“Desperate for the tires. Component shortage disrupts US harvest
CHICAGO, October 12 (Reuters) – Dale Hadden cannot find any spare tires for his combine. So the Illinois farmer told his harvest team to avoid driving on the roadsides this fall to avoid metal waste that could shred the tires.
New Ag Supply in Kansas is begging customers to order parts now for spring planting. And in Iowa, farmer Cordt Holub locks up his machines in his barn every night, after thieves stole hard-to-find tractor parts from a local Deere & Co (DE.N) dealer.
“You’re trying to keep your gear, but we’re all at the mercy of luck right now,” said Holub, a fourth-generation corn and soybean farmer in Buckingham, Iowa.
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Manufacturing meltdowns are hitting the heart of the United States, as semiconductor shortages that plague equipment makers for months spread to other components. Supply chain problems now pose a threat to the United States’ food supply and the ability of farmers to get their crops off the fields.
Farmers say they scramble to find workarounds when their machines break down, hunting down local welders and mechanics. Producers looking to buy tractors and combines online are asking for close-up photos of the machine’s tires because replacements are expensive and hard to find, said Greg Peterson, founder of the Machinery Pete website which runs sales. auction of agricultural equipment.
“At the end of the harvest, we’ll see farmers auctioning off equipment not for the machines – but for the parts,” Peterson said. “We already hear from guys talking about buying a second planter or sprayer, just for the parts.”
For some farmers, shortages force them to reuse – or repair – old parts.
In their small welding shop in western Washington, Rami and Bob Warburton struggle to keep up with every order from farmers in need of something fixed, from fittings on irrigation systems to a cracked bulldozer bucket.
“We were in the middle of a drought here,” said Rami Warburton. “At that time, they were eager to water their fields for a month. The crops will be dead by then.
Supply chain flaws due to COVID-19 closures at manufacturing centers in the United States and Asia, a shortage of containers at major ports and a shortage of workers are preventing equipment manufacturers from taking full advantage of a lucrative time, when grain prices soared to their highest point in nearly a decade.
The Purdue University / CME Group Farm Economy Barometer, a monthly measure of farmers’ economic sentiment, has fallen 10% to its lowest level since July 2020 in early October. Supply issues weigh heavily on producers, with 55% of farmers surveyed saying low stocks have affected their plans to purchase machinery.
Access to steel, plastic, rubber and other raw materials has been scarce during the pandemic, and manufacturers are bracing for even more shocks after power outages forced several Chinese smelters to reduce their production in recent weeks.
When executives from farm machinery maker AGCO Corp (AGCO.N) visited suppliers in the Midwest this summer, they found some companies were only operating with a 60% workforce, said Greg Toornman, who oversees the AGCO’s global supply chain management.
Toornman Said Workforce Declines At Some Suppliers In Dakotas, Nebraska And Texas As Workers Oppose President Joe Biden’s Vaccine Mandate, Ditch Workforce For Fear Of Getting COVID-19 or move to other jobs.
“It’s the perfect storm of Tylenol moments,” Toornman said. “It’s one headache after another.”
The squeeze in supply has put particular pressure on equipment dealers, who generally see their service activity explode during the traditional harvest season from September to November.
This year, some have used a ten-year-old inventory to find solutions. One of the problems faced by dealers is the industry-wide shortage of GPS receivers, which are used to operate tractor guidance and data systems.
At Ag-Pro, the largest private Deere & Co dealership in North America, staff in Ohio have dug out GPS units that date back to 2004. Until now, they were virtually worthless.
But growers can still use them to record a digital map of their farms’ crops, which many need when talking to their bankers, landowners and crop insurance agents.
SORTING OF COMPONENTS
Equipment makers face a painful choice this harvest season: send parts to factories to build new tractors and combines to sell to farmers or redirect those parts to the field to fix broken equipment for customers. existing?
For AGCO and competing manufacturer CNH Industrial NV (CNHI.MI), the answer is the latest.
“You can’t afford not to support these customers in the field,” said Toornman of AGCO. “When you harvest, timing is everything.”
CNH estimates that supply chain constraints ranging from rising freight to rising commodity prices have cost the company $ 1 billion.
This shift has forced the company to transform some factory car parks into car parks. At the CNH combine plant in Grand Island, Nebraska, hundreds of unfinished combines wait outside, waiting for parts.
Meanwhile, CNH is redirecting components that can be used on its Case IH and New Holland equipment to customers in the field, a company representative said.
CNH has told dealers that supply chain issues and parts shortages for Case IH farm equipment continue, according to Reuters interviews with six dealers. The manufacturer said in a statement that it was meeting customer needs “to the best of its ability given these unprecedented challenges.”
Deere said it was revamping shipping containers to make more room for cargo, renting additional cranes to speed up the unloading of ships in ports, and expanding its fleet of trucks.
But component shortages are “especially difficult for farmers facing an already short window of time to harvest,” said Luke Gakstatter, senior vice president of service and customer support at Deere.
In some cases, the company delivered unfinished machines to customers. Missouri farmer Andy Kapp’s all-new combine has rolled off the assembly line, missing some of the high-tech cameras that help deliver the very efficiency he paid hundreds of thousands of dollars for.
But he uses it anyway, and even stocked up on extra parts, in case the combine breaks down.
“As you get closer to the end of the harvest, the machines and people get more and more tired,” Kapp said. “It’s a new machine. It won’t surprise us if there are a few loose bolts.”
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Reporting by PJ Huffstutter and Mark Weinraub in Chicago; additional reporting by Dane Rhys in Monroeville, Ohio; Editing by Caroline Stauffer and Marguerita Choy
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