Farmers caught in supply chain pinch, too

DES MOINES — Iowa’s agriculture economy is not immune to the import and export backups at U.S. ports, experts say, potentially driving down the crop and livestock prices farmers get while driving up the cost they have to pay for equipment and fertilizer.

“Ag is just like the rest of the general economy,” said Chad Hart, a professor of economics and agriculture at Iowa State University.

“We’ve been seeing the stories about supply chain problems, about how we’re having problems getting consumer goods here, or the gifts that we want to buy for the holidays coming. Well, ag is facing those same supply chain issues,” Hart said. “Because every sector of the economy is basically facing those supply chain issues. The same basic problems are occurring, whether I’m talking ag or manufacturing or consumer electronics — you name it. We’re all facing that same crunch.”

Dozens of cargo ships are waiting outside docks in California, carrying at least $24 billion in goods, according to national news reports. The results: delayed delivery of goods and higher prices.

The shipping backlog impacted agriculture, too.

Hart said the backlog creates separate issues for imports and exports.

On the import side, he said, the jam is contributing to the rising price of fertilizer and agriculture chemicals.

On the export side, Hart said, the issue is most pronounced with livestock and dairy products being unable to reach overseas markets because of the containers needed to ship those goods.

“Our basics are corn or beans, wheat. Those things store pretty well. We can ship them in bulk, and bulk shipments have been moving relatively well,” Hart said.

“It’s finding containers and getting those containers moved where we need them to go” that is causing the problem, he said. “And that’s where, when you’re shipping meats or you’re shipping dairy products, those go in containers. And let’s face it, they have a shorter shelf life. So they have to move and move quickly.”

Hart said if the shipping issues continue, that could create a backup of products, which could drive down the prices farmers receive for selling their goods.

“When I look at our export sales on like beef and pork, they’re very strong. But could they be even stronger if we could actually get the product moving as quickly as we’d like to here?” Hart said. “It is, I think, right now putting a cap on where prices can go. And the worse the shipping problems get, the more it puts downward pressure on prices.”

Hart and another ISU expert, economist Bobby Martens, an expert in supply chain management, said the shipping backlog could contribute to higher prices for farm equipment because of an increased cost of shipping the parts for things like tractors and combines.

“That one is tougher because that one has longer lead times. You’re competing against others for the (computer) chips that go into it, and many of those parts and components — maybe not the end tractor itself — but many of the parts and components could be sitting on those ships off of (Los Angeles) and Long Beach, those backups that we’re seeing,” Martens said recently on the Iowa Farm Bureau’s The Spokesman Speaks podcast. “And there could be input challenges to being able to even produce some of those products.”

All of these issues threaten to weaken farmers’ bottom lines, said experts including Danny Munch, an associate economist for the American Farm Bureau Federation.

“If you have any sort of supply chain disruption, you’re going to see increased prices for inputs. So farmers have already started to see massive increases in prices for their inputs,” Munch said recently on the American Farm Bureau’s Newsline podcast. “All of these ports are vital to farmers who use foreign outlets as a place to market their goods. So any change in the ability to access containers impacts farmers’ bottom lines.”