A boon in commodity prices is creating higher demand for everything from tractors to seed tenders. However, the long tail of the COVID-19 pandemic is creating a strain on the supply chain, and now demand for many items has outpaced supply.
“It’s finding the raw materials,” says Nic Beck, of Nebraska-based Clarks Ag Supply that produces seed tenders. “That’s really what the issue comes down to. It’s the steel, the tube steel, especially, for our augers that go into our seed tenders on our machines. It’s just really hard to come by.”
He says it’s not just trouble in sourcing supplies at a reasonable price that’s turned into an issue. He says supply is short no matter where you try to source it.
“The price of tube steel in one week went up 150% for 10-gauge tubes of steel,” says Beck. “And then it just couldn’t be found. There’s nothing around for it.”
Beck says the raw materials are being pinched by transportation issues, but it’s also turned into a shortage of sourcing the correct parts to run the machines.
“The company that cuts out the holes on a part, they had just a small $10 part break and all a sudden it shut down a million-dollar machine for two weeks and put a backlog on everything,” he adds.
For a product that typically could be shipped overnight, it can now be in a holding pattern for weeks to even months in order to get some parts to operate machines.
“We tried to get some in February,” says Beck. “Normally, it takes about a two-month turnaround, we can get a lot of these parts, but that’s not the case today.”
As the supply shortage ripples across many manufacturers today, Beck says the company is now trying to even secure supplies for next year.
“Honda motors that we use on all of our machines are absolutely impossible to get right now,” he adds. “We’re actually ordering for next year already, because they’re just on that shorter supply.”
Beck says he’s tried to source some of the parts out of the United States, but if he could find the correct part, it was four times more expensive.
With strains on supplies, as suppliers scramble to meet growing demand, some sectors can’t even keep up at this point. From drainage tile to seed tenders, demand for products continues to scream higher among farmers.
“We are seeing demand creep up,” says Derrik Ellingson, chief strategic officer, Ellingson Companies in Fargo, N.D., a company that installs drainage tile across various industries. “It’s been a big run for everybody in the industry across the entire Midwest, in all the regions that are installing underground drainage.”
“I’m telling three to five guys a day ‘no’ on seed tenders right now,” says Beck. “I don’t have them. If I had another 50 tenders, I would have sold them this month, but there’s just no way I can keep up with them.”
As demand is higher than the supply, there’s a race to catch-up also happening at the production level. The rush to produce products came after both hurricanes and the February Texas freeze caused plastics manufacturing plants to go offline for an extended period of time.
“The good news is the majority of these facilities are back up and running,” says Jennifer Van Dinter, head of integrated analytics, S&P Global Platts Analytics. “Their utilization rates are there, their run rates are inching up, and we’re getting back to kind of to a more normal place. The risk is always is there going to be another event that’s going to disrupt supply again.”
A combination of improved commodity prices bolstering demand, at a time when supplies are slipping, is creating an industry-wide shortage for supplies some farmers and ranchers can’t do without.
