We've got PROBLEMS!!!

Discussion in 'Pesticide & Herbicide Application' started by Runner, Mar 9, 2007.

  1. Runner

    Runner LawnSite Fanatic
    Posts: 13,494

    I was just informed that fertilizer prices are going up AGAIN! Nitrogen is going up 18% within the next month, and then another 20% the month following. Potassium has another increase, all of its own. It won't be as much of an increase as the N, but it will be a seperate increase, all the same. This comes from our Lesco rep. It will be doing this all over...regardless of the distributer. Cost is cost. We were quoted our season prices for Dimension last month, and it came in at around $14.30 per bag. It just went up to $15.90. All together, we are looking at close to a 40% increase in our material costs. we are either going to have to make some SERIOUS changes in pricing, or we are not going to be able to stay afloat. The only way around this, is that the purchases have t be made by the end of this month, and delivery must be taken. Well, we just don't have a place to store 120 ton of fert.. Even then we would be stuck with exactly what we order...no room for change-up. We are going to to play havoc trying to compete with the big green companies and some of the chains. I'm currently drafting a letter, but I have a bad feeling that we are going to lose a serious number of clientele this season. I have NO idea what to do about the pre-pay customers. I am going to Lesco tomorrow to talk to our guy, and get all the facts, and some hard numbers, but I just know it's not going to be good. I have to admit...right now, I'm a little scared and very bummed out.
     
  2. MStine315

    MStine315 LawnSite Senior Member
    Posts: 789

    Luckily I have my early order in my building now, which isn't anywhere near your tonnage, but it'll get me through June. I hate to say it, but they're talking $3.00 gas again, so I'm not entirely shocked about fert., but that is still a big jump. I'll make some calls to see what other info. I can get as well. You don't think this has anything to do with the merg..., no, I better not go there. Not a great way to start the season, for sure. Funny, though, I just lost a $30 lawn this morning to a guy at $25. He'll be happy to hear this, won't he! At least it makes me feel better about losing a lawn.
     
  3. Shades of Green LService

    Shades of Green LService LawnSite Bronze Member
    Posts: 1,011

    Joe, Your new higher price is still cheaper than what i was quoted from the lesco in my area, for the dimension. This is gonna suck.

    PS. Thanks again for the SOS Form. Picked mine up a couple weeks ago. Should make life a lot easier.
    -Jay
     
  4. philk17088

    philk17088 LawnSite Fanatic
    Posts: 17,386

    Fert is going up due to demand by corn farmers . Corn prices are way up as demand for ethanol goes up.

    From the looks of it the retailers are putting off price increases to the homeowner market until at least mid year. Which is another kick in the nuts for us because Joe Homeowner doesn't see the real price at Home depot.
     
  5. EJK2352

    EJK2352 LawnSite Bronze Member
    Posts: 1,150


    Joe,
    With all due respect I have to totally disagree with you. You dont think the "Big Greens" are going to get hit with the same material cost increases??? The demand for fert. is going to drive prices thru the roof I'm afraid and everyone is going to be in the same boat. Ethanol production will be at an all time high as long as gas prices loom in the $2.50-$3.00 range. Farmers will need fert for all these corn crops and we will be paying the price. "Big Green" will be forced at some point to raise prices as well, they may be able to early order some quantities of fert but will reach the same point as us smaller guys. They too will be raising prices or going bankrupt!!! I'm now drafting a letter to all my customers explaining how future price increases are due to the demand for fert being directly linked to Ethanol production. As long as we have these increasing fuel costs I see no end in sight as far as fert cost are concerned.
     
  6. Runner

    Runner LawnSite Fanatic
    Posts: 13,494

    This is exactly right. It was all just explained to me very well by the state regional manager of Lesco. He took the time to call me, which in my opinion, speaks VOLUMES on their customer care and management, as well. He was most helpful and will continue to be, by the looks of it. First of all, and foremost,...the thing to know is that this has NOTHING TO DO WITH ANY JD MERGER. This is an INDUSTRY WIDE issue. It will affect us, it will affect Joe Homeowner, and it will affect the potato farmer in Idaho. As Phil said, it is all based on the ethanol market - mainly India and China. They are upping their production of ethanol, and requiring more Urea to do it.
    Here is a great website that has much info about ferts. http://www.fertilizerworks.com/ . The most important part pertaining to this is the green square at the upper left of this page. There is a small square entitled "Granular Urea Basket Price". On THAT page, scroll down, and see the graph of the upcoming prices. Now, this is the price of raw, unprocessed urea. It has nothing to do with processed fert.. This is the stuff that is on the ship, coming across the ocean, right now.
    EJ,...I fully agree with you. The big green companies are going to see it, too. BIG time. they are looking at the very same thing we are. The question would be, When? What I mean, is when will they decide to do their price increases. They may already have enough product banked, that they may not opt to do the increases just yet. Now distributors, are already doing their price increases, as they are looking at actual replacement costs....much like we have to.
     
  7. Tscape

    Tscape LawnSite Bronze Member
    Posts: 1,370

    Maybe we need to form a local buying co-op, like the grangers.
     
  8. drumbo

    drumbo LawnSite Senior Member
    Posts: 336

    Yeah, I got quoted $18-$20 a bag in my area...sheesh.
     
  9. MStine315

    MStine315 LawnSite Senior Member
    Posts: 789

    Might be worth giving Symbiot a look. I was on the fence, but I think this fert. deal just sealed it for me.
     
  10. teeca

    teeca LawnSite Bronze Member
    Posts: 1,202

    thats what i heard also, the farmers.
     

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