Clayton Plant Protection. Ensuring the highest quality standards and supply consistency for generic formulations is a vital part of our customer offering today.

Posted on 19 July 2019

Clayton has an effective business for the challenges faced in the industry today, with the ability to adapt quickly to changing environments the industry will face in the future. First and foremost, a focus on quality right through the business is vital in providing cost-effective, flexible solutions for growers and an alternative choice to the large multinationals.

“One of the key starting points to this quality focus is in our technical active ingredient supply sourcing from China and India, and careful management of the supply chain.” Dave O’Mahony, Managing Director, Clayton Plant Protection Ltd.

With this in mind Clayton has recently taken further steps to implement supply process improvement procedures to ensure that both the quality and consistency in supply of technical active ingredient material sourced by the company from China and India is highly assured.

Most stakeholders involved in the wider agrochemical and crop protection industries will be acutely aware of the serious workplace accidents and environmental issues which have affected production manufacturing standards in China in recent years; such as incidents of waste being pumped into watercourses, widespread pollution levels, factory fires and explosions. Production quality and safety aspects were frequently poor; with smaller factories often not having computerised distributed control systems in place to allow plants to shut down automatically in case of emergency or spillage for example. But as Clayton Plant Protection saw first-hand during their recent supplier visit’s to China in November 2018, March 2019 and May 2019, the current situation is gradually being transformed:

The Chinese government has now tightened environmental protection in agrochemical production and introduced strict environmental laws and regular inspections of all factories, with those that do not meet new criteria shut down. Jiangsu province has been the worst affected region (with an estimated 80% of its production now offline), and many plants recently had to completely suspend production due to breaches of environmental law. During 2017 and the first half of 2018, a large number of agrochemical enterprises in China suspended production for failing environmental protection or safety production reasons, or supply shortage of raw materials. The resulting tight supply of pesticides and intermediates caused by these suspensions has pushed up price of agrochemical products on the market during 2018.

Over the next few years, more plants will close and the surviving plants will likely be the larger ones with better financial capability to meet the far stricter pollution and safety standards now required. The ones which remain will probably be the more modern plants situated in large industrial parks, rather than the smaller plants that are too close to towns and cities or major watercourses; another important law now implemented by the Chinese government on agrochemical manufacturers is the Pollutant Discharge Permit System. As of mid-July 2018, pesticide enterprises across the country had obtained over 850 pollutant discharge permits in total, yet the number of enterprises qualified to produce pesticides in China is far greater than that. It is expected that enterprises without pollutant discharge permits will continue to suffer from suspension or complete stoppage in future. This is having a knock-on impact on product inventories and pricing through the supply chain in 2019 with signs of recovery not clear.

The implementation of China’s new environmental protection processes has had financial impacts, increasing the cost of production, which has resulted in the overall number of producers in China becoming significantly less than two to three years ago, with many of the surviving companies now being state owned. The supply of a number of important plant protection molecules have been affected by the new environmental laws, including; fungicide AIs such as chlorothalonil and epoxiconazole, as well as herbicides such as metribuzin (where technical costs have more than doubled recently), fluroxypyr and metamitron. Whenever products are in short supply, improper trading can emerge in the marketplace; it is important that buyers are certain of the products being purchased and know that they are of the correct standards and specifications. China is the world’s biggest source of crop protection products with around 80% of the world’s agrochemicals containing at least some Chinese-sourced active ingredient. So the changes highlighted here will likely affect all crop protection manufacturers globally including the major R&D companies who often use Chinese sourced tech or intermediates in their formulations. So the impact on the supply chain (and the pushing up of production costs and potential restricted supplies) is not just a generic issue.

“Clayton Plant Protection is working hard to minimise any supply impact and exposure for growers, agronomists and distributors. By visiting our suppliers in China, we are successfully building strong relationships at a local level, and we are also actively sourcing tech from multiple supply sources to mitigate risk. In addition, we have put in place a network of agents with extensive exposure to Asian and European markets to support our procurement. The direct relationships we have with major Asian manufacturers are paying real dividends in our business and our ability to ensure a dynamic and reliable supply of high quality technical material for our generic formulations.” explains Will Ridgwell, UK Sales & Marketing Manager at Clayton Plant Protection.

“Going forward, we are likely to see wide-scale consolidation in China’s manufacturing sector, including plant closures. As part of our own strategic planning process we have placed a high emphasis on putting measures in place to ensure reliable sourcing, engagement in plant audit and supply chain operations from China and India, as well as compliance with overseas regulatory requirements, to keep our generic formulations of the highest standard for our customers, and available when required.” adds Dave O’Mahony.

A proper focus on international sourcing and supply chain enables Clayton to offer growers a selection of top performance generics. In addition to their wide range of parallel products, Clayton has a growing number of generic product registrations, and central to the company’s strategic focus is maintaining a smooth, efficient supply chain. This provides a solid platform to enable formulation and manufacturing quality excellence for their high performance generics and innovative product solutions in the UK and other key markets across Europe. On the back of these newly implemented manufacturing standards in China and associated production cost increases on AI tech and products derived from China, prices of agrochemicals may rise in 2019/2020 along the supply chain. But, despite these pricing difficulties and market disruption caused, Dave O’Mahony remains confident for the years ahead.

“With effective supply chain planning, we are well positioned to continue to improve our overall service levels in 2019 and beyond, and provide our customers with the kind of quality performance, product provenance, cost-effectiveness and competitive advantage, which has become synonymous with Clayton brands.”

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