Top 10 Ag Stories of 2021: No. 1
Supply Chain Woes Made Challenging Year for Ag Businesses, Farmers
Each year, DTN publishes our choices for the top 10 ag news stories of the year, as selected by DTN analysts, editors and reporters. Today, we complete the countdown with No. 1: Supply chain woes made for a challenging year for farmers and agribusinesses.
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LINCOLN, Neb. (DTN) -- This year's supply chain challenges spared no segment of the agriculture industry. Whether it was a shortage of chemicals, fertilizer, seed, farm machinery parts -- you name it -- farmers struggled throughout the year to find enough of what they needed. It was the perfect storm of factors that created a bevy of supply chain challenges, making it the No. 1 story of the year in agriculture.
AG MACHINE PARTS SHORTAGE
Even before the John Deere employee strike late in 2021, the farm equipment industry faced a shortage on parts and new equipment.
At the onset of COVID-19, manufacturers found they had to dial back on production, often due to lack of parts and, at times, labor shortages. Then, by the second half of 2020, the economy -- the farm economy included -- snapped back in a big way. A sudden wave of demand crashed headlong into supply disruptions that were not easily solved.
The supply crisis of 2021 featured a combination of many factors, including everything from the continuing global pandemic to the freeze that hit Texas between Feb. 13 and Feb. 19. The freeze killed the power grid and led to reduced oil production, creating a wave of problems across the country.
One Iowa manufacturer reported the price of steel has more than tripled. Rubber for tires, hoses and belts has been difficult to acquire. Plastics are in short supply. It's been tough to hire new employees. Suppliers have canceled, delayed and shrunk orders without warning.
Computer chips and electronics are in short supply. Their availability dictated how much ag equipment companies were able to produce in 2021.
In the ag industry in particular, the confluence of high commodity price and government stimulus funds combined with years of deferred maintenance in leaner times. This all was aggressively magnified by worldwide raw material shortages, factory shutdowns and shipping delays attributed to the ongoing COVID-19 pandemic. The industry faced problems that farmers, ranchers and ag businesses could never have imagined.
The pain drifted down from company boardrooms to farms, from those operators looking for new equipment to those looking to fix their old machines.
New equipment in many cases simply wasn't available in 2021 or perhaps even next year for farmers who didn't already have orders placed.
AG INPUT CRUNCH
Agricultural chemicals experienced a year of rising prices and spotty shortages. Soaring freight costs, labor shortages and tight inventory left the supply chain vulnerable to sudden weather or logistical hiccups. That included historic rises in nitrogen fertilizer prices.
A lot of factors converged in 2021.
First, agriculture chemical companies spent multiple years up to 2020 ridding themselves of excess inventory, as stagnant commodity prices made holding them too costly and unpopular with financers.
In 2019, record levels of prevented planting pushed planted corn and soybean acres down near 165 million.
Inventories shrunk further after increased tariffs slowed the amount of crop input products entering the country, particularly for post-patent chemicals. Then came the COVID-19 pandemic, with its unprecedented factory shutdowns and global lockdowns reverberating across the supply chain.
Freight and labor shortages led to manufacturing and delivery delays, which left companies in a tight spot when farmers then rushed to the field with 180.5 million acres of corn and soybeans in 2021 -- a record high for the country.
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As a result of the chaos in 2021 and 2020, Brett Bruggeman, president of WinField United, told DTN this fall that ag input suppliers have poured more resources into their forecasting and delivery systems and worked to develop tighter relationships with the manufacturing industry.
TRANSPORTATION CHALLENGES
The movement of agriculture commodities and other products across the country, and in the export market, was slowed as a result of a backlog of ships entering U.S. waters and fewer ships making the trek back across the Pacific Ocean.
Movement of products in the U.S. has been pressured by a shortage of commercial truck drivers.
In November, members of Congress from both parties began holding hearings and considering ways to increase the number of truck drivers.
At least 80,000 drivers are needed, but it's been difficult to recruit people for those jobs. Lawmakers and the industry began considering allowing people under age 21 to drive semi-trucks across state lines.
Farmers in northern California, for example, have been having difficulty exporting crops produced in already challenging drought conditions.
The Associated Press reported California tree nut farmers, for example, had about 80% of scheduled shipments canceled as a result of the shipping backlogs.
By some estimates, as high as 70% of containers on West Coast ports are sent back empty to Asia.
A worker shortage created many challenges for food and agriculture businesses. (See https://www.dtnpf.com/…)
Ed Cinco, director of purchasing for Schwebel's Baking Co. in Youngstown, Ohio, told federal lawmakers in November that a shortage of workers forced them to shut down production lines.
Trade experts believe farmers and ranchers who may be hoping for a quick resolution of supply chain problems dogging agriculture and other industries may not see it for some time.
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To see more DTN stories through the year on the various supply chain shortages and their impact on ag:
-- "Ag Chem Supplies: Four Things to Know Heading Into 2022"
-- "Increasing Fertilizer Demand, Less Supply Combine to Push Retail Prices Higher in 2021,"
-- "Weed Control Workarounds for Herbicide Shortages,"
-- "Farmers Mostly Managing Parts Shortages, but Equipment Delays Still Causing Headaches," https://www.dtnpf.com/…
-- Finding Truckers Is One Key to Attacking National Supply Chain Crisis,"
-- "Even $70,000-Plus a Year Top Pay for a Service Tech Gets No Takers in This Job Market,"
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Editor's Note:
You can find No. 10 in DTN's top 10 list at https://www.dtnpf.com/….
You can find No. 9 in DTN's top 10 list at https://www.dtnpf.com/…
You can find No. 8 in DTN's top 10 list at https://www.dtnpf.com/…
You can find No. 7 in DTN's top 10 list at https://www.dtnpf.com/…
You can find No. 6 in DTN's top 10 list at https://www.dtnpf.com/…
You can find No. 5 in DTN's top 10 list at https://www.dtnpf.com/…
You can find No. 4 in DTN's top 10 list at https://www.dtnpf.com/…
You can find No. 3 in DTN's top 10 list at https://www.dtnpf.com/…
You can find No. 2 in DTN's top 10 list at https://www.dtnpf.com/…
Todd Neeley can be reached at todd.neeley@dtn.com
Follow him on Twitter @DTNeeley
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