Bayer CEO says supply shortages cut crop protection sales in 2022

By Ross Kerber

CAMBRIDGE, Mass. (Reuters) – Supply chain shortages cost Bayer AG up to 3% of lost sales in its crop protection business this year, CEO Werner Baumann said on Wednesday, adding he expects constraints to continue in that segment and others.

Global supply chains must rebalance before the situation eases, Baumann said in an interview with Reuters.

“We do see shortages and we are affected by non-availability or insufficiency of products, that limits our ability to take advantage of the market opportunities that are out there,” Baumann said.

The German company’s crop-protection business includes herbicides, insecticides and other products to maximize crop output at a time of low global grain supplies. Widespread chemical shortages this year disrupted U.S. farmers’ production strategies and raised their costs, contributing to rising food prices and inflation.

Baumann said the company “could easily see” up to 3% more growth in its crop protection business if it had full product availability in 2022. He declined to give a figure for 2023, but said other lines like the multi-vitamin segment of its consumer health business also face shortages.

Causes include Russia’s invasion of Ukraine. Also, many businesses could not ramp up quickly as the global COVID-19 pandemic eased.

“We would need a full rebalancing” of the supply chain, he said.

Baumann spoke during a press event that Bayer held to show off a new laboratory space it opened this year in Cambridge, Massachusetts adjacent to the Massachusetts Institute of Technology.

A Bayer representative said his comments did not change recent earnings guidance. In the interview Baumann declined to comment on a recent report the company has begun a search for his successor.[L8N30K2TF]

Baumann also said it was too soon to tell how a June U.S. Supreme court decision opening the door to new abortion restrictions might affect contraceptive sales.

Bayer’s sales of such products fell around 10% as people formed fewer long-term relationships during the pandemic, he said. Sales will likely recover in coming quarters, Baumann said, citing how many pubs are again crowded with people.

“Life is back to normal, at least based on what I’ve seen in Boston,” he said.

(Reporting by Ross Kerber in Cambridge, Massachusetts; Editing by David Gregorio)