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Cash-strapped United States farmers switch to generic crop chemicals, in blow to huge makers

U.S. farmers dealing with plunging earnings and depressed grain costs have been switching to less expensive generic pesticides and fungicides as they plan for spring planting next year, which market experts stated could strike the bottom lines of agrichemical companies like Bayer

Indications of these financial impacts are currently emerging. Bayer. shares fell greatly to a 20-year low on Tuesday, after the chemical business warned that weak international farming markets and a slumping U.S. farm economy are likely to pressure profits even more.

Agrichemical competitors Syngenta, Corteva and the agriculture unit of Germany's BASF might likewise deal with difficulties in the sector, experts said.

Nearly one-third of all the pesticides and fungicides that Paul Butler utilizes on his Illinois soybean and corn farm are generic to assist him cut expenses in a tight year, he stated.

Fellow Illinois grain grower Jeff O'Connor is doing the same. It resembles if you grew up eating Fruity Pebbles and now you go to Dollar General and get Fruity Bites, he stated.

Despite the cost savings, farmers state there can be disadvantages to downgrading. Manufacturers of generic chemicals usually do not cover the cost of respraying if the product does not work, stated Caleb Hamer, an Iowa corn and soy farmer.

Still, Midwestern distributors and grain elevators state they have seen customers cutting back their spring pesticide and herbicide spending plans.

Some farmers are moving far from top quality products, said Matt Carstens, chief executive of farm cooperative Landus and agricultural financing business Conduit. Others are buying equipment that targets and treats weeds and pests in their fields - enabling them to purchase less herbicides and pesticides entirely, he stated.

It comes down to this: What does the farmer really need? Do they need a name brand, with defense insurance coverage and grievance policies backing it? Do they need to spend for all of that? Carstens stated.

OFF-PATENT CHEMISTRY

When it comes to chemistry, a farmer's buying decisions often are rooted in the seed.

Farmers generally base their chemical purchases with trait-specific seeds they desire - such as ones that produce a. drought-tolerant crop or can withstand herbicide applications. that kill weeds without damaging the plant.

If there is a generic alternative to brand-name herbicides, and. the seeds that a farmer purchases can endure it, then it can. makes good sense to opt for a less expensive item, said Mac. Marshall, creator of agriculture recommending firm Veranda View. Consulting.

The variety of generics readily available to farmers is growing. The. patent for glyphosate, the active component in Roundup and the. world's most commonly used herbicide, expired in 2000, according. to Rabobank agricultural analysts Owen Wagner and Sam Taylor.

More than two dozen active ingredient patents have actually expired. in the previous five years - stimulating a boom in off-patent usage,. which now represents about 80% of the agrichemical market. share, they stated.

Now, with farmers facing weak margins this spring, they're. more likely to look for cost savings amongst their fertilizer or. crop security chemicals, Taylor stated.

(source: Reuters)