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The fact is the supply
chain issues have been ongoing for more than a year, and some of our
major manufacturing companies have felt the heat of not being able
to fill orders, not being able to complete production on items and
indeed parking unfinished inventory in factory parking lots while
they await the arrival of necessary components.
Among those necessary components is the ever important micro-chip or
semi-conductor now commonplace in many items including cars, trucks,
tractors and combines.
Travis Jones, CEO for LHP Telematics explained the situation
companies like his have been in and how they got there in an article
published on April 24, 2021by agrinews-pubs.com
In “Chip shortage affects ag industry — and, no, it’s not the potato
kind” Jones said that when the pandemic broke out, many companies
that produce the chips in China shut down. In addition, those that
were still working cut back on production because of the fear that
they would not be purchased.
But, that psychology backfired when the American government issued
stay at home rules and many employees began working at home.
Children were also at home, and both parents and kids needed access
to technology to continue on working and receiving their education.
Jones said in the article, “The biggest issue is that demand has
skyrocketed.”
Jones also noted that with the issuance of multiple stimulus checks
per household throughout 2020, cash was available to purchase
electronics for home entertainment.
These factors increased the demand and compounded the severity of
the shortage. The end result, chips that were available were going
to consumer items and not items such as combines and tractors.
Companies like John Deere that is serviced by LHP Telematics had to
halt production of many of their machines mid-way because they
needed those chips for guidance systems and other technology within
the tractors and combines.
As farmers looked to replace equipment, they found there was no
equipment to buy or at least a very limited supply.
Additionally, other raw materials were being delayed and companies
had to make the choice to keep building partially complete
implements or use the resources they had on hand to manufacture
replacement parts for what was already out there.
So, how are grain producers coping with this mess? In an article
written by Reuters correspondents P.J. Huffstutter and Mark Weinraub
and published on October 12, 2021 in Lincoln Daily News, workarounds
are currently the name of the game for farmers.
In the article “'Desperate for tires.' Components shortage roils
U.S. harvest,” the authors talked to mid-west farmers who said they
were doing all they could to keep their machinery safe, but they had
several concerns. They were seeking out local welders to fix broken
parts instead of replacing them Some were concerned that parts would
be stolen from their equipment so they were driving everything
inside and locking their machine sheds daily. Farm sales were
becoming all the more important as equipment that had been
previously considered worthless was being purchased so that
interchangeable parts could be taken from them to use on more modern
equipment.
In addition, some manufacturers were shipping those incomplete tools
to dealerships. Combines and tractors were being purchased without
technology installed. Dealerships in turn were robbing old,
unsellable implements of their systems. Though old and out of date,
all agreed it was better than nothing and would provide some of the
valuable digital information’s farmers rely on for their future farm
loans. In total, the
article surmised that the farmers were doing what they do best,
adapting to their situation and trying to keep the wheels on the bus
(or combine if you will) until the end of harvest.
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So how long will this shortage
continue? In July an article published by Wengers “How the Microchip
Shortage Impacts the Agricultural Industry” indicated that while
there may be an increase in chip availability in the near future,
the long term projection is that it will be 2022 before the
microchip supply meets the demand.
More recently, an interview by CNBC with Advanced Micro Devices Inc
CEO Lisa Su concurred, saying it would be the second half of 2022
before the supply meets demand.
In the meantime, other events of recent days are also possibly
impacting equipment availability. Raw materials are in demand for
items such as tires, and the unrest among John Deere employees could
also slow production and delivery of new implements.
Also being reported is a shortage of potash fertilizer as well as
nitrogen products. What is available is not going to go for cheap
when planting season arrives next spring.
After Covid, Hurricane Ida has also had an impact on the supply
chain when damage occurred to the Bayer Chemical plant in Louisiana.
This is going to impact the production of products such as Round Up
and Atrazine and other chemicals containing glyphosate.
There is a reported shortage of resin used to make plastics. This
will impact the supply of items such as baler twine and those large
plastic on-the-ground grain and silage storage bags.
For the farmer, this could be yet another pivot, perhaps going back
to the old way of doing things. We may see a coming year where
farmers consider crop rotation away from corn due to a lack of
needed chemicals and fertilizer.
They may also need to cope with record keeping without the use of
technology or with less up-to-date technology. Only time will tell,
just how “old school” producers will have to go in order to keep the
farm running in 2022.
However this story ends, one thing is sure, if anyone can adjust to
challenges it is our farmers. The old ways may not be the best
anymore, but they are still known, and farmers will figure out how
to make due until the balance returns.
AMD CEO Lisa Su says chip shortage likely to end next year (cnbc.com)
How the Microchip Shortage Impacts
the Agricultural Industry
How the Microchip Shortage Is Impacting Agriculture | Wengers®
'Desperate for tires.' Components
shortage roils U.S. harvest
LDN - Business (lincolndailynews.com)
U.S. farmers face supply shortages,
higher costs after Hurricane Ida
LDN - Business (lincolndailynews.com)
THREE WAYS SUPPLY CHAIN BOTTLENECKS
ARE IMPACTING U.S. AG TRADE
The Impact of Supply Chain Bottlenecks on Ag Trade |
AgAmerica
Chip shortage affects ag industry —
and, no, it’s not the potato kind
Chip shortage affects ag industry — and, no, it’s not the potato
kind – AgriNews (agrinews-pubs.com)
The ongoing impact of COVID-19 on
global supply chains
The ongoing impact of COVID-19 on global supply chains | World
Economic Forum (weforum.org)
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