to confirm how competitive we are."

But there may not be much scope to push prices much lower. "Distributors are starting to say this is the bottom of the market and that they cant go any lower on what manufacturers are charging." &#42

Chris Brown (right) has shaved 5% off variable costs by better buying. Brown & Cos Mark Grubb says many growers could do the same, and it is not always the big buyers who get the best deal.

CHEMICALBUYING

&#8226 Big scope to pay less.

&#8226 Survey shows true costs.

&#8226 Up to 60% price range.

&#8226 Popular products vary most.

&#8226 Service costs £75-£125 depending on farm size.

&#8226 Buying group cuts costs.