How Long Could Supply Chain Problems Persist For Farmers? John Deere Weighs In
Feed Costs 100622
Transportation troubles have plagued agriculture all year, and experts say supply chain problems could persist for the industry until the end of 2023. That's unwelcomed news for farmers who've already had issues sourcing equipment parts and other essential products for their operations.
While the U.S. avoided a rail strike at the end of September, a labor strike is still possible with rail, and severe backlogs remain an issue today. Katie Grinstead is a dairy producer in Wisconsin. She says supply chain headaches are far from over.
"We've had problems getting some supplies, we've had problems getting parts," says Grinstead with Vir Clair Farms in Fon du Lac County, Wisc. "We've had trouble with products like milking gloves and blood tubes. Penicillin now has been a problem, products that I could have never even imagined being a problem getting."
Grinstead isn't alone. No matter the region or type of producer, agriculture continues to grapple with supply chain issues.
Equipment manufacturers are also dealing with issues. Semiconducter chips have garnered the most attention, but manufacturers report problems getting multiple different parts delivered. Tires are also a problem, with some production sites seeing equipment like combines sitting at the plant, waiting on tires to arrive.
The issue is one Kanlaya Barr, director of corporate economics with John Deere, says could last until the end of 2023. While the consumer segment is starting to see some improvement, she thinks it could be another year before significant supply chain improvements reach agriculture.
"We expect to see those continue to improve throughout the year, especially when demand from consumers is tapering off a little bit," she says. "I think that leaves room for the supply chain – on the manufacturing side – to increase and improve over the next year. So, maybe not in the next six months, but by the end of 2023, I think we do expect to see some of the normalizing of the supply chain. It may not be all the way but perhaps getting closer to where we were before Covid."
Grinstead admits she’s seen a lot of firsts since 2020, but now dairy producers across the country are not only having to pay more upfront to have many of those necessities in stock, but rising feed costs are yet another pain point.
"Feed costs continued to be our No. 1 expense here at the dairy; some ingredients have been up as much as 50%," she says. "Overall, most of our ingredients are roughly about 30% more than what they had been in the past."
The positive side of the situation is the family has embraced even more automation, especially in their feed center. That’s helped them produce even higher accuracy, but the move to automation requires yet another investment at a time when costs are up across the board.
