CoBank Quarterly: Agricultural Supply Chains Are Still Broken
Jul 27 2022
After more than two years, COVID-related supply chain complications are finally easing, and various metrics indicate improvements to supply chain performance both domestically and globally. However, those improvements have been modest and agricultural supply chains in particular remain broadly mired in dysfunction.
Warehouse and inventory costs are still rising at near-peak levels and transportation costs remain well above pre-pandemic levels. Grain rail car availability and prices were at multi-year lows and highs, respectively, in the second quarter of 2022. Although as consumer purchases of goods continues to soften, supply chains will slowly recover.
Ag retailers navigated a challenging spring agronomy season marked by input cost inflation, planting delays and producer cost-cutting efforts. Fertilizer prices began to ease in June but are likely to remain elevated compared to long-term averages. The farm supply sector will face additional risks going into the fall agronomy season. Asian-made crop protection chemicals continue to be in short supply and interest rate hikes will make borrowing more costly.