RELUCTANCE by producers to reach for their chequebooks is sending shockwaves through the farm inputs industry.
It has already brought Elders to its knees and now agrichemical supplier Nufarm has followed suit.
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Nufarm last week slashed its profit forecast to between $55 million and $65 million, telling shareholders it had only just got a clear picture of its poor sales forecasts. The sharemarket smashed its share price as a result.
Barely two years ago, Nufarm shares were selling at a high of $17.32 but on Monday it was battling to keep shares above $3.
Nufarm spokesman Robert Reis said while the company had the capacity to handle a surge of late orders, it could only achieve that because of its massive infrastructure investment throughout the country.
He said the company now needed its distributor network to share some of that risk.
Incitec Pivot may also be facing its own challenges.
Incitec's profits for the past six months, compared to the same period last year, were down 14 per cent to $146.2 million after tax.
Ruralco managing director John Maher agreed a softening of the chemical and fertiliser markets had hit suppliers.
Ruralco has become a significant player in the Victorian market through the growth of its Rodwells subsidiary.
Mr Maher said there was a lack of working capital in the system.
He said May and June were traditionally the big spending months in agriculture, as farmers looked to take advantage of tax opportunities and prepare for the coming season, but this year that did not occur.
While maintaining an upbeat outlook, Landmark has also been hard hit by reduced farmer spending.
Managing director Graeme Jacobs listed reduced farmer cash flow, tighter margins and lower input revenues because of the strength of the Australian dollar and global oversupply of key commodities as fundamental negatives.
Making it tougher for both Landmark and Elders is the shrinking national sheep flock, despite recent record prices for lamb, and herd rebuilding.
The beef market is also being increasingly strained by Indonesia's decision to strictly enforce its 350-kilogram limit in the live export market, threatening to flood our domestic market with huge volumes of discount beef.
The only good news on the horizon for distributors is a report that the Chinese Government will end its export tax rebate of pesticides and glyphosate.
In an increasingly competitive market, this will have an immediate impact on farm prices, with rebates worth as much as 9 per cent of the cost.
