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Raw material shortage brings Dow AgroSciences small loss

New Zealand loss reported as raw materials are squeezed by global demand.

Jonathan Underhill
Tue, 26 Jun 2012

BUSINESSDESK: Dow AgroSciences (New Zealand) reports a loss in 2011, partly reflecting difficulty in sourcing raw materials for its weed and pest control products because of strong demand for agricultural chemicals in the US and Latin America.

The net loss was $742,000 in calendar 2011, from a profit of $6.8 million a year earlier, the New Plymouth-based company said in its annual financial report. Sales fell 13% to $119 million.

Dow AgroSciences NZ is ultimately owned by New York Stock Exchange-listed Dow Chemical, the biggest US chemical company by revenue.

The local business, formerly known as Ivon Watkins Dow, sells products including Grazon and Tordon herbicide and Delegate insecticide through rural merchants in New Zealand and distribution retailers in Australia.

“There was a significant shortage of key raw materials we source from outside Australia and New Zealand,” company regional supply chain manager Andrew Syme said.

“Global demand for agri-chemicals has been very strong. With commodity crop prices reasonably high, farmers are more willing to invest in the yield of their crop.”

The annual report cited difficulty in obtaining “2,4D acid raw materials to meet demand”.

The New Zealand company also had to deal with a disruption to production from an unexpected two-month shutdown after an accident, it said.

Foreign exchange losses were $416,000, down from a loss of $1.85 million a year earlier.

Mr Syme said the company has made changes to its sourcing policy to minimise future disruptions. So far in 2012, demand continued to be strong and crop prices continued to be high.

Jonathan Underhill
Tue, 26 Jun 2012
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Raw material shortage brings Dow AgroSciences small loss