Supply Chain

Companies Team Up To Accelerate Ag Innovation With Artificial Intelligence

Tue, 20 Jan 2026 20:19:57 GMT

SAP SE and Syngenta have announced a multi-year strategic technology partnership designed to bring AI-driven innovation directly to the agricultural sector. For farmers, this means a more modern, data-driven approach to the products and services they rely on daily, from manufacturing and supply chain management to field-level support.

As farmers navigate the complexities of climate variability and global market uncertainty, the partnership aims to bolster the tools available to meet the challenge of feeding a projected 10 billion people by 2050, Syngenta reports. By integrating AI across Syngenta’s operations, the collaboration is positioned to unlock faster innovation and stronger operational resilience that scales to meet the needs of agricultural producers.

“AI is the catalyst for agricultural transformation and has quickly become a core competitive edge for Syngenta,” said Feroz Sheikh, chief information and digital officer, Syngenta Group, in a prepared statement. “Our partnership with SAP is transforming how we run the enterprise, modernizing core operations and unlocking new ways to work — a testament to our commitment to becoming an agriculture company with AI at its core.”

“Syngenta’s transformation sets a benchmark for digital innovation in agriculture,” said Philipp Herzig, chief technology officer at SAP SE, in a statement. “Together, we’re demonstrating how cloud and AI technologies can drive sustainable growth and efficiency in one of the world’s most critical industries. This partnership will help Syngenta future-proof its operations to feed the world responsibly.”

The transformation begins with SAP Cloud ERP Private solutions, modernizing Syngenta’s value chain to ensure the company remains agile and responsive to market shifts. For U.S. farmers, this translates to a more reliable partner capable of weathering volatility and delivering consistent results, Syngenta says.

Through the SAP Business Data Cloud, Syngenta is establishing a unified and secure data foundation essential for real-time decision-making. Combined with SAP Business AI and tools like the Joule Copilot , the company intends to drive operational efficiency and accelerate the development of new technologies. Importantly, this initiative focuses on delivering superior products and services while ensuring farmers maintain control and privacy over their proprietary information.

Here's How Much Fertilizer Tariffs Cost Farmers in 2025

Tue, 20 Jan 2026 18:26:54 GMT

The full cost of fertilizer tariffs – and then some – may have been passed through to farmers in 2025, according to data released Tuesday by North Dakota State University (NDSU).

In its monthly Agricultural Trade Monitor, NDSU found that tariffs imposed by the Trump administration under the International Emergency Economic Powers Act (IEEPA) collected an estimated $958 million in revenue from selected imports of agricultural inputs between February and October of last year. Of that, about:

$273 million came from agricultural chemicals
$530 million from farm machinery
$110 million from fertilizers
$44 million from seeds.

The report observes that when fertilizer tariffs were imposed in April, U.S. fertilizer prices significantly rose relative to Canadian prices, which weren’t subject to the tariff. The premium for DAP, measured by the difference between prices in the U.S. Northern Plains versus Canadian prices, climbed to $343 per metric ton at its peak during the tariff period, marking an increase of $172 per metric ton from pre-tariff baseline levels. MAP and urea each saw a similar divergence.

So who pays the cost of tariffs? The burden can either be distributed between exporters, who eat the cost by reducing export prices, or importer and end users, who pay higher prices. The analysis of the U.S.-Canada spread “indicates that domestic importers and farmers bore the tariff burden substantially,” says the report, noting price movements during the tariff period seemed to exceed the direct cost of the tariff itself.

(NDSU Agricultural Trade Monitor)

The report notes the effective tariff rate on DAP imports was approximately 8% of the import value, while year-over-year spot price analysis showes the differential between U.S. and Canadian spot prices rose by $187 per metric ton in August 2025 compared with August 2024. That’s equivalent to a 342% pass-through rate when measured against the 8% tariff. At the retail level, the pass-through rate was lower at 156%, but still exceeded 100%.

Context is important, says Shawn Arita, associate director and associate research professor at NDSU’s Agricultural Risk Policy Center. He notes the $110 million in IEEPA tariff revenues for fertilizers is less than 1% of the estimated $33 billion in total production costs.

“The high pass-through rate may reflect the uncertainty around tariff levels that prevailed around President Donald Trump’s April “liberation day” announcement of reciprocal tariffs,” Arita says. “It was unclear whether some exporters would be subject to levies above 10% as importers moved to stockpile inventory.”

The report notes retailers engaged in “precautionary” inventory building, while exporters may have been worried about sustained access to the U.S. market. Those uncertainties may have combined to widen price premiums beyond what would be expected from the direct impact of the tariffs.

NDSU’s monthly analysis found year-over-year premiums hit major peaks in August and September, with DAP spot premiums hitting $187 per metric ton before gradually normalizing through November. Retail markets saw lower volatility, with DAP retail premiums peaking at $123 per metric ton in September.

Premiums eased from September to November, reflecting the easing of “extreme” supply constraints as the policy environment became more clear, the report says.

Following tariff exemptions granted in November, U.S. price differentials with Canada caused by the tariffs converged back to normal, the report found. DAP spot prices have retraced most of their tariff-driven increases, and MAP prices have fully reversed their increases, trading slightly below pre-tariff levels.

While wholesale prices fell sharply after the November rollback, retail prices are adjusting more slowly.

“As of early January 2026, farmers buying fertilizer from local retailers continue to face price stickiness, paying tariff-induced premiums above pre-tariff baseline levels,” the report says.

Join a dynamic conversation connecting the dots between global market forces and on-farm fertilizer costs at Top Producer Summit, Feb. 9-11 in Nashville. From geopolitics to natural gas prices to shipping constraints, Shawn Arita from North Dakota State University, and other experts will unpack what’s really driving fertilizer volatility — and how you can better time, plan and budget your nutrient strategies for 2026 and beyond. Click here to view the agenda and register.

Sign of the Tariff Times? Claas Shifts LEXION 8000 Combine Production From Omaha to Germany

Fri, 26 Sep 2025 16:47:33 GMT

German farm machinery manufacturer Claas has issued a statement reading, in part, that “to remain competitive in the Canadian market under current tariff and trade conditions, CLAAS will transition production of 2026 model year LEXION 8000 Series combines destined for Canada to Germany.”

By implementing this production shift, Claas would avoid paying the 50% steel and aluminum tariffs currently in place between the U.S. and Canada. Products manufactured in Germany and shipped into the U.S. are subject to a 15% blanket tariff, with some exemptions.

Related - From the Factory to Your Fields: Where Farm Equipment Is Made

Claas says the change will only apply to machines that will eventually harvest grain on farms in Canada. LEXION combines built for U.S. customers will continue to be assembled in Omaha, Neb., with most parts sourcing remaining local to the U.S.

A bit of good news amid the bad is Claas also says it will maintain stable prices in the U.S. until Dec. 31, despite the impact of tariffs.

So, if you’re looking at buying a new Claas combine, tractor or forage harvester, it sounds like you should think about locking in that pretariff price before the end of the year.

A busy 2025 at Claas

(Claas)

Claas recently soft launched its new Jaguar 1000 series forage harvesters (shown above) for the U.S. dairy market. That machine will hit the dairy industry in time for the 2026 forage harvest season when the first units manufactured over in Germany hit dealer lots.

Earlier this month, the company hosted a groundbreaking on its Omaha campus for a new North American R&D Center. And it recently expanded its dealer-network throughout a handful of states in the Midwest.

Back in August, we talked with senior vice president Eric Raby at the manufacturer’s booth at the Farm Progress Show . He told Farm Journal that Claas was absorbing the extra expenses from tariffs and “not passing all that on to the customer” but that the new-at-the-time 50% aluminum and steel tariffs would pose a significant challenge going forward.

“We’re still trying to figure out what are the implications because that is going to affect our industry much more broadly than just the tariffs on a country of origin for a specific machine,” Raby said at the time.

The manufacturer says it is currently reviewing preorder sales data to determine combine production requirements in Omaha . The company “sees strong potential in the future of U.S. agriculture and, with it, opportunities for continued growth.”

Despite the decision to move some combine production back to Germany, CLAAS is also actively recruiting new hires for sales and service throughout the U.S.

Your next read: How Much Does It Cost to Run a High Horsepower Tractor?

United States Eases Port Fees On China-Built Ships After Industry Backlash

Fri, 18 Apr 2025 16:04:08 GMT

The Trump administration shielded on Thursday domestic exporters and vessel owners servicing the Great Lakes, the Caribbean and U.S. territories from port fees to be levied on China-built vessels, aiming to revive U.S. shipbuilding .

The Federal Register notice posted by the U.S. Trade Representative was watered down from a February proposal for fees on China-built ship s of up to $1.5 million per port call that sent a chill through the global shipping industry.

Ocean shipping transports about 80% of global trade — from food and furniture to cement and coal. Industry executives feared virtually every cargo carrier could face steep, stacking fees that would make U.S. export prices unattractive and foist annual import costs of $30 billion on American consumers.

“Ships and shipping are vital to American economic security and the free flow of commerce,” U.S. Trade Representative Jamieson Greer said in a statement. “The Trump administration’s actions will begin to reverse Chinese dominance, address threats to the U.S. supply chain, and send a demand signal for U.S.-built ships.”

Still, the fees on Chinese-built ships add another irritant to swiftly rising trade tensions between the world’s two largest economies as President Donald Trump seeks to draw China into talks on his new tariffs of 145% on many of its goods.

The revisions tackle major concerns voiced in a tsunami of opposition from the global maritime industry, including domestic port and vessel operators as well as U.S. shippers of everything from coal and corn to bananas and cement.

They grant some requested carve-outs, while phasing in fees that reflect the fact U.S. shipbuilders, which turn out about five vessels annually, will need years to compete with China’s output of more than 1,700 a year.

The USTR exempted ships that ferry goods between domestic ports as well as from those ports to Caribbean islands and U.S. territories. Both American and Canadian vessels that call at Great Lakes ports have also won a reprieve.

As a result, companies such as U.S.-based carriers Matson and Seaboard Marine would dodge the fees. Also exempt are empty ships arriving at U.S. ports to load up with exports such as wheat and soybeans.

Foreign roll-on/roll-off auto carriers, known as ro-ros, are eligible for refunds of fees if they order or take delivery of a U.S.-built vessel of equivalent capacity in the next three years.

The USTR set a long timeline for liquefied natural gas (LNG) carriers. They are required to move 1% of U.S. LNG exports on U.S.-built, operated and flagged vessels within four years. That percentage would rise to 4% by 2035 and to 15% by 2047.

The agency, which will implement the levies in 180 days, also declined to impose fees based on the percentage of Chinese-built ships in a fleet or on prospective orders of Chinese ships, as originally proposed.

The fees will be applied once each voyage on affected ships a maximum of six times a year.

Executives of global container ship operators, such as MSC and Maersk MAERSKb.CO, which visit multiple ports during each sailing to the United States, had warned the fees would quickly pile up.

Instead of a flat individual fee on large vessels, the USTR instead opted to levy fees based on net tonnage or each container unloaded, as was called for by operators of small ships and transporters of heavy commodities such as iron ore.

From October 14, Chinese-built and owned ships will be charged $50 a net ton, a rate that will increase by $30 a year over the next three years.

That will apply if the fee is higher than an alternative calculation method that charges $120 for each container discharged, rising to $250 after three years.

Chinese-built ships owned by non-Chinese firms will be charged $18 a net ton, with annual fee increases of $5 over the same period.

It was not immediately clear how high the maximum fees would run for large container vessels, but the new rules give non-Chinese shipping companies a clear edge over operators such as China’s COSCO 600428.SS.

The notice comes on the one-year anniversary of the launch of the USTR’s investigation into China’s maritime activities.

In January, the agency concluded that China uses unfair policies and practices to dominate global shipping.

The actions by both the Biden and Trump administrations reflect rare bipartisan consensus on the need to revive U.S. shipbuilding and strengthen naval readiness.

Leaders of the United Steelworkers and the International Association of Machinists and Aerospace Workers, two of five unions that called for the investigation that led to Thursday’s announcement, applauded the plan and said they were ready to work with the USTR and Congress to reinvigorate domestic shipbuilding and create high-quality jobs.

The American Apparel & Footwear Association reiterated its opposition, saying port fees and proposed tariffs equipment will reduce trade and lead to higher prices for shoppers.

At a May 19 hearing, the USTR will discuss proposed tariffs on ship-to-shore cranes, chassis that carry containers and chassis parts. China dominates the manufacture of port cranes, which the USTR plans to hit with a tariff of 100%.

The Federal Register did not say if the funds raised by the fees and proposed crane and container tariffs would be dedicated to fund a revival of U.S. shipbuilding.

(Reporting by Lisa Baertlein in Los Angeles, David Lawder and Andrea Shalal in Washington and Jonathan Saul in London; Editing by Jamie Freed, Clarence Fernandez and Gerry Doyle)

USDA Prepares to Protect Farmers in a Trade War

Tue, 04 Mar 2025 22:28:13 GMT

As the clock struck midnight on March 4, President Donald Trump’s new tariffs on imports from Canada, Mexico and China went into effect. Almost immediately, global markets started to react, and trading partners retaliated.

While the full economic consequences of the trade war remain to be seen, Secretary of Agriculture Brooke Rollins has promised to have a plan, such as the Market Facilitation Program (MFP), ready for farmers, if needed. In 2019, MFP provided direct payments to producers impacted by retaliatory tariffs, resulting in the loss of traditional exports.

“Everything is on the table right now. Everything. I know that President Trump, whom I speak with regularly, realizes the state of the farm economy in this country,” Rollins said on Sunday at Commodity Classic . “The last time, I know, he pushed Secretary Perdue to ensure we were able to make whole–as best as we could–some of those, and hopefully most of those, if not all, who had been hurt. We’re building the team at USDA to ensure we have the structure and the plan in place to allow us to move very quickly.”

In an interview with Farm Journal at Commodity Classic, USDA Economist Seth Meyer says he has been instructed by Secretary Rollins to be ready for a relief program, and he’s started calculating what possible relief could look like.

“Calculating something right today would not be helpful because we don’t know where we’re going to be, but absolutely, the Secretary instructs: ‘You need to be ready, have your pencil sharpened and have your tools available. Think about how you would proceed,’” Meyer says. “We are ready in that backstop. It won’t be easy. We’ve talked a lot about different countries. We’ve talked about reciprocal trade, but we are indeed sharpening our pencils to be able to do what she’s asked us to do.”

Here are the key details of the U.S. tariffs and retaliation from Canada, Mexico and China.

(Farm Journal)

Canada responded swiftly with plans to impose 25% tariffs on nearly $100 billion of U.S. imports over two tranches. Mexican President Claudia Sheinbaum plans to announce retaliatory tariff and non-tariff measures against the U.S. at an upcoming rally in Mexico City’s central square.

Meyer’s question is, “Can Mexico afford to retaliate?”

(Farm Journal)

As President Trump’s tariffs drew swift retaliation from trading partners, the ag industry was quick to react.

Impact on Farm Machinery
Equipment makers are concerned about the additional duties, especially after a rough year for the industry.

“We have spent decades laying down supply chains across the world. Our industry is global — 30% of all equipment made in the U.S. is destined for export. Canada is our largest market outside of the U.S.,” says Johan “Kip” Eideberg, senior vice president – government and industry relations, Association of Equipment Manufacturers (AEM). “If we want to create more jobs here in America, we need to sell more equipment and that means selling to customers outside of the U.S.”

As detailed in From the Factory to Your Fields: Where Farm Equipment Is Made , the ag equipment manufacturing industry is fully integrated across the three North American allies involved in the so-called “trade wars.”

“Anytime you disrupt those tightly connected supply chains — and tariffs would be a direct disruption — it’s going to have a serious impact on equipment manufacturers and on our farmers,” Eineberg says. “Given that Canada is our largest export market, we’re sending almost $10 billion worth of goods to Canada every year, there’s a lot at stake here.”

In 2018, Eineberg estimates, tariffs on steel, aluminum and farm inputs from China drove up the cost of making equipment in the U.S. by about 9 percentage points.

“Obviously, manufacturers will try to absorb as much of that as they can, but inevitably some of it will be passed down to the consumer, which in this case is our farmers and ranchers,” he adds.

AEM is also sounding the alarm on the compounding effect of tariffs, specifically due to the tight integration of manufacturing cycles on both sides of the border. There are often cases, Eineberg says, where components and raw materials are shuttled three to five times across the border between different factories in the manufacturing process. That means each time a piece of steel or other raw material being manufactured into a component for a tractor crosses the border, the tariffs multiply.

An example of the cross-border journey of one piece of agriculture equipment from raw material to delivery on the farm.

(AEM)

Impact on Rural America and Fertilizer
American Farm Bureau President Zippy Duvall expressed alarm about potential harm to farmers resulting from imposing stiff tariffs on the top three agricultural markets by value for the U.S.

“Farm Bureau members support the goals of security and ensuring fair trade with our North American neighbors and China, but, unfortunately, we know from experience that farmers and rural communities will bear the brunt of retaliation.” Duvall says.

Of note, more than 80% of the U.S. supply of potash , a key fertilizer product, comes from Canada.

“Tariffs that increase fertilizer prices threaten to deliver another blow to the finances of farm families already grappling with inflation and high supply costs,” Duvall adds. “The uncertainty hits just as operating loans are being secured and spring planting approaches, leaving farmers in a tough spot.”

(Farm Journal)

Read: Fertilizer Manufacturers and Retailers React to Trade Tariffs

Impact on Soybeans
During the 2018 trade war with China, U.S. agriculture experienced more than $27 billion in losses, with soybeans accounting for 71% of those losses, according to the American Soybean Association (ASA). Unlike in 2018, farmers are in a more tentative financial situation in 2025. Commodity prices are down nearly 50% from three years ago, while the costs for land and inputs, such as seed, pesticides and fertilizer, are high.

In an ASA statement, it says for years the organization’s farmer-members have consistently maintained their position that they do not support the use of tariffs, which threaten important markets and raise input costs for farmers, as a negotiation tactic.

“Farmers are frustrated. Tariffs are not something to take lightly and ‘have fun’ with. Not only do they hit our family businesses squarely in the wallet, but they rock a core tenet on which our trading relationships are built, and that is reliability. Being able to reliably supply a quality product to them consistently,” says Caleb Ragland, ASA president and soybean farmer from Magnolia, Ky.

Soybeans by far make up the largest volume of ag products exported to China. In 2024, U.S. exporters sent 27 million metric tons of soybeans to China valued at $12.76 billion, according to USDA. Mexico is the second-largest customer for whole soybeans, soybean meal and soybean oil. Canada is the fourth-largest customer for soybean meal.

“Soybean producers face huge, disproportionate impacts from trade flow disruptions, particularly to China,” Ragland says. “And we know foreign soybean producers in Brazil and other countries are expecting abundant crops this year and are primed to meet any demand stemming from a renewed U.S.-China trade war.”

Impact on Corn and Ethanol Demand
Market analysis shows tariffs won’t solve the U.S. trade deficit and instead will just shift business to other countries, says Neil Caskey, CEO, National Corn Growers Association (NCGA).

“We issued a study back in the fall that documented the implications of tariffs and specifically retaliation in a trade war — it’s not good for corn farmers, farmers in general,” he says. “We did that in conjunction with the American Soybean Association, and it concluded a trade war is really only good for Brazil, and we hope to avoid that.”

The top two destinations for corn and ethanol are Mexico and Canada. According to Krista Swanson, chief economist, NCGA, 40% of U.S. corn exports go to Mexico and more than 40% of U.S. ethanol exports are shipped to Canada.

“[Corn] is a commodity [those countries] consume way more than what they produce, so they’re going to have to get it from somewhere,” she says. “There’s definitely some concern about losing corn [exports], but how much is lost is left to be seen because it depends on what happens with shifting trade flows.”

Impact on Beef and Pork Sectors
U.S. meat export could be impacted by the tariff war as well, with China singling out pork and beef for a 10% counter tariff. Mexico, China and Canada accounted for 8.4 billion in U.S. red meat exports last year, according to the U.S. Meat Export Federation (USMEF).

USMEF is disappointed no agreements were reached to avoid or postpone the tariffs, but president and CEO Dan Halstrom says just because there are tariffs, doesn’t mean trade will stop.

“I do think the thing that we have definitely in our favor is that demand for our products globally is record breaking. I mean, it’s as good as I’ve ever seen it in 40-plus years,” he says. “I think that we have a very unique product. We got to keep that in mind because that’s a big leverage point.”

Halstrom says it could be a bumpy ride for a while, but it’s not something exporters can’t overcome.

Read: Industry Comments on Retaliatory Tariffs on U.S. Pork and Beef

China Hits U.S. Agriculture, Says It Won't Be Bullied by Fresh Trump Tariffs

Tue, 04 Mar 2025 16:27:36 GMT

China retaliated swiftly on Tuesday against fresh U.S. tariffs with hikes to import levies covering $21 billion worth of American agricultural and food products, moving the world’s top two economies a step closer towards an all-out trade war.

Beijing also slapped export and investment curbs on 25 U.S. firms, on grounds of national security, but, unlike when it retaliated against the Trump administration’s February 4 tariffs, this time avoided punishing any household names.

“Trying to exert extreme pressure on China is a miscalculation and a mistake,” a foreign ministry spokesperson told a press conference in Beijing, adding that China had never succumbed to bullying or coercion.

The latest retaliatory measures came as the extra duty of 10% U.S. President Donald Trump threatened for the world’s second-largest economy took effect at 0501 GMT on March 4.

That makes for a cumulative 20% tariff in response to what the White House considers Chinese inaction over drug flows.

China has accused the White House of “blackmail” over its tariff hike, saying it has some of the world’s toughest anti-drug policies.

Analysts say Beijing still hopes to negotiate a truce on tariffs, deliberately setting its hikes below 20% to leave its negotiators room to hash out a deal, but each escalation reduces the chance of a rapprochement.

“China’s government is signaling that they do not want to escalate,” said Even Pay, an agriculture analyst at Trivium China.

“It’s fair to say we’re in the early days of Trade War 2.0,” Pay said, adding there was still time to avoid a protracted trade war if Trump and Chinese President Xi Jinping were able to strike a deal.

Later on Tuesday, China said it would investigate U.S. producers of a type of optical fibre for circumventing anti-dumping measures, suspended the import licenses of three U.S. exporters, and halted China-bound shipments of U.S. lumber.

Additional Levies to Hit About 15% of U.S. Exports

The new U.S. tariffs represent an additional hike to pre-existing levies on thousands of Chinese goods.

Some of these products took the brunt of sharply higher U.S. tariffs last year under then President Joe Biden, including a doubling of duties on semiconductors to 50% and a quadrupling of tariffs on electric vehicles to more than 100%.

The 20% tariff will hit several major U.S. consumer electronics imports from China that had previously escaped untouched, from smartphones and laptops to video game consoles, smartwatches, speakers and Bluetooth devices.

China responded immediately after the deadline, with an additional tariff of 15% tariff on U.S. chicken, wheat, corn and cotton and an extra levy of 10% on U.S. soybeans, sorghum, pork, beef, aquatic products, fruits and vegetables and dairy imports from March 10.

The additional levies will hit about 15% of U.S. exports to China or $21 billion worth of trade, according to Reuters calculations based on U.S. census data for 2024.

Beijing also added 15 U.S. companies to its export control list that bars Chinese firms from supplying American companies with dual-use technologies.

It also put 10 U.S. companies on its Unreliable Entity List for selling arms to Taiwan, which China claims as its own territory, although the self-governing island rejects that.

“We’re still on track to 60% (tariffs),” said Cameron Johnson, a supply chain expert at Tidalwave Solutions, referring to Trump’s campaign trail threat.

“At the moment, with 20%, it just barely moves the needle for companies wanting to move potential supply chains out of the country,” he added.

“At 35%, we start to see that companies will start to move or consider other strategies.” China is the biggest market for U.S. agricultural products, and the sector has long been vulnerable to being used as a punching bag at times of trade tension.

Chinese imports of U.S agriculture goods fell for a second year to $29.25 billion in 2024, from $42.8 billion in 2022.

China’s futures markets were steady on the news.

The most actively traded soymeal and rapeseed meal futures in the world’s biggest agricultural importer rose 2.5% on Monday after the Global Times said Beijing planned to target U.S. agricultural exports.

Supply Chain Shifts

Trade tension risks exacerbating U.S. inflation and China’s efforts to ensure a durable post-COVID economic recovery, which has been heavily reliant on exports.

On Tuesday, the U.S.-China Business Council (USCBC) applauded Trump’s goal of tackling illegal trade in fentanyl, but said raising tariffs on Chinese products was not the way to achieve that goal.

“Across-the-board tariffs will hurt U.S. businesses, consumers, and farmers and undermine our global competitiveness,” its president, Sean Stein, said in a statement. All the same, the China-U.S. trade war could benefit third countries.

Since the United States and China imposed tit-for-tat tariffs during Trump’s first term, Beijing has moved to cut its reliance on American farm goods by spurring domestic production and buying more from countries such as Brazil.

U.S. agricultural exporters could also step up efforts to replace the China market by shipping more to Southeast Asia, Africa and India.

“Chinese tariffs on U.S. wheat and corn imports should be supportive for demand for Australian wheat and barely exports,” said Dennis Voznesenki, an analyst at Commonwealth Bank in Sydney.

“However, China’s recent slowdown in imports of feed grains from all origins should temper the excitement.”

(Reporting by Joe Cash, Mei Mei Chu and Nicoco Chan; Additional reporting by Ethan Wang, Qiaoyi Li, Ellen Zhang, Lewis Jackson and Ella Cao; Editing by Christian Schmollinger and Clarence Fernandez)

Second U.S. Port Strike Averted as Union, Employers Reach Deal

Thu, 09 Jan 2025 14:55:03 GMT

The union representing 45,000 dock workers on the U.S. East and Gulf Coasts and their employers on Wednesday said they reached a tentative deal on a new six-year contract, averting a strike that could have snarled supply chains and taken a toll on the U.S. economy.

The United States Maritime Alliance employer group and the International Longshoremen’s Association, in a joint statement, called the agreement a “win-win.” The deal includes a resolution in automation, which had been the thorniest issue on the table.

“This agreement protects current ILA jobs and establishes a framework for implementing technologies that will create more jobs while modernizing East and Gulf coast ports — making them safer and more efficient, and creating the capacity they need to keep our supply chains strong,” the groups said.

Terms of the deal were not disclosed.

The talks had been extended until Jan. 15 to hammer a deal on automation. Shipping industry executives had been concerned that the parties would not be able to overcome their impasse, leading to a second ILA strike just days before President-elect Donald Trump’s Jan. 20 inauguration.

A three-day ILA strike in October triggered a surge in shipping prices and cargo backlogs at the 36 affected ports. Longshoremen returned to work after employers agreed to a 62% wage increase over the next six years.

ILA and USMX have agreed to continue operating under the current contract until the union can meet with its full Wage Scale Committee and schedule a ratification vote, and USMX members can ratify the terms of the final contract.

(Reporting by Gnaneshwar Rajan in Bengaluru; Editing by Alan Barona and Leslie Adler)

New Data: How The Fertilizer Industry Contibutes To The Economy

Fri, 13 Dec 2024 15:36:02 GMT

The Fertilizer Institute (TFI) has released its 2024 Fertilizer Industry Economic Impact Study , which details the contributions of the U.S. fertilizer industry to the economy and also explains the global nature of fertilizer markets.

“Fertilizer is a cornerstone of modern agriculture and a critical component of the global food supply chain,” said TFI president and CEO Corey Rosenbusch. “While the latest data reveals the industry’s significant domestic economic impact, it also provides an opportunity to educate people about fertilizer’s complex global network and its reliance on open markets and fair competition to meet the needs of American farmers.”

Imports and Exports
TFI’s study highlights how the United States operates as both a major fertilizer producer and consumer. Overall, it’s the world’s third largest fertilizer consuming country and accounts for nearly 11% of world consumption.

On the production side, it ranks as the world’s third largest producer of phosphate rock and third largest ammonia producer. U.S. phosphate is mined extensively in Florida’s Bone Valley region and nearly 40% of U.S. phosphate exports went to Canada in 2023.

Though the U.S. is the fourth largest producer of urea, it must also import a substantial amount to meet demand – serving as the third largest importer of urea in the world.

When it comes to imports, the U.S. leads the pack in potash – relying on imports for 98% of its potash needs. These mainly come from North American trading partner Canada.

Why the World Can’t Ignore the Demand for Potash

“Our ability to feed the world depends on maintaining and strengthening these vital trade relationships,” Rosenbusch concluded. “And what makes our industry so strong is the balance between domestic production and having reliable global trading partners.”

Direct Fertilizer Employment
The fertilizer industry is an important piece of the U.S. economy – contributing nearly $140 billion. According to the study, fertilizer directly accounts for:

46,301 manufacturing jobs
17,133 wholesale jobs
49,038 retail jobs

For each of those direct jobs in the fertilizer industry, TFI estimates 3.26 jobs outside of the industry are supported – totaling nearly 500,000 jobs for American workers. That makes up $36.5 billion in employment income.

To see how fertilizer impacts your specific region, or to view the full report, click here .

Your Next Read: Make Fertilizer Decisions With Confidence and Insight

Fertilizer Concerns Come Into Focus With Canadian Rail Strike

Thu, 22 Aug 2024 17:52:44 GMT

Starting Aug. 22, 10,000 Canadian rail workers went on a labor strike. Brought on after negotiations failed with two major railroads–Canadian National and Canadian Pacific Kansas City—the strike only directly effects Canadian employees, however with Canadian rail being a major part of the North American supply chain, especially in agriculture, concerns are being elevated.

Reporting from Canada, Shaun Haney said, “The problem is that for weeks leading up to August 22, the railways have cut shipping flow on some products to not strand crews or products in the geographically-challenging expanse that is Canada. A strike is not just about the loss of the strike days; you must account for the economic impacts of the weeks leading into decision day and then the time required to get back to full capacity after the strike is over.”

And he highlights how even with full capacity restored, even one week of such a strike could add up to 14 weeks until the system is completely back to being optimized.

Canadian Government Steps In
By Thursday afternoon, Canadian Labour Minister Steven MacKinnon announced the railroads must enter contract arbitration with the labor union. This is positive movement as trains could start moving as soon as the dispute enters arbitration. As reported by the Toronto Star, MacKinnon is using federal code that can have the Canada Industrial Relations Board impose final, binding arbitration.

In reaction to the governmental action, The Fertilizer Institute provided the following state: “TFI applauds the Canadian government’s efforts to take action to get the rail system moving again as quickly as possible. The economies of Canada and the United States are closely intertwined, and a dependable and reliable rail network is necessary to support the cross-border fertilizer supply chain and facilitate the movement of critical agricultural inputs on both sides of the border. We also thank US government officials for their engagement with both the industry and their counterparts in Canada. TFI looks forward to continuing to work with policymakers on strengthening supply chains and domestic fertilizer supply and production.”

Fertilizer In Focus
Notably, the U.S. imports more than 80% of its potash tonnage from Canada.

“We are disappointed that the parties involved in this dispute have failed to prevent what has become another significant disruption to vital supply chains serving the agricultural industry,” says Mark Thompson, chief commercial officer for Nutrien. “Nutrien depends on Canadian rail to provide the crop inputs that growers around the world need to support global food security. We are already feeling the impacts of work stoppages on our industry and urge all parties involved to come to a resolution and prevent further damage.”

Echoing the dependence of the ag supply chain on Canadian rail, TFI president and CEO Corey Rosenbusch said, “Rail transport is the backbone of North America’s supply chain, and fertilizer and agriculture are among the most dependent on rail service. The interconnected and time-specific nature of agriculture means that even short-term disruptions to one segment have wide-ranging implications, affecting everything from grocery store prices to international trade.”

The strike adds another layer of concern for ag retailers. With farmers assessing their fertilizer costs and needs this fall, this supply chain concern could add stress to an already elevated issue.

“My fear is that with higher interest rates, fall fertilizer prices and application won’t be as popular with farmers,” says Mark Stutsman, COO of Stutsman, a three-location Iowa-based ag retailer. “If this comes true on a large scale, all it will do is push the workload to the spring, which creates logistical and workload chaos.”

The Agricultural Retailers Association launched a grassroots letter writing campaign hours after the rail stoppage. Anyone can take action with ARA at www.aradc.org/take-action.

“The agricultural community will feel an immediate hit to supply chains due to the rail strike because the fertilizer, livestock and other ag input companies rely on these railroad operators for timely deliveries,” says ARA Senior Vice President of Public Policy & Counsel Richard Gupton. “In fact, many ARA member facilities have no other transportation options to continue to move products through the supply chain, which could limit crop yields during the harvest.”

Canada Rail Stoppage Poised to Disrupt North American Agriculture

Tue, 20 Aug 2024 20:49:44 GMT

A looming stoppage of freight railway operations across Canada would disrupt North America’s agricultural supply chain, snarling shipments of everything from wheat to fertilizer and meat.

Unless last-minute labor agreements are reached, both Canadian National Railway and Canadian Pacific Kansas City, an effective duopoly, will shut nearly all freight rail services in Canada for the first time at midnight on Thursday.

Canada is the world’s top exporter of canola, used in food and biofuel, and of potash fertilizer, as well as the No. 3 wheat exporter. While a lockout or strike would directly involve 10,000 Canadian employees of the railroads, not those in the U.S., it would have knock-on effects on the U.S. economy due to the countries’ criss-crossing rail lines.

Nearly three dozen North American agriculture groups, in a joint letter to the U.S. and Canadian governments on Monday, urged action to avoid a stoppage.

“The impact of a strike would be particularly severe on bulk commodity exporters in both Canada and the United States as trucking is not a viable option for many agricultural shippers,” the letter said, citing large volumes and vast distances.

The rail operators have said lockouts will begin on Thursday. The Teamsters union, which is demanding better wages, benefits, and crew scheduling, has issued a Thursday strike notice to CPKC.

The stoppage will halt shipments of U.S. spring wheat from Minnesota, North Dakota and South Dakota to the Pacific Northwest for export, said Max Fisher, chief economist at the National Grain and Feed Association.

CPKC ships grain from the Dakotas and Minnesota to west-coast export terminals via Canada, according to the U.S. government.

U.S. farmers still have nearly two-thirds of the spring-wheat crop to harvest, the U.S. Department of Agriculture said on Monday. Soy, corn and canola harvests are still a few weeks away in North America.

Canada’s prairie elevator network would run out of storage capacity within 10 days of a stoppage, said Mark Hemmes, head of Quorum Corp, which monitors Canadian grain handling and transportation.

Shippers are also concerned about U.S. corn products heading to Canada. In 2023, Canada was the top destination for U.S. ethanol exports, and almost three-quarters traveled by rail, according to USDA.

“We just can’t have the railroads not operating,” Fisher said.

The U.S. exported $28.2 billion of agricultural products last year to Canada, its third-largest destination for agricultural exports behind China and Mexico, USDA said.

The U.S. imported $40.1 billion of Canadian agricultural products last year, making Canada the second-largest origin of U.S. agricultural imports behind Mexico, the agency said.

About 85% of the 13 million metric tons of U.S. potash imports last year came from Canada, nearly all of which crossed by rail, according to USDA.

‘No Good Time’

U.S. corn farmers apply fertilizers in fall and spring, but potash imports from Canada are consistent throughout the year, said Krista Swanson, chief economist for the National Corn Growers Association.

“Given constant trade flows and the importance of the trade relationship between the two nations, there is no good time for this to occur,” Swanson said.

The railways move an average of 69,000 tons of fertilizer product per day, equivalent to four to five trains, said Fertilizer Canada spokesperson Kayla FitzPatrick. Disruptions will cost the industry C$55 million ($40.34 million) to C$63 million per day in lost revenue, not including logistical and operational costs, she said.

Canadian meat producers warned that a rail stoppage would result in millions of dollars in losses and waste.

The Canadian Meat Council and Canadian Pork Council said some processing plants expect to lose up to C$3 million a week, and noted these facilities would be forced to shut down within seven to 10 days of a rail stoppage. Once the railways resume service, it would take two to five weeks for plants to return to normal capacity.

There is concern that the movement of Ontario soybeans to export markets, primarily Japan, will completely stop just before the harvest, said Crosby Devitt, CEO of Grain Farmers of Ontario.

With crop-shipment delays lasting beyond a week, companies must pay contract penalties and demurrage for ships waiting for grain to arrive, piling significant cost onto the industry, said Wade Sobkowich, executive director of the Western Grain Elevator Association.

“We’ll be playing catch-up for the rest of the harvest year, till next July,” he said.

($1 = 1.3634 Canadian dollars)

(Reporting by Tom Polansek and Karl Plume in Chicago and Promit Mukherjee in Ottawa; Editing by Rod Nickel)

Soybean Rally Proves There's No Room for Error in the Global Balance Sheet

Fri, 03 Nov 2023 22:00:40 GMT

For the week, December corn was down 3½ cents, January soybeans were up 32¼ cents, January soybean meal was up $5.50 per short ton and January soybean oil was down 235 points. December Chicago wheat was 3 cents lower, December Kansas City wheat was up a ½ cent, with December Minneapolis wheat up 1¼ cents.

Soybeans had a strong day on Friday, closing near the highs and above the 50-day moving average. The January contract also closed higher for the week by more than 32 cents. Jerry Gulke, president of the Gulke Group says, “Soybeans opened on the low and closed on the high. I haven’t seen that in a long time in soybeans, especially on a Friday.” He says the fund and technical buying was sparked by concerns about South American weather and crop prospects.

“This is a serious situation,’” according to Gulke. El Nino is re-intensifying, which he says might already be causing planting issues in Argentina and Brazil. Conditions are less than ideal in Brazil with too much rain in the south and dryness in central and northern soybean production areas.

In response, this week CONAB lowered their soybean production estimate for Brazil by nearly 2 million metric tons to 162 mmt. Crop consultant Dr. Michael Cordonnier also dropped his estimate 2 mmt to 160 mmt.

“If South American production drops just 3 million metric tons that is 100 million bushels and all of the sudden that makes the U.S. ending stocks at 220 million bushels look tight,” Gulke explains.

Gulke thinks the market is finally taking note of the fact there is no room for error on the global soybean balance sheet. Plus, he says its bullish that USDA left ending stocks for soybeans at 220 million bushels in the October WASDE while projecting a record soybean crop in Brazil and doubling Argentina’s production. He says USDA did not lower U.S. exports despite the fact that crop will compete with the U.S. in the export market.

Production issues in South American might also be catching the attention of export customers such as China. Market talk has continued to circulate that China is cancelling soybean orders from Brazil and shifting business to the United States for November through February delivery. Gulke says that might have prompted at least a portion of the rally on Friday. He’s watching for confirmation in additional flash sales on Monday or early next week.

On Friday, corn flirted with two-year lows and came within a quarter cent of the September low before reversing with soybeans and closing higher. Gulke says corn holding that support area was significant.

“I think that speaks well of corn. I don’t think it was just a follower of soybeans and there was value there for end users at that price level,” he explains.

However, if soybeans continue to rally on South American weather concerns, corn will need to follow to hold or buy acres, Gulke adds.

For more market information contact Jerry at info@gulkegroup.com.

Brazil Clears Bottlenecks to Oust US as Top Corn Exporter

Thu, 24 Aug 2023 16:46:18 GMT

Brazil is set to overtake the U.S. this year as the world’s top corn exporter, reflecting both a bumper harvest and logistical breakthroughs such as the consolidation of northern export routes, which are boosting the competitiveness of the South American grains powerhouse.

Corn exports through Brazil’s northern ports, which use the waterways of the Amazon River basin to ship grains globally, are on track to beat volumes via the most traditional port of Santos for a third consecutive year, according to a Reuters analysis of grain shipping data.

The shift underscores how Brazil, which churns out three corn crops per year and still has huge expanses of under-used farmland, is finally overcoming some of the infrastructure bottlenecks that have long made it hard to get its bountiful harvests to global markets.

That and a new supply deal with China announced last year suggest Brazil may be opening a longer era of supremacy over U.S. corn exports, unlike the last time the Brazilians briefly grabbed the global corn crown during North America’s drought-hit 2012/13 season.

The improved export capacity helped Brazil to fill gaps in the global corn market amid disruptions from the war in major grain exporter Ukraine and trade tensions between the U.S. and China.

“We celebrated a lot ... when (corn export) volumes via northern ports equaled Santos,” said Sergio Mendes, head of Brazilian grain exporter group Anec. “By using northern ports ... you are saving 20 reais ($4.12) per ton (of corn).”

Major new investments in Brazil have begun to ease several chokepoints and bring down logistics costs sharply, helping to undercut U.S. farmers.

Northern export routes in particular have benefited from a 2013 law that encouraged grains traders such as Cargill and Bunge, and barge operator Hidrovias do Brasil, to build out new private-use port terminals (TUPs).

Their transshipment stations on the Tapajos and Madeira rivers have linked up the heart of Brazilian farm country and up-and-coming Amazonian ports such as Itacoatiara, Santarem and Barcarena.

The Tegram grain terminal at Itaqui, built and operated by foreign and Brazilian grain merchants including Louis Dreyfus Commodities and Amaggi, boosted its grain export volumes by 306% in eight years to more than 13 million tons in 2022, according to data provided by the firms.

The TUP legal framework, unlike a traditional concession for a limited period, has unlocked a wave of long-term port investments in Brazil. Some 39 billion reais ($8.0 billion) have poured into building and expanding 112 new private-use terminals under the new law, according to a 2020 study by Brazil’s TCU federal audit court.

Brazil’s farm industry, however, is not past all of its logistical woes. On-farm storage capacity still pales next to rival grain powers like Canada, the U.S. and Argentina.

In the No. 1 grains state of Mato Grosso, the storage gap had surged to 46 million metric tons, according to state government data through 2021, after the annual corn harvest tripled in a decade to over 90 million tons, faster than new silos could be built.

A lack of storage space means Brazilian farmers are forced to quickly sell their harvests or pile their corn outside warehouses and hope for good weather. As a result, much of the Brazil harvest crowds onto the roads during a narrow seasonal window, which can make for expensive traffic jams.

Cheaper Route to China

The new export capacity has helped grains shipped from Brazil’s northern ports to compete on logistics costs with U.S. farmers.

Shipping a ton of soybeans in 2008 from Iowa to Shanghai was 77% of the price of using Brazil’s northern ports, but by March 2023 it was 5% more expensive shipping it from the U.S., according to U.S. Department of Agriculture and Brazil’s ESALQ-LOG data. For corn, freight values are very similar, says Thiago Pera, logistics research coordinator at ESALQ-LOG.

The Amazon basin has also become competitive with the southeastern port of Santos, long the powerhouse of Brazilian grains exports. Some 37% of Brazil’s total corn exports flowed through Barcarena, Itaqui, Itacoatiara and Santarem ports in the first half of 2023, according to Brazil’s crop agency Conab. Just 24% flowed through Santos.

By comparison, Santos exported almost three times more corn than those four northern ports in 2015, before heavy investments expanded port capacity in the Amazon region.

“The greater share of shipments through northern ports reflects cheaper freight costs compared to routes to the ports in the south and southeast,” said Thome Guth, a Conab official.

Conab forecasts Brazil’s 2023 total corn output at nearly 130 million metric tons, the highest ever, and exports reaching 50 million metric tons for the first time.

Corn futures in Chicago have fallen from a 10-year high in April 2022 to a two-and-a-half-year low this month, in part due to ample supplies from Brazil.

Brazil’s surging export infrastructure shows little sign of letting up, even though lower prices may discourage farmers from expanding plantings as rapidly.

Chinese state-owned trader COFCO is now building a major new grains terminal at Santos after getting a 25-year license to operate a unit with capacity for 14 million tons. Shipments from COFCO’s STS11 terminal are scheduled to begin in 2026.

A highway license issued two years ago has also modernized a key Amazonian grain corridor stretching over 1,000 kilometers (625 miles) from Mato Grosso to ports in Para state, known as BR-163.

For years, caravans of grain trucks would get stuck regularly in deep mud on that road when they got caught in the rain on their way to northern ports.

Major rail projects still face an array of bureaucratic obstacles, but a few have gotten off the drawing board.

Brazil’s largest rail company Rumo just finished an investment of 4 billion reais on the Ferrovia Norte Sul, started in 2019. The line connects Santos port to farm states Tocantins, Goias, Minas Gerais and Mato Grosso, reinforcing another key route to get Brazilian harvests to global markets.

($1 = 4.8769 reais)

(Reporting by Ana Mano; Editing by Brad Haynes and Marguerita Choy)

John Phipps: Is There Really a Shortage of Truck Drivers?

Mon, 14 Aug 2023 16:07:06 GMT

Cast your mind back to early 2022 and the headline-grabbing Trucker Shortage . My conclusion then was there wasn’t much hard data to substantiate that alarm. There has always been a need for truckers and perversely there seems to have always been ample qualified workers to fill it.

It didn’t take an economics degree to figure out the problem: truckers simply weren’t being compensated enough to entice and keep workers. Now a year and a half later the headline is the demise of one of America’s largest trucking companies – Yellow Trucking – and the end of 30,000 jobs they represent.

Freight companies are struggling now with reduced demand, which threatens even more trucking jobs. At some point most of us begin to wonder about these alleged shortages. Adding to the muddled picture of jobs and pay is the historically low unemployment rate which emphatically illustrates how small the pool of potential employees is.

Related Story: Walmart Will Now Pay Starting Truck Drivers $110,000, Could It Backfire and Make the Nationwide Trucker Shortage Even Worse?

For trucking, which is often a career step up from entry wage employment, increases in the minimum wage by many states has helped low-wage employees keep up.

Since the pandemic, the surprising strength of low wage compensation compared to skilled or managerial wages removes some motivation for workers to consider a trucking job. Note the inversion after the pandemic of which income quintile is seeing greater wage increases.

Trucking companies have long dealt with astonishing turnover rates since the prospective employee pool was large and already qualified. New CDL licenses are issued to about half the current trucker numbers each year. Short-lived shortages are not limited to employees either.

Related Story: SHIP IT Act Could Save Truck Drivers Up to $10,000 and Cover CDL Costs

I started looking back at the numerous “shortages” and dire predictions of the last few years. At least some semiconductor chips, for example, are in now surplus, even a glut. We’ve discovered more new sources for lithium than anyone imagined. Ditto for copper, cobalt, and phosphates.

It appears markets can remedy shortages faster than we have imagined, and the few stubborn scarcities are sidestepped with alternative solutions. Not always, but certainly more than the hysterical headlines suggest.

There will always be warnings about trucker shortages, I suspect, but not from truckers.

3 Economic Forces to Watch that Will Impact Agriculture

Mon, 24 Jul 2023 20:52:25 GMT

Understand how global headwinds and tailwinds will affect your operation

INFLATION IMPACTS
U.S. inflation is at a 40-year high, and the U.S. is not the sole owner of the inflation situation (see map). “We didn’t talk about inflation for 20 years,” says Jackson Takach, chief economist at Farmer Mac. “That’s not the case anymore.”

Expect higher interest rates on loans in 2023. “There is time to do balance sheet management,” Takach says. “Farmers can still restructure to protect themselves from interest rate risk.”

GLOBAL ECONOMY HEALTH

For 2021, the U.S. posted a real gross domestic product (GDP) rate of 5.5%. “The U.S. had a banner year in 2021, with output now at the pre-pandemic trend line,” says James Bullard, president of the Federal Reserve Bank of St. Louis.

Beyond the U.S., other key trading partners have had similar economic improvements, Takach says: “Growth in China, Mexico, Canada, Japan and South Korea will feed U.S. agriculture growth.”

LOW UNEMPLOYMENT

The U.S. unemployment rate has fallen to 3.6% and will likely fall below 3% later this year, which has not occurred since the 1950s, Bullard says: “This would make the U.S. labor market one of the best in the entire post-World War II era.”

Low unemployment won’t go away, Takach adds: “We’re not growing our population quickly enough. We’ll see more automation because of this labor shortage, which could last three to four years.”

Listen to Farmer Mac’s Jackson Takach discuss economic trends on the “ Farming the Countryside ” podcast with Andrew McCrea:

Read more coverage and watch sessions from Top Producer Summit .

How Important is U.S. Ag and Food to the Economy?

Mon, 27 Mar 2023 15:48:56 GMT

As the saying goes, “numbers don’t lie,” and this rings especially true in the 2023 Feeding the Economy report, showing the economic importance of U.S. food and agriculture to communities throughout the nation.

Sponsored by 25 food and agriculture groups across all areas of the food supply chain, the report illustrates the food and agricultural impact on local and nationwide economic activity, underscoring the sector’s resilience and reliability amid a number of global and domestic disruptions.

“Feeding the Economy demonstrates how agriculture is connected to each stage of the supply chain, every item in the grocery store and relied upon by multiple other indispensable industries. The report provides insightful data and research on how the food and agriculture industry consistently generates a positive trade balance as well as millions of jobs while boosting economic vitality in rural and urban areas,” says Mike Seyfert, president and CEO of the National Grain and Feed Association.

Economic Output

Showing an increased economic output in all 50 states compared to the 2022 report, the industries contributed to over $8.6 trillion, nearly 20%, of the country’s economic activity. In addition, the industries accounted for over $202 trillion in export value.

Reflecting a rebound in national economic activity, the largest total output gains were from Hawaii (31%), North Dakota (26%), New York (23%), Nevada (22%) and Florida (21%), according to the report.

Agriculture and food businesses also contribute over $947 trillion to federal and state taxes, including $565.3 trillion and $382.5 trillion, respectively.

Jobs and Wages

Despite the economic challenges and disruptions associated with the COVID-19 pandemic, in 2023, a total of 22,924,189 million jobs are tied directly to the food and agriculture sector, claiming $927.4 billion in wages. This contributes to a total of over 46.2 million jobs and $2.6 trillion in wages supported across the whole supply chain, increasing nearly 2% since 2019.

Productivity

“The strength and growth highlighted in this year’s report reinforce that agriculture is evolving and innovating to meet the demands of the 21st century,” the report says.

USDA notes that between 1948 and 2019, land use for agriculture decreased by 28% while land productivity grew nearly four times and labor productivity grew more than 10 times, the report adds, with agriculture’s total factor productivity growth rate among the highest of U.S. sectors.

While producers raise crops, produce and livestock on two of every five acres of U.S. soil, millions of other U.S. workers fulfill jobs in over 200,000 food manufacturing, processing and storage facilities to strengthen the food supply chain across the world. Additionally, approximately 200,000 retail food stores and over 1 million restaurant locations provide food for communities from coast to coast.

The sheer number of jobs and total of wages, taxes and export values highlight the vitality of the industry to our nation. However, for many Americans, both rural and urban, agriculture and food are more than simply a paycheck.

“American agriculture is really the foundation of our lives and our economy. This study reveals the numbers, and maybe some of the spirit, of this one indispensable sector,” says Roger Cryan, chief economist at the American Farm Bureau Federation.

The full report can be found on the Feeding the Economy website .

Why Are Some Ag Retailers Sitting on High Fertilizer Prices? Making Sense of the Disparity Right Now

Wed, 15 Mar 2023 15:42:02 GMT

Fertilizer and herbicide prices continue to fall, and there are signs the decline could continue into spring. Now the issue is the number of agricultural retailers sitting on high-priced inputs, which are often passed on to farmers.

A year ago, the headlines were focused on climbing input prices . Not only were farmers looking at a possible shortage of herbicides, there were also concerns about what the fallout from the war in Ukraine could mean for already surging fertilizer prices. In April of 2022, a Farm Journal survey found:

87% of retailers experienced difficulty sourcing inputs for 2022
Of those, 85% had trouble with herbicide availability
38% had difficulty sourcing fertilizer
The biggest issue was securing enough glyphosate, with 100% of respondents reporting issues with that particular chemistry
69% reported difficulty sourcing glufosinate

A year later, the story has dramatically changed. Active ingredients are flowing more freely from China, and declining natural gas prices are leading to less expensive fertilizer.

Sam Taylor, farm inputs analyst at Rabo AgriFinance in the RaboResearch Food & Agribusiness group , watches fertilizer and herbicide prices closely. He says the fertilizer market, in particular, has posted quite sizable falls even since the start of the year.

“You’re seeing wholesale Midwest pricing in some of the nitrogen products down 20% since the start of this year. This is really a function of inventory, but also the natural gas price in Europe creating a less worst-case scenario, as well as potentially some of the big buyers sitting out in the market to kind of get a little bit of clarity,” says Taylor.

He says there’s been less of a fall on the phosphate side, but it’s still in the double digits. Taylor expects further downside in that market in the coming weeks.

The potash market’s price decline has been more pronounced, with a 20% fall in Midwest potash prices on the retail level, according to Taylor.

With the sudden shift in prices, it creates a difficult scenario for those retailers sitting on fertilizer prices that are at a much higher level than what is posted today.

“What this very often means is that kind of over-played cliche, ‘who wants to catch the falling knife as the market’s coming down?’ The independent people within that value chain, the farmer, the retailer, the distributor, they don’t necessarily want to be taking hold of inventory that they might not then necessarily be able to get the value out of and that they paid for ostensibly,” Taylor explains.

Taylor thinks there’s been a front-loading of the price decline, with some fertilizer prices looking at a 30% drop since November.

“You’ve seen an early fall off in the pricing, and I think this has added a little bit more fear,” says Taylor. “On the nitrogen side, it has just been steeper than a lot of people have thought and this has been as a function, I would say, primariily of the weather components in the supply of natural gas in Europe. There’s not necessarily anything that anyone can do to legislate for these kinds of weather forecasts or changing the landscape.”

While farmers may be annoyed with the prices they paid in the fall compared to now, some are also getting cheaper price quotes from other retailers just ahead of planting. Taylor says some of those smaller retailers, like co-ops, aren’t structured to assume a 20% to 30% fall in pricing and likely need to pass it on to growers.

As a result, consolidation in the ag retail space, which is already underway, could continue to accelerate in the years ahead.

“Scale is a great source of purchasing power, but it’s also a great source of market intelligence,” says Taylor. “As there is more consolidation and potentially more integration, then you’re likely to see an increasing amount of pressure put on some of the smaller guys. So, it’s not at all unreasonable to think that we will continue to see consolidation in the kind of proverbial ‘mom and pop’ retail locations, and with even some of the smaller cooperatives as well, we’ll likely continue to see merge going forward.”

The latest 2023 outlook from Rabo AgriFinance points out the true test for fertilizer prices is coming, and whether the price pressure will continue when demand emerges. Rabo says once spring fertilizer needs are underway, the question is whether that will then signal a bottom in the markets for nitrogen, but also where the inventory will then be held within the supply chain.

Rabo’s outlook says, “Senses remain that much inventory remains at the product producer level, as retailers and distributors stay reluctant to jump in a falling market.”

Related Stories:

Producers Eliminate Fungicide and Insecticide Use, Cut Fertilizer 50%

Are You Worried About Glufosinate Supplies in 2023? Good News. There Isn’t a Shortage This Year

John Phipps: Is it Even Feasible to Bring the Production of Chips and NH3 Back to the U.S.?

Ferrie: You Can Reduce Fertilizer and Still Harvest Big Corn Yields, But Some Parameters Apply

John Phipps: If China Sides With Russia, The Move Could Cost U.S. Farmers Beyond Trade

Mon, 06 Mar 2023 23:11:10 GMT

At one year, I think it realistic to label the Ukraine War a quagmire, with no obvious end. Until recently, China , or perhaps more accurately, Xi Jinping, has been unclear on what involvement it intended.

Last week, a German newspaper reported he was considering supplying lethal weaponry, starting with dual-use weapons like drones but possibly following conventional military materiel. While the report is unconfirmed, it was credible enough the U.S. warned China of serious consequences.

Russia badly needs to replace expended and outdated Soviet arms while China needs Russian energy. That is compelling math. This is bad news not just for the heroic people of Ukraine, but Europe and the US.

Lethal weapons are a red line diplomatically and strategically. China’s massive industrial complex can easily outproduce the combined Western Alliance in sheer numbers of conventional weapons. It will become contentious political issue as Republican support for Ukraine is dropping and their admiration of strong-man dictatorships like Victor Orban of Hungary grows.

Related Story: Battle For Ukraine: The Untold Farming, People And Infrastructure Stories From The Front Lines

Meanwhile, anti-China sentiment on the right has been intense for years so that an emerging China-Russia Axis will be a pick-a-side moment. U.S. agriculture has much to lose. Grain sales are less worrisome in my opinion due to the infamous bathtub theory of commodity flows.

The almost certain stronger sanctions on Chinese trade that would follow will pressure our flexibility to reroute supply lines. Planter upgrades and combine repairs are already hobbled by ordinary steel castings and machinery tracks as we discover, often to our surprise, where stuff really comes from.

Our business with China is largely for such mundane, low profit components far more than complex technology. While I believe this would be a major geopolitical blunder for China and Russia, our economic and political systems will be tested. Our ties with partners like Japan and Europe and neighbors like Canada and Mexico will be critical.

For my money, Putin and Ukraine in 2022 have too many similarities with Hitler and Czechoslovakia in 1939. Any decision by China to ally with an invader will change Sino-American relations and commerce radically.

What Ag Equipment Parts Are In the Shortest Supply Right Now?

Tue, 28 Feb 2023 17:44:02 GMT

The National Farm Machinery Show (NFMS) earlier this month revealed one major theme: the supply chain is still posing major problems for ag equipment manufacturers. Leaders within the ag equipment sector say the supply chain issues have been a major hurdle in bringing some new equipment to market, and the issue could persist throughout 2023.

“The supply chain challenges that we experienced in 2021 and 2022 are with us for a little bit longer,” says Curt Blades, senior vice president of agriculture services for the Association of Equipment Manufacturers (AEM) .

From Case IH to Deere and Company, the equipment manufacturers admit issues sourcing parts has been a constant headache.

“Absolutely, it’s been an issue. Supply chains have been highly disruptive in the last 12, 18 to 24 months,” says Jahmy Hindman, Deere and Company chief technology officer (CTO).

Hindman says in the constant conversations Deere is having with their supply chain base, suppliers are telling them the situation looks to improve the second half of the year.

“It’s progressively getting better,” Hindman adds. “Our third quarter and fourth quarter of last year showed us the improvement in our ability to deliver the products that are being ordered to the marketplace. I expect that to continue in the first quarter of this fiscal year for us.”

AEM also sees improvement coming later this year, which means farmers could still face months of supply chain constraints.

“Maybe by the end of the year, we’ll begin to see some return to normalcy, whatever normalcy looks like,” says Blades.

Parts in Shortest Supply

Today, equipment manufacturers across the world are grappling with the same problem. The supply chain issues are not only ongoing, but hard to predict.

“We had this level of challenge, maybe now it’s a little bit less, but we’re not out of the woods,” says Kurt Coffey, head of Case IH for North America . “It could be tracks one day, it could be tires the next day. We have a lot of very unique, high-value, custom castings, a heat-treated custom casting, that you can’t just go get, and it’s a very unique supplier.”

Castings are the latest supply chain headwind to hit. No matter the type of equipment, manufacturers are saying castings are a major hurdle right now.

“It’s a little bit of a whack-a-mole strategy when it comes to the supply chain,” says James Shurts, president of the ag division for Great Plains . “It’s always something new, and it just happens to be that castings are our current issue and the current challenges. But it’s always something different.”

AEM recently conducted a survey of its members, showing:

The most sought-after component are tracks (and their included components):
Only 27% of optimal inventory is available.
In both agriculture and construction sectors, semiconductors and chips are in short supply.
44% optimal inventory is available across both sectors.

“The other things that are interesting are like wiring harnesses, which oftentimes are made in the Ukraine, or seat cushions, which are made in Texas in areas that were destroyed by floods. It’s not one thing, it’s a collection of things,” says Blades.

Case IH says as the parts in short supply continue to vary, the company is finding unconventional ways to address the issues.

“The last year or two has been custom castings, chips, tracks, tires,” says Coffey. “We actually pulled strategic sourcing in and went on third-party markets to go buy chips from third parties, millions of dollars of chips from a third party, bring them in, ship them to our partner suppliers so we can keep our lines going.”

The Biggest Issue? Labor

No matter what item is in scarce supply, the problem is bigger than one part or company.

“The underlying issue with all supply chain challenges are labor,” says Blades.

AEM also surveyed 179 equipment manufacturer executives about the supply chain late last year and found:

98% still face supply chain issues.
58% are experiencing continuously worsening supply-chain conditions.

The AEM survey showed equipment manufacturers of all size are getting creative to address the challenges, which includes increasing their inventory and supplier base, creating a more vertical integration of supply chains, certifying alternative suppliers, as well as focusing more on supply chain reliability than price.

Growing Optimism

Despite the constant supply chain obstacles, leaders at both John Deere and Case IH are optimistic.

“We’re not just hearing that it’s progressively getting better, we’re sensing it; we’re feeling it,” says Hindman. “We’re also seeing it come through in our delivery. So, as long as things continue on that trajectory, I feel pretty good about next year.”

“We’re not out of the woods, but we’re certainly in a better place than where we were, let’s say, a year, year and a half ago,” adds Coffey. “But we’re just going to keep fighting to make sure that we’re ready for whatever the customers need from us.”

Optimism is growing in the supply chain, even with some bumps still ahead, as agricultural equipment manufacturers continue to navigate uncharted waters with the supply chain.

Related Story:

John Phipps: Is it Even Feasible to Bring the Production of Chips and NH3 Back to the U.S.?

What's The Biggest Supply Chain Headache Crippling Equipment Manufacturers Right Now?

Wed, 22 Feb 2023 16:53:02 GMT

Supply chain challenges consistently hit agriculture in 2022. While 2023 has brought improvement with fertilizer availability, a sector still fragile to supply chain issues is the farm equipment sector.

From tires and tracks, to a new problem with castings, leading equipment manufacturers like Case IH, John Deere and Great Plains all say the supply chain is still an issue.

“We’re conditioned to expect the black swans to the point where they’re no longer black swans, they’re just kind of inevitable disruptions,” says Sam Taylor, farm inputs analyst for Rabo AgriFinance, RaboResearch .

“The supply chain challenges that we experienced in 2021 and 2022 are with us for a little bit longer,” says Curt Blades, senior vice president of agriculture services for the Association of Equipment Manufacturers (AEM) .

Supply Chain Issues Projected Through 2023

During National Farm Machinery Show (NFMS) last week, booth after booth displayed the latest in technology and equipment, but leaders within the ag equipment sector say the supply chain issues are a hurdle in bringing new products to market.

“Absolutely, it’s been an issue. Supply chains have been highly disruptive in the last 12, 18 to 24 months,” says Jahmy Hindman, Deere and Company chief technology officer (CTO).

Hindman says in the constant conversations Deere is having with their supply chain base, suppliers are telling them the situation looks to improve the second half of the year.

“It’s progressively getting better,” Hindman adds. “Our third quarter and fourth quarter of last year showed us the improvement in our ability to deliver the products that are being ordered to the marketplace. I expect that to continue in the first quarter of this fiscal year for us.”

AEM also sees improvement coming later this year, which means farmers could still face months of supply chain constraints.

“Maybe by the end of the year, we’ll begin to see some return to normalcy, whatever normalcy looks like,” says Blades.

Parts In Shortest Supply

The most sought-after component are tracks (and their included components):
Only 27% of optimal inventory is available.
In both agriculture and construction sectors, semiconductors and chips are in short supply.
44% optimal inventory is available across both sectors.

The Biggest Issue? Labor

98% still face supply chain issues.
58% are experiencing continuously worsening supply-chain conditions.

Growing Optimism

John Phipps: Is it Even Feasible to Bring the Production of Chips and NH3 Back to the U.S.?

Tue, 21 Feb 2023 19:35:29 GMT

Dennis Zehner in Lawrenceville, Illinois has a question about the new push for semiconductor factories:

“Recently we have seen much discussion on the urgency to produce semiconductor chips in this country so that much of our equipment requiring those chips will be more readily available. I have read that one of the most important scientific discoveries of the twentieth century is the process of making anhydrous ammonia. Wouldn’t it make sense for some effort to encourage more domestic production of NH3? It would appear that this is a product that is just as important as microchips to keep our food supply secure.”

Thanks for the question, and the answer looks like good news: we’re doing both. The 2022 CHIPS Act does exactly what the name says – provides $270B for semiconductor manufacturing facilities, like much publicized huge Ohio Intel plant .

The 2022 Inflation Reduction Act , which is really a renewable energy act, provides about $370B for all kinds of projects that help energy and manufacturing processes reduce carbon emissions. This includes funding for cleaner ammonia plants.

Ammonia is a remarkably simple product with a molecule made of one nitrogen atom and three hydrogen atoms. The nitrogen is plentiful and free – about 80% of air is nitrogen and easily isolated. The hydrogen has been easy to come by as well, just knock a couple of atoms off methane, CH4, which we call natural gas.

The issue has been what happens to the remaining gases, CO and CO2?

New processes have been developed to manufacture ammonia with much lower or no carbon emissions. Blue ammonia uses the traditional process but captures the CO2 byproduct and sequesters it underground. Green ammonia uses a carbon-free hydrogen source like electrolysis of water - passing an electrical current through H2O, yielding hydrogen and oxygen.

Since passage of the IRA several blue and a few green ammonia plants have been announced. Agriculture uses about 80% of all ammonia, so fertilizer producers are spearheading this.

I hope this is where we are heading, but the US is now noted for its inability to not get things built on time, on budget, or at all, largely due to regulations and local opposition.

How Do Grain Cancellations Work?

Mon, 20 Feb 2023 13:42:02 GMT

Missed a recent article by Jon Scheve? Get it sent to you directly every week. Send a request by email: jon@superiorfeed.com

Market Commentary for 2/17/23

Export sales have been very good for beans up to this point in the marketing year, but there are still a high percentage of beans left that have not shipped out of the country yet. As March approaches this might become a concern because Brazil’s beans are valued 80 cents less for shipment a month from now. This may lead to cancellations soon, which could mean a bigger carryout and price pull back.

What Are Cancellations?

The term “cancellation” in grain trading does not mean foreign buyers can just walk away from contracts without penalties. It instead means there are offsetting trades between two parties that effectively cancels the original contract. This often involves a money exchange between two parties as the original sales need to be shifted to other buyers.

How Do Cancellations Work?

To answer this, it helps to first understand how grain trading works after farmers sell and deliver their grain.

What Happens to Grain After Its Delivered to Elevators?

Some farmers may be surprised how many times one bushel of grain changes hands before it’s consumed or processed in another country. As a farmer and grain trader, I’ve watched grain sold and delivered from our farm to an elevator be sold again several months later, and then shipped by rail 500 miles away to a second company (e.g., a domestic processing plant or used for animal feed). Sometimes the second company may even sell those bushels to a third company before the train gets loaded. This third buyer may then take the grain or move it to another destination, possibly for export.

If the third buyer is an export facility, they may either arrange vessel freight and export paperwork themselves or sell it to a fourth company that handles export transport logistics across the ocean.

Once grain arrives in another country, it can be sold again to another company who off-loads it and puts it in storage. This foreign buyer might sell it directly to an end user or it could be sold several more times before reaching the final-end user.

While there are countless possible trade scenarios, most exported grain is transported by at least 3 modes of transportation (i.e., truck, train or barge and bulk ship or container vessels) and can be traded between 6 to 8 different companies before it reaches the final end user in another country.

This Seems Inefficient

It can seem that way but it’s important to remember that the original seller of the grain, the farmer, may not want to sell the grain when an end user wants to buy it or vice versa. This means there needs to be risk takers and risk managers trading grain between one another to make sure there is liquidity in the market every day, for the farmer to sell when they are ready, and for the buyer to be able to get product when they need it. This is why there are so many market participants involved with moving grain.

Some larger companies have tried to integrate several of these steps to increase efficiencies and improve profit margins, but it can still lead to inter-office trading or other outside integrated companies still trading with each other. The steps don’t change, but the number of players involved might.

The system still works because trading grain between multiple companies helps reduce risk, since no company wants all their trades with one country or one customer with everything that can potentially go wrong. Credit issues or quality demands with customers can always develop. Freight spreads constantly change, trains and trucks do not always run on-time, and vessels can get backed up at ports. Plus, demand changes over time too. This type of trading done once the grain has been sold off the farm is known as “arbitrage” and it is the key to profitability and efficiency in the grain trading world.

The Market Is Always Looking for a Profit.

If a trade could be done more profitably with fewer “middlemen” then it would. Every trader knows someone else is trying to cut them out of a trade to earn a little more, just like they are trying to cut someone else out. Farmers do this too by selling direct whenever they can. All this competition is what keeps the market as efficient as possible.

All grain going through this complex trading system helps prevent someone from easily walking away from trades without causing financial strain. Similar to how difficult it is for farmers to walk away from trades without a penalty, each company in the trading chain usually cannot cancel without a cost. However, cancellations can occur when there is economic gain for all parties involved throughout the trading chain.

Futures Prices Are Not a Factor in Cancellations

It may surprise some farmers, but once farmers sell their grain, futures are not really a factor for those in the trading chain. Instead, companies determine a trade’s profitability based on the basis and spreads off the futures market. Basically, as companies trade grain they exchange futures positions with one another all the way through the system to minimize price risk beyond basis, spreads, and transportation costs.

Traders Are Monitoring Global Freight Spreads and Basis Constantly to Maximize Profitability

Right now, South American beans delivered to different ports throughout Asia are more than 80 cents cheaper than US beans. While this lower price might mean that less beans will be bought from the US going forward, it does not automatically mean there will be cancellations.

Purchases and Sales Are Never Final – Back and Forth Trading Can Continue Until the Grain is Shipped

A trader who has already purchased beans from a US port to be delivered to Asia may see they can now buy South American beans much cheaper. So, that trader may ask the US bean seller they have the contract with for how much they would be willing to “buy back” or cancel their bean sale. If this happens, and the price is right, it can create a domino effect throughout the entire chain of traders. Each trader in the chain then goes back to who they bought the grain from to see who is willing to buy the grain back or cancel a contract and at what price.

As the trade works backward through the trading chain, each trader will look for the best-selling opportunities available. After all, it does not matter where the grain is coming from (i.e., elevator, export facility, etc.), every trader is always looking to make a profit on another trade. Maybe another exporter has a strong bid or maybe a train scheduled from Nebraska to Washington could instead be rerouted and sold to Mexico or another end user in a different state.

First Rule of Business – Buy Low and Sell High

Despite all the middlemen involved in these trades, the market stays efficient because everyone is looking to “buy low and sell high,” even though it is a cancellation process trade. This may mean traders will sell the grain all the way back to the company that originated the grain in the first place. For example, that elevator who originally sold the grain on a train may now see that a local processing plant is willing to buy for a higher price than what the export chain now wants to sell the grain back to them for. The origin elevator could then buy back the train and move it to the local processor for a profit.

The Catch – The Cancellation Process Has a Price

No company in the chain will likely do this work for free though. Each company will probably want to make a profit on every trade transaction. And the more work it is, the more profit that is likely required. For example, changing the destination of one train to a different location is a lot quicker and easier than having to cancel that train and find 400 trucks to move the grain of that one train to a processing plant.

While traders will likely demand a profit to make a change, they cannot charge whatever they want. Instead, market competition for everyone involved determines the price and profitability at each step in the cancellation process. After all, it takes a lot of trucks to fill a train and a lot of trains to fill a vessel. Therefore, not all of a vessel’s grain will necessarily originate from the same Midwest elevator. It’s usually spread across many elevators in multiple states, which creates a lot of competition.

In theory, farmers could be a part of the cancellation process too. A farmer could potentially make a little profit, if they were willing to tell their grain buyer that for the right price, they would haul their already contracted grain to another location for a premium when the contracted shipment time comes.

Cancellations Can Be Very Complex and Expensive

There can be up to 10 transactions involved with cancelling an export order if all transportation companies are considered in the trade. This gets us back to the 80-cent cost difference between South American and US beans right now. For some trading chains it may cost more than 80 cents per bushel to cancel a contract. However, for others it might be a lot less. This uncertainty can contribute to market price swings because no two trades will cancel out the same way.

Cancellations Can Quickly Have a Rippling Effect on The Market

If a large cancellation does happen, first there will be local basis pressure as traders try to find a home for sizable amounts of grain. Then the spreads between futures contracts will widen because the market suddenly does not need grain as badly or quickly. Both scenarios can then put pressure on the futures market.

While public reporting of cancellations is always a little bit after the fact, some market participants usually have already seen them through sudden domestic basis drops or transportation adjustments. That is why there are often cancellation rumors when the futures market falls substantially, but then the market will quickly rebound if there are not any export confirmation or cancellations within a few days.

Cancellations in Reverse

While the example above showed how a foreign buyer could cancel US grain purchases, the opposite can happen too. If ethanol plants or the feed sector cannot procure enough corn, they can raise their basis bids high enough so elevators with grain sold for export can ask their buyers if they want to cancel their trades. If this happens, the request will then be sent through the export chain for consideration. This sometimes happens after a basis rally causes spreads between futures contracts to narrow or even invert which often leads to a futures rally. This could lead to the potential to buy grain from other countries if prices are lower than what it costs to buy domestically.

Grain Trading Is Complex

The grain trading process after it leaves the farm is complex with many moving parts and players. While cancellations can occur, they are more likely to happen when there are large imbalances in world prices. The laws of supply and demand always makes sure grain is moved to the area with the highest need and those most willing to pay for it. It may seem inefficient; however, having so many different market participants create a lot of competition, which in the end mitigates risk for everyone.

Want to read more by Jon Scheve? Check out recent articles:

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USDA Cattle Numbers Suggest Upside Potential In Corn For Feed Demand

NATO Tank Shipments Could Suggest Upside Potential In Corn

Stocks, Silage, And Sorghum Could Be Signaling Corn Has Upside Potential

Reasons For Soybeans To Rally Or Drop Moving Into 2023

Reasons For Corn To Rally Or Drop Moving Into 2023

Jon Scheve

Superior Feed Ingredients, LLC

jon@superiorfeed.com

Are You Worried About Glufosinate Supplies in 2023? Good News. There Isn't a Shortage This Year

Fri, 03 Feb 2023 02:20:28 GMT

As farmers prepare to plant this spring, 2023 isn’t shaping up to be as much of a guessing game as last season in terms of some inputs and especially supplies of certain herbicides . Despite warnings from weed scientists last fall, BASF says the company isn’t seeing a shortage of glufosinate this year.

2022 posed continuous supply chain challenges in just about every sector of agriculture, and glufosinate and glyphosate were hot topics. When farmers reported problems finding certain herbicides in 2022, they resorted to plan B or C for weed control.

However, 2023 is starting off on a much better foot, according to Kate Greif, senior marketing strategy lead for BASF.

“We’re happy to tell you, we feel very confident in our ability to see an increase in supply of Liberty for the 2023 growing season,” Greif told Farm Journal.

Related Story: $100 an Acre Herbicide Costs Won’t be Unusual Next Season

Greif points out growers still need to talk to their local retailers, but on a national level, the situation has significantly improved in a year.

“It’s also all about shipping and logistics,” Greif adds. “Industry wide, the majority of Liberty and many of our products get sprayed in a very short window in a calendar season. So, what we’re really focused on doing as an organization is expanding our shipping windows. We do have product moving throughout the entire year, rather than trying to get it just in time to the farmers at the time when they need it.”

It wasn’t just active ingredients that posed sourcing problems last year. Greif says the supply chain issues even hit things you wouldn’t expect, like the packaging of those products.

“We saw things as simple as problems getting caps for jobs in the last few years. And so really what we’ve learned from that is plan earlier, plan more often,” says Greif. “And then ultimately, we’ve built a lot of contingency plans within our production systems to ensure that we’re going to be able to get these products to farmers and to get them to them on a timely basis.”

Related Story: Manufacturers Explain Supply Challenges In Crop Protection

While the supply chain on the chemical side is shaping up to be better than last year, it’s also good news for growers trying to lock in all tools they need to combat tough-to-control weeds.

“We absolutely are seeing where there’s going to be more availability to phosphonate this year and at this point, based on our forecast, enough to be able to meet the market demand,” she adds.

Related Story: Expert Warns Key Herbicides Will be in Short Supply Again in 2023

Signs Growing that the Global Supply Chain Crisis is Over

Fri, 23 Dec 2022 18:32:27 GMT

From the docks of Southern California and Europe to the parcel hubs in the Midwest and the store shelves in New York, signs are growing that the global supply-chain crisis is over, according to the Wall Street Journal (WSJ).

The COVID-19 pandemic that spawned product shortages, shipping bottlenecks and soaring transport costs may not be gone, but the WSJ reports goods are moving around the world again, reaching companies and consumers.

Despite widespread government and industry attempts to unwind the bottlenecks, the real break may have come in the demand slowdown that has eased the pressure on strained operations.

“As some of commodity prices and transportation costs begin to come down, we’re revisiting these costs with our suppliers,” says Bill Bolts of Lowe’s, on easing supply chain pressures.

On the Water

According to Drewry Shipping Consultants’ index for spot prices, to ship a 40-ft. container from Shanghai to Los Angeles the week of Dec. 22 was $1,992, down from $2,000 the week before and 82.2% below the 2022 high set in Jan.

U.S. container imports reached their lowest level in November since early 2020, and shipping heavyweight Maersk Line projects demand will decline next year from 2% to 4%. Freight rates that busted shipper budgets last year are sliding and broader costs for suppliers heading into 2023 are also retreating.

China to Hold Economic, COVID-19 Policy Meetings this Week, Following an Ease on Restrictions

Wed, 14 Dec 2022 18:58:19 GMT

China is moving forward with economic/COVID-19 policy meetings this week after previously saying they would be postponed pointing to a potential reopening occurring sooner than later.

The latest shift includes the country will stop counting asymptomatic cases of COVID-19 as high numbers of such patients were no longer taking part in testing. This comes in the wake of China’s decision to cut back on testing requirements and close testing facilities.

However, the country is now pushing more vaccinations as it appears to pivot away from its zero-Covid policies — those with a higher risk of infection due to severe existing conditions, weakened immune system or over the age of 60 will be targeted for a second booster shot six months after the first booster.

The Financial Times reported that more than half of Chinese over 60 received a booster before March this year, “heightening uncertainty over the efficacy of Chinese vaccines compared with messenger RNA jabs used in the West.”

Bottom Line

“There is a problem with people thinking the pullback of Covid-zero measures is equivalent to the economy reopening, which it is not.” says Leland Miller, CEO of research firm China Beige Book, explaining why China’s economy will likely remain weak for a while.

Many people are staying home and canceling travel because they’re worried about outbreaks after Beijing eased its restrictive pandemic policies.

More on China :

John Phipps: Is China in Trouble?
Chinese Delegates Meet with Top U.S. Officials in New York

Shippers Note ‘Notoriously Difficult’ Railroads During Latest Hearing

Wed, 14 Dec 2022 15:00:00 GMT

Shippers urged the U.S. railroad regulator to create more competition in the industry during hearings in which Union Pacific was called to explain a spike in service restrictions.

Shippers used the public forum to air grievances about an industry structure that they say gives railroads the power to boost prices and pad their profit even as service suffers.

Companies, including Cargill Inc. and Ag Processing Inc., pointed to reduced workforces as one of the main culprits for railcar curtailments.

Lance Fritz, the chief executive officer of Union Pacific, said service has suffered because the railroad didn’t have enough train crews at the beginning of the year and has hired 1,400 train and yard workers to address the problem. As service deteriorated, customers added railcars to the network to move goods. That exacerbated the congestion and forced the railroad to use embargoes to clear out railcars from switching yards and tracks, Fritz said.

“Excess freight-car inventory disrupts the alignment of our network resources,” he said. “It requires us to use more crews and more locomotives to handle the same amount of business, and it produces congestion on our lines of road and in our terminals.”

More on rail:

Rail Strike Derailed as Biden Signs Labor Bill
Rail Strike Averted Until Dec. 4, Saving U.S. $2 Billion Per Day

Rail Strike Derailed as Biden Signs Labor Bill

Mon, 05 Dec 2022 14:09:51 GMT

The Senate swiftly moved to pass a tentative rail agreement on Thursday with a landslide 80-15. This move followed the House’s favorable vote of 290 to 137 on Wednesday. President Biden signed the bill Friday morning, further derailing the looming labor strike.

Congress also voted on a paid sick leave bill, which the House moved to pass but the Senate chose to deny. The odds were close, however, with a vote of 52-43 .

Zippy Duvall, Farm Bureau president, says producers’ reliance on rail is what pushed AFBF to support and celebrate averting the rail strike.

“High diesel prices, a truck driver shortage, and low water levels on the Mississippi River have already made shipping conditions difficult,” Duvall said in an AFBF press release . “A rail strike would have had a devastating effect on the American economy, especially as families grapple with higher prices caused by inflation.”

“There was an industry-wide sigh of relief today after both Congressional chambers voted in favor of implementing the September TAs,” said The Fertilizer Institute’s Corey Rosenbusch. “Rail is critical to the movement of fertilizer year-round. Averting embargoes and production delays were crucial to not only ensuring we’re able to provide the fertilizers our nation’s farmers need, but also avoiding additional disruptions to a global market already constrained by geopolitical events and volatile energy prices.”

While some groups are applauding the outcomes, others are outraged.

The Brotherhood of Railroad Signalmen (BRS) spoke out on the votes in a press release :

“What took place in the United States Senate today is a symptom, and further illustration, of a larger issue in our country. Almost every elected member of Congress campaigns on being “for the working class”; the actions of many today demonstrated they are for the corporate class,” BRS said. “The dereliction of duty and inability to hold corporations accountable for a lack of good faith to their employees will not be forgotten.”

BRS says their work on the matter will continue, and they will “not be silenced.”

Tom Vilsack, USDA secretary, echoed each response, saying the rail system and workers both deserve protections.

“Our work doesn’t stop here. This Administration will continue to make progress on fostering economic growth and strengthening supply chains, and supporting workers who deserve protections in the workplace.”

According to Biden’s economic advisors, as many as 765,000 Americans — many union workers themselves — would have been put out of work in the first two weeks of shutdowns.

More on rail:

Congress “Likely” to Pass a Rail Deal this Week, According to Soy Transportation Coalition’s Steenhoek
Rail Strike Averted Until Dec. 4, Saving U.S. $2 Billion Per Day

Congress “Likely” to Pass a Rail Deal this Week, According to Soy Transportation Coalition’s Steenhoek

Wed, 30 Nov 2022 12:30:53 GMT

President Joe Biden late Monday called on Congress to pass legislation immediately to adopt the tentative agreement between railroad workers and operators that was approved by labor and management negotiators in September “without any modifications or delay — to avert a potentially crippling national rail shutdown.”

Biden noted the deal “provides a historic 24% pay raise for rail workers. It provides improved health care benefits. And it provides the ability of operating craft workers to take unscheduled leave for medical needs,” adding that “since that time, the majority of the unions in the industry have voted to approve the deal.

Biden said a rail shutdown “would devastate our economy. Without freight rail, many U.S. industries would shut down.”

According to Biden’s economic advisors, as many as 765,000 Americans — many union workers themselves — could be put out of work in the first two weeks alone.

Meanwhile, the advisors say communities could lose access to chemicals necessary to ensure clean drinking water. Farms and ranches across the country could be unable to feed their livestock.

“As a proud pro-labor president,” Biden said he is “reluctant to override the ratification procedures and the views of those who voted against the agreement. But in this case — where the economic impact of a shutdown would hurt millions of other working people and families — I believe Congress must use its powers to adopt this deal.”

Next Steps in Congress

House Speaker Nancy Pelosi (D-Calif.) said in a statement that the House this week would “take up a bill adopting the tentative agreement — with no poison pills or changes to the negotiated terms — and send it to the Senate.”

Mike Steenhoek, executive director at the Soy Transportation Coalition, feels this action will lead to a solution.

“I think the [odds Pelosi will reach an agreement] is really high because the republicans will support it,” Steenhoek says. “There may be some on the democratic side that say they need to hold out on concessions for workers. But with the President urging it, along with the board recommendations, I think there will be quick passage.”

If an agreement isn’t made by the cooling-off deadline of Dec. 5 (Brotherhood of Railroad Signalmen), Steenhoek says there will likely be a reduction in rail service as early as the end of this week.

More on the rail strike:

Rail Strike Update: Labor Deal Deadline Shortened to Dec. 5
A Possible Rail Strike is Quickly Approaching Unless Congress Steps In