CHICAGO, October 12 (Businesshala) – Dale Haden isn’t getting any spare tires for its combine harvester. So an Illinois farmer told his harvest crew to avoid driving on roadsides this autumn to avoid scraps of metal that can crack tires.
New Ag Supply in Kansas is requesting customers to order parts now for spring planting. And in Iowa, farmer Cordt Holb is locking his machinery inside his barn every night after thieves find hard-to-find tractor parts from a local Deere & Company (D.E.N.) dealership.
“You try to baby your equipment, but we’re at the mercy of fate right now,” said Holub, a fourth-generation corn and soybean farmer in Buckingham, Iowa.
Manufacturing meltdowns are hitting the US heartland, as semiconductor shortages that have plagued equipment makers for months are expanding to other components. The supply chain crisis now threatens the US food supply and farmers’ ability to harvest crops from their fields.
Farmers say that when their machinery breaks down, they are scrambling to find a workaround to track down local welders and mechanics. Greg Peterson, founder of the Machinery Pete website that hosts farm equipment auctions, said producers wanting to buy tractors and combines online are asking for close-up photos of machine tires, because replacement is expensive and difficult.
“As soon as the harvest ends, we will see farmers auction equipment – not for machinery – but for parts,” Peterson said. “We’re already talking to people about buying another planter or sprayer, just for the parts.”
For some farmers, the shortage is forcing them to reuse – or repair – old parts.
At their small welding shop in western Washington, Rami and Bob Warburton can barely carry out all of the farmers’ orders that need repairs from fittings for irrigation systems to broken bulldozer buckets.
“We were in the middle of a drought here,” said Rami Warburton. “At that time, they could not wait for a month to water their fields. By then the crops would have been dead.”
Kinks in supply chains due to COVID-19 shutdowns in manufacturing centers in the United States and Asia, a container shortage at major ports and labor shortages prevent equipment manufacturers from fully capitalizing on a lucrative moment when grain prices are rising. Goes. Most in almost a decade.
The Purdue University/CME Group AG economy barometer, the monthly measure of farmer economic sentiment, fell 10% in early October to its lowest level since July 2020. Supply concerns are taking a toll on growers, with 55% of farmers surveyed saying low inventory has affected their plans to buy machinery.
Access to steel, plastics, rubber and other raw materials has become scarce during the pandemic, and manufacturers are preparing for an even greater setback in recent weeks after power cuts forced several Chinese smelters to cut production.
Greg Tornman, who oversees AGCO’s global supply chain management, said that when executives from agricultural machinery maker AGCO Corp (AGCO.N) visited Midwest suppliers this summer, they found some companies were only at 60% staffing levels. was working.
Tornman said staffing levels are falling at some suppliers in the Dakota, Nebraska and Texas, as workers object to President Joe Biden’s vaccine mandate, drop out of the workforce for fear of getting COVID-19 or moving to other jobs go.
“It’s a perfect storm of Tylenol moments,” Tornman said. “It’s one headache after another.”
The supply crunch has put particular pressure on equipment dealerships, which typically see a boom in their service business during the traditional September to November harvest season.
This year, some have resorted to sifting through the decade-old list for a solution. One pain point for dealerships is the industry-wide lack of GPS receivers, which are used to drive tractor guidance and data systems.
At AG-Pro, the largest privately owned Deere & Company dealership in North America, employees in Ohio are ditching pre-2004 GPS units. Until now, they were essentially useless.
But growers can still use them to record a digital crop map of their fields – many require it when talking to their bankers, landlords and crop insurance agents.
Equipment makers are faced with a painful choice this harvest season: send parts to factories to make new tractors and combine to sell to farmers or replace those parts to repair broken equipment for existing customers. Redirect to farm?
For AGCO and rival manufacturer CNH Industrial NV (CNHI.MI), the answer is the latter.
“You can’t afford not to support those customers in the area,” said AGCO’s Tornman. “When you’re harvesting, timing is everything.”
CNH estimates the company lost $1 billion from supply chain disruptions from freight traffic to high raw material prices.
That gap has forced the company to convert some factory parking lots into storage lots. At CNH’s combine plant in Grand Island, Nebraska, hundreds of unfinished combines sit outside, waiting for parts.
In the meantime, CNH is redirecting components that can be used on its Case IH and New Holland equipment to customers in the area, a company representative said.
According to Businesshala interviews with six dealers, CNH is signaling to dealers that supply chain problems and parts shortages for Case IH farm equipment continue. The manufacturer said in a statement that it is meeting customer needs “the best we can do to meet these unprecedented challenges.”
Deere said it is reorganizing shipping containers to make more room for cargo, leasing additional cranes to speed up the unloading of ships at ports, and expanding its trucking fleet.
But ingredient shortages are “particularly challenging for farmers who are already facing short time to harvest,” said Luke Guxstadter, Deere’s senior vice president of aftermarket and customer support.
In some cases, the company has given unfinished machinery to the customers. Missouri farmer Andy Kapp’s brand new combination rolled off the assembly line missing some high-tech cameras that helped deliver the very efficiency he paid hundreds of thousands of dollars for.
But he’s using it anyway, and has also stocked up on some spare parts in case the combine breaks down.
“As you move toward the end of the harvest, the machinery and people get more tired,” Kapp said. “It’s a new machine. We wouldn’t be surprised if there are some loose bolts.”