Ag Supply Chain Pulled In All Directions

Experts from the ag industry’s meat, dairy, crop and farm equipment sectors weighed in on chronic supply chain issues that continue to plague them more than two years after the COVID-19 outbreak.  Problematic challenges include transportation costs, labor availability and rising energy and input costs.

Panelists speaking at the Council’s June 16 monthly luncheon meeting included Jarrod Gillig, president, business operations & supply chain, Cargill Protein North America; Michael Lichte, vice president of Milk Optimization and Customer Relations, Dairy Farmers of America; Dave Spears, executive vice president and CMO, Mid-Kansas Coop, and board member, Kansas Ag Retailers Association; Chris DeMoss, director, Plant Foods, MFA, Inc.; Ben Smith, operations manager, Production and Precision Agriculture Marketing Operations, John Deere. Tom Brand, executive director, National Association of Farm Broadcasting, moderated the discussion.

As demand remains strong, persistent manufacturing supply base challenges that started in early 2021, have not materially improved as of mid-2022, said John Deere’s Ben Smith.  He also noted that unforeseen labor or workforce challenges have been caused by several factors that all lead to the same result of reduced production output.  “We are doing everything we can to meet demand responsibly and sustainably,” Smith said, “but it has been at higher financial costs.”

Jarrod Gillig remarked that at Cargill, resiliency in standing up to labor shortages means putting its people first, which further means ensuring the company is responsive to employee needs that go beyond salary and the usual benefits. Retaining its workforce and attracting new workers requires his company, Gilling said, to understand how important things like day care, affordable housing and transportation are to job seekers. 

Michael Lichte described DFA’s 6,000 farms and their farmers as a tightly knit community that is reeling from the high costs of feed. He also noted there is a “high cost” of not having drivers. From a dairy perspective, he said, “The supply chain is not just about getting product [inputs to feed and maintain animal health] into the farm, but also about getting product [milk] out.” Lichte noted it isn’t easy to find drivers who want to get up before dawn on cold winter mornings to haul milk for processing and marketing.

Dave Spears, Mid-Kansas Coop, doubled-down on the “severe shortage of both trucks and drivers” by noting that rail systems are also a challenge that is further complicated by congestion and labor issues at many of the nation’s ports. “Ag is not a simple industry,” said Spears, and suggested some government policies further complicate the situation. MFA’s Chris DeMoss concurred with Spears saying the value of coops depend on infrastructure. “But we can’t make highways and we can’t build railroads.”

One of the panelists quipped that the problem with capitalism is that it works, implying that businesses, entrepreneurs and individuals find ways to fix problems, innovate and produce things, exposing weaknesses in infrastructure and logistical practices.  Jarrod Gillig said, “Logistic problems just may spur solutions we need.” And Dave Spears suggested the Supply Chain of the Future will shift from the current conventional inventory strategy of Just-In-Time (stocking less) to Just-In-Case (stockpiling more).