I’m a notoriously last-minute Christmas shopper, but I come by it honestly. Growing up, I remember riding to Clinton with my dad on Christmas Eve after doing chores so that he could shop at the jewelry store before it closed. Although I start planning with the greatest of intentions, I always seem to find myself scrambling at the last minute to find the perfect gift for my wife. This year, I’ve got my work cut out for me. If I don’t get started now, I may not find the right one in the store or online.
All across the country, we are hearing about supply chain issues interrupting the holiday season. Everything, from microchips to prescription drugs, is in short supply, along with artificial Christmas trees. Getting a new truck these days is nearly impossible. Want to order furniture? Better keep what you have or sit on the floor until the spring. Goods are sitting in warehouses overseas, or even on container ships in ports waiting to be unloaded. Even if you can get timely delivery, you’re paying a lot more for it.
In agriculture, we’ve felt the squeeze of an inflexible supply chain on the inputs side. Farmers have seen the price of fertilizer and crop protection products rise rapidly – if they can get product at all. In Purdue University’s latest monthly survey of producers nationwide, more than 50% said they expect farm input costs to increase by at least 8% in the upcoming year. This is a real eye-opener because over the past 10 years input prices have increased just 1.8% per year, on average.
For some of the most basic products, companies have stopped taking orders because they are unsure if they can access the necessary supplies, a good portion of which are sourced in part or fully overseas. The U.S. farm chemical industry, for instance, relies on China to supply 40% of ingredients and materials needed to make crop protection products.
In some cases, the raw ingredients are there to manufacture products, but employees aren’t available to take those raw commodities to the next level – whether that is further processing or delivering the finished product to the customer.
Recently, the American Farm Bureau joined 16 other national agricultural organizations in calling attention to multiple facets of the supply chain situation, including labor, barges, ports and shipping containers, trucking and rail freight, fertilizer, chemical inputs, energy, and equipment and parts. Although we chalk up the logjam to the “just in time” supply chain, problems created over time and compounded by the pandemic will not be fixed overnight. We need a more resilient American supply chain.
At the Missouri Farm Bureau, we’re committed to ensuring domestic agriculture and manufacturing remain strong. We have fought to prohibit foreign ownership of farmland in our state, incentivize processing of agricultural commodities and promote direct-to-consumer marketing of meat, vegetables and fruit. We have worked with others in the ag industry to expand in-state processing of farm and forest products through the Missouri Food, Beverage and Forest Products Initiative.
Gov. Mike Parson recently announced that American Foods Group had selected Warren County, near St. Louis, for a new state-of-the-art beef processing facility. The $450 million facility will employ 1,300 workers and bolster Missouri’s beef industry. We also have seen more small-scale meat processors pop up across the state. These collective efforts will certainly improve supply chain resiliency in the long term.
In the near term, however, we shouldn’t expect supply chain pressures to ease. Processing facilities can’t be built overnight, and it can take years to expand ports, dredge rivers and build highways. Continued inflation, labor shortages, rising energy prices and a gamut of other issues are making for a tough end to 2021.
We must do our best to make prudent decisions as we head into 2022 and, yes, put a little more thought into holiday shopping.
Garrett Hawkins, a farmer from Appleton City, is president of the Missouri Farm Bureau. He can be reached at email@example.com.
The expanded facility is expected to reach annual revenue of $650M.