Commodity prices have recently seen record grain prices with most growersgenerally improving their profitability. In 2007 the USA crop protection valueexperienced its biggest annual increase since 1984 with a US$30.5 billionincrease compared to 2006. South African growers increased their grossmargin even with lower historical yields, from US$480 per hectare in 2004, to anestimated US$1,133 per hectare in 2008. With the current global grain stock-touseratios maintaining their lowest levels in 35 years, higher and more pricevolatility is expected to continue.
Whilst growers have benefitted from these more favourable crop prices, agrochemicalsuppliers have battled to increase their chemical prices. In SouthAfrica, other suppliers (seeds and fertiliser), managed to increase prices at leasttwofold the percentage agro-chemicals achieved from 2003 to 2008. Thepurpose of this research was therefore to try and understand how commodityprices influence corn growers pesticide demand, as well as to betterunderstand their pesticide buying behaviour under fluctuating crop prices.
A structured web-based questionnaire to collect primary data from corn growerswithin South Africa and Hungary was used. Besides the impact of commodityprices to business buying behaviour, the research also focused on the priceelasticity of agro-chemicals, futures trading as a risk reduction mechanism andthe value of agro-chemical sales representatives.
From the findings the survey managed to highlight that even though commodityprices do impact agro-chemicals, it was not the biggest influencer towards agrochemicalbuying behaviour. The survey further indicated that similar to manyother industrial goods, agro-chemicals represented fairly inelastic prices, mostgrowers use hedging to reduce price uncertainty and the majority value therelationship with their agro-chemical representatives. The data also highlightedadditional similarities that exist within the business buying behaviour ofHungarian and South African growers.
Copyright © 2008, University of Pretoria. All rights reserved. The copyright in this work vests in the University of Pretoria. No part of this work may be reproduced or transmitted in any form or by any means, without the prior written permission of the University of Pretoria
Please cite as follows:
Vermeulen, AD 2008, The impact of changes in corn prices on pesticide demand, MBA dissertation, University of Pretoria, Pretoria, viewed yymmdd < http://upetd.up.ac.za/thesis/available/etd-03172010-133339/ >
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