The vast majority of the cost of any product is not the raw materials. A herbicide that sells for $50 per gallon may only have $5 worth of ingredients. The problem is between discovery, testing, labeling, building manufacturing plants, hiring people, insurance, shipping, and all the “other” costs that go into it, a company might have another $40 per gallon, for example, invested before they get it to the end user. Herein lies my frustration. When the incremental cost of producing a product is so low, it only makes sense to never, ever, ever miss a sale. However, most companies figure inventory value inclusive of all the fixed costs, rather than the incremental cost like I (and most farmers) would figure it. Because of this, companies don’t want to have much inventory around at the end of each season. Then, when we get a year when all the acres actually get planted and farmers want to invest more in their crops, there are supply shortages. To make matters worse in 2021, the U.S. still has millions of people collecting huge unemployment checks rather than going back to work, so production, supply, and trucking availability are all way down.
By the spring of 2022, we feel extremely confident these issues will all go away and supplies will be back to normal. For this year, though, we have been advising you for months to take everything you need on the farm through August. If you haven’t done that yet, please do so today, because while we have a pretty good supply of most ag chemicals, many of our competitors have already been running out, so their customers are turning to us to supply them. In other words, we’re going to sell out of almost everything we’ve got at some point, too.