Supply chain tightening affects all sectors of agriculture

First there was delayed shipments from abroad. Then, ships stranded in port and truck drivers unable to load deliveries. More recently, a more Thanksgiving turkey– if you were able to find one in the first place.

Supply chain disruptions have steadily increased this year and with each new setback a new sector of food production or distribution was impacted. While each of these supply issues occur on their own scale, it is clear that they are interrelated. That freighter stuck off the coast of Los Angeles is part of the reason your peanut butter is more expensive. Pull on a single loose wire and you can untangle the entire power system.

COVID-19 has also changed the way we shop. With online ordering being a primary option for many people, this puts even more strain on the transport channels. As we head into our second COVID winter, demand for the products has not abated and experts agree that supply chain issues will continue for the foreseeable future.

Here are some of the areas that have collapsed, but how producers are trying to cope with the fallout.

Transportation is scarce

Generally speaking, we have enough food. Farmers and producers across the country grow enough grain, harvest enough almonds, and slaughter enough pigs to meet demand. It’s not about having the goods. It’s about bringing farm produce to your table.

United Cereals Society, based in Washington, works with thousands of farmers in Washington, Oregon, Montana and the Dakotas, moving thousands of bushels of grain from field to storage to shipping container every day . The grain distributor focuses on cash crops such as wheat varieties, as well as soybeans and barley, meeting the high demand for these products in Asian markets. CEO Augusto Bassanini says United Grain has weathered the transport crisis fairly well, but only because they have spent the past decade consolidating their own dedicated pipeline. In many areas that means learning to be as efficient as possible. “Bigger planters, bigger combines. For the most part, farmers have their own fleet of trucks, so they didn’t have to depend on a trucking company to transport their product, ”explains Bassanini.

For some farmers, an all-in-one system like this might work well. If you harvest your own wheat and haul it to a local grain elevator yourself, you cut out the middleman and avoid a transportation headache. But ports and sea freight are often at the mercy of good weather and there is only a limit to what a single producer can control. If one part of the supply chain slips, it has ripple effects down the line.

Photo by Tanja Tatic, Shutterstock.

Take corn, for example. Like many farmers right now, corn growers are grappling with fertilizer shortages, which has made the the price of available products is skyrocketing. This follows tariffs on certain imported fertilizers, with which the National Corn Growers Association (NCGA) is fighting in a short friend, currently before the US Tribunal of International Trade. As this fight unfolds in the courtroom, the reality on the ground is that some fertilizers are costing double what they were just a year ago. Others, like nitrogen-based fertilizers, can cost more than three times the cost. If farmers can’t get fertilizer, or can’t get enough, it can have a huge impact on a commodity like corn.

“It can be in bioplastics, it can be in different food products. It could be in things you might see in the pharmaceutical industry, or your chewing gum, ”says Chris Edgington, Chairman of the NCGA Board of Directors.

Maize and its components (starch, fiber, protein and oil) are used in all kinds of products, especially in animal feed. According to Edgington, about 25 percent of American corn is exported to more than 100 countries for use as fodder. If the corn cannot be shipped, it means next year’s feed supply is in question. And that means next year’s meat supply is also on hold.

Producers get paid

Right now, most American growers have enough corn, although they can’t always get it to where it is needed. But that might not be the case next year as growers debate whether or not to stick with the crop as production costs rise.

“This is causing serious discussion about crop mixing,” Edgington says. “A producer with whom I spoke … he reserved his [fertilizer] to put this fall for $ 800 per tonne. Today it is $ 1,600 a tonne. It’s about two months away. So some people say “I don’t”.

Maize farmers might otherwise turn to soybeans, oats, cotton, peanuts or rice, any other cash crop that might get more for their money. For producers Edgington knows, it boils down to one question: “What are you willing to pay?” ”

It’s also a question customers ask at the grocery store, as labor shortages throughout the food chain have reduced the available products. The average cost of Thanksgiving turkeys this year was around 24% more than in 2020. This price increase has spread to other cuts of meat, even ones you might not expect, like brisket or bottom roasts. “Bsket is a great example. During the holidays we sell a lot of beef brisket. But the rest of the year the brisket is mostly sold to people barbecuing, and they don’t expect it to be expensive, ”says Rob Levitt, butcher and chef at Public Quality Meats in Chicago. “Now that there are all these labor shortages, everywhere from slaughterhouses and packing plants to truck drivers, you see the price of these things going up. ”

Rob Levitt. Photo courtesy of Publican Quality Meats.

Levitt got around Thanksgiving supply issues by getting his turkey order in July. He also buys direct from the producer, building a relationship that has helped him pivot if supplies drop. “I’m going to do whatever I can to help him get through the products he’s sitting on and he’ll do whatever he can to make sure I don’t run out of things I need,” of things my clients want. He’s going to keep prices fair, ”says Levitt, acknowledging that many customers might not have access to the same butchers or producers as he does. And in that case, they’re probably readjusting their budgets this holiday season.

Wrap it up

One of the biggest issues this fall has not been transportation or procurement, but packaging materials. Plastic shells for berries, bags for nuts, string for balls, cardboard boxes and polymer resins are all rare. As a result, many farmers who have a farm stall or country store where they sell value-added products have encountered problems getting the goods out.

During a recent round table of the North American Farmer Direct Marketing Association, Kim Sisco from White House fruit farm in Canfield, Ohio, spoke about the need to switch up many of the value-added products she offers in her farm store. “One of the things we’re known for is our donuts and we use a raised box,” says Sisco.

When this box was not available, the farm had to look for a new supplier and could not find a package of the same size. “It made a really bad presentation of our product… It was just big enough to make us feel like we had shrunk our product,” Sisco said, adding that she had encountered problems getting almost all of the containers we had. they need. “We were having trouble getting labels, so we couldn’t produce things because we had to label them. We had trouble getting glass, trouble getting canning jars, canning lids, all of those things.

One way around the problem is to over-order supplies, which has worked for Sisco. When she finds a material that works, she buys as much as she can store. “The canning jars, when we could get them, we absolutely took the limit we could take,” she says.

For larger operations, however, many had to place orders in advance, planning years in advance. This is a particularly risky proposition, as future planning is difficult at the best of times. But during the COVID-19 pandemic, with physical distancing requirements and changing restaurant regulations, it’s even more difficult to predict what next week will be, let alone next month. But what else to do?

AT Castle and key distillery in Frankfort, Kentucky, Jessica Peterson, the director of operations, knows how many bottles of bourbon she will produce over the next two years. She must. Pre-ordering glass bottles is the new reality for many distilleries, following the glass shortage earlier this year.

As a newer distillery, Castle & Key spent over a year designing a custom mold for their glass bottles and found a source of production in the UK. But when that source experienced a COVID-19 outbreak and had to shut down, Peterson rushed out. At first she was able to get a single cargo from the original UK factory, but they had to fly over it, rather than bringing it in by freighter. Although the bottles arrived, they cost four times more than expected.

Today, the distillery is working with a new supplier in Mexico, which allows rail freight to be used while keeping costs low. Even so, they still place orders years in advance. “Traditionally, we place glass orders anywhere for six months to a year in advance,” says Peterson. “We have already submitted our orders for 2023.

It is a reality of a limited supply, but it is also a kind of insurance policy. Peterson says she is trying to avoid getting caught without supplies like they did at the start of the pandemic. “We were only focusing on one network of suppliers. We only had one supplier for each item there, ”she says. “And now we’re just looking to expand that and see how we can provide ourselves with that security blanket.”

Now that they have the bottles, the next hurdle is getting some label paper. The time to order labels has been reduced from approximately one week to over eight weeks. “It’s been an interesting time,” says Peterson. “But it’s also great that the people we work with are very transparent.” For already stretched vendors, that’s all you can ask for.