Prepaying Inputs for 2022 Do you Know What Force Majeure Means?

If you are prepaying herbicide, fertilizer, seed, fuel and other inputs for 2022 you need to know what force majeure means and if it is in the contract! Force majeure means that some uncontrollable event has occurred that has caused a contract or agreement not to be fulfilled. Some contracts have a force majeure clause stating an "act of God" like a war, epidemic or hurricane happened so, one or both companies or individuals could "back out of the agreement."

I was aware of force majeure as it pertained to grain contracts. I had corn sold for January delivery. There was a paragraph that said if the elevator could not take delivery of my corn in January because of events beyond their control, force majeure would apply and I would need to deliver the corn such time when the elevator specified. Was there a force majeure clause in the contracts I signed last summer for the propane, diesel fuel, fertilizer or herbicide contract I will soon sign? I have no idea!

With the supply chain issues and COVID-19 shut down lingering affects, there are concerns about shortages as we purchase inputs for the 2022 growing season. I go to my retailer who quotes me a price for herbicides I need. My retailer had commitments from the herbicide manufacture to deliver the herbicide at a certain price. Then the herbicide is not delivered to my retailer because of a shortage of base chemicals to make the herbicide.

I have heard some retailers will not quote a price until the product is delivered to their warehouse and they know what it cost. In other cases I have heard the product is available and they will not bring it in until a farmer commits to the amount and the price. The retailer does not want to bring in a large amount of expensive fertilizer, see the price fall and then be forced to sell it for a loss.

So, talk with your agronomist and retailer soon about your plans for 2022. I am not really concerned about local coops and retailers but be careful about doing business with a distant retailer that has a great price on a product in short supply.