Supply Chain

Produce Procurement Can Help Build Sustainability

Thu, 05 Feb 2026 05:27:45 GMT

When you think of sustainability in the produce industry, your thoughts might go to regenerative practices and precision irrigation on the grower side. Maybe you think about alternative packaging materials and electric trucks on the packing and shipping side or food waste reduction efforts on the retailer side.

But according to a recent report from the First Movers Coalition for Food, an initiative of the World Economic Forum, procurement also has a role to play in the sustainability of the supply chain. And it’s one that has to change with the times.

“For a century, food supply chains have been feeding a growing global population with unprecedented efficiency. However, they were built to operate in a stable climate, with more predictable costs and consumer demand,” reads the report’s foreward.

But climate is increasingly unstable, and this is causing more frequent food supply chain shocks.

Euan Murray, partner at Bain & Company, which collaborated on the report, points to several examples of this in action in fresh produce. These included the 2021 drought in the southeast U.S. that spiked vegetable prices, the projection that Fusarium wilt tropical race 4 (TR4) could kill off the commercially dominant cavendish banana in the near future and research in Spain showing that water stress in oranges can significantly decrease yields.

“These are issues that are impacting the produce industry today and will be out into the future,” Murray says.

“This is a business opportunity to manage risk, to manage costs, to maintain security of supply and to be able to continue to serve customers,” he adds. “And that’s why we think this should be a priority for produce and the food system as a whole.”

What Produce Procurement Can Do for Sustainability

The report offers two main strategies to build resiliency and sustainability into procurement, efforts that have worked in case studies and according to interviews with chief procurement officers at several global food companies. The report calls these strategies spec-anchored sourcing and decoupled sourcing.

The spec-anchored sourcing strategy involves procurement companies including sustainability requirements in specifications for commodities. The strategy is most applicable in commodities with high dependency on specific growers or low flexibility in production. The report gave the example of hazelnuts, where 70% of global production occurs in Turkey.

“We do see spec-anchored sourcing really all the time in fresh produce,” says Murray, offering the examples of fair trade bananas or Rainforest Alliance-certified mangoes. “The reason they make it to us as shoppers is because those corporates have embedded that requirement in the spec, and that’s what then drives standards back through the supply chain.”

He adds that this strategy works best when procurement companies work directly with growers, commodity groups, sustainability nonprofits and others to help the growers implement the right practices and access financing for it. This makes the individual growers more sustainable and resilient themselves, in turn leading to greater resiliency for the companies that buy from them.

The decoupled sourcing strategy works on a broader, more landscape-level scale, functioning through investment in specific sustainability or resiliency elements within regions where many growers of a commodity can be found. The report gave the examples of soy, rice and wheat, which are grown by many producers across wide swaths of the world.

Murray noted that decoupled sourcing models are newer in produce and seen more often in fruit than in vegetables, though they are growing.

“By investing at that landscape level, [produce procurement companies] know that they’re securing the supply overall and ultimately raising the sustainability profile into the bargain,” he says.

Climbing the Sourcing Maturity Ladder

Though the report gives examples from large, globe-spanning companies, Murray says that the report’s findings can apply broadly to any size of procurement operation.

“The need to operate sustainably and the benefits from building resilience apply to food companies of any size,” he says. “Of course, smaller companies might not have the same level of resources to dedicate to this, and they may not have the same negotiating clout with upstream suppliers and downstream customers, but the flip side to that is that smaller companies often find it easier to innovate and to act nimbly.”

The report also offers a “maturity ladder” with recommended strategies and goals for companies to step up their approaches to increased procurement sustainability and resiliency according to their ability.

The three levels of the ladder are:

Get the basics right (the pilot stage) — This involves building up baseline data and starting the effort. Examples include updating key metrics and starting collaboration with a current partner.
Step up performance — This involves moving toward structured initiatives and could involve creating cost-sharing models with supply partners or drawing on external funding opportunities.
Lead at scale — The report estimates this could be 30% to 50% or more of procurement, is underpinned by partnerships and includes clear demand signals and comprehensive grower support services.

Murray says the report’s findings can bring produce procurement companies three main things: more options in sourcing, improved protections from supply shocks and a better ability to bounce back quickly when supply shocks do hit.

“That’s why we think this should be a priority for produce and the food system as a whole,” he says.

Dragon Fruit Expected to be Plentiful Through February, Says Tierra Suelta

Mon, 22 Dec 2025 10:11:43 GMT

Tropical fruit grower and importer Tierra Suelta reported Dec. 18 that plentiful volumes of dragon fruit are now available for retail promotions.

“We’ve entered peak dragon fruit season with 40,000 boxes arriving weekly,” says Steve Stutz, vice president of sales, in an announcement. “For the next two months, our state-of-the-art packing facility in Ecuador will operate at capacity to support promotable volumes of our highest quality dragon fruit. Tierra Suelta has the production, logistics and infrastructure to meet the needs of major retailers throughout the holiday season and beyond.”

Earlier this year, Tierra Suelta invested significantly in developing and building a state-of-the-art packing facility dedicated to dragon fruit, the company reports. The new facility is Global GAP and Primus certified. Tierra Suelta says it is committed to helping retailers succeed with this novelty-turned-favorite fruit by providing an abundant supply of dragon fruit along with in-store and online support to generate additional consumer demand.

“In the winter months, the fruit’s vibrant color and festive appearance naturally enhances fruit platters and decorative tablescapes,” says Adrian Abreu, Tierra Suelta CEO. “We have four varieties of dragon fruit — white, red, yellow, and golden — all of which boast antioxidant-rich nutritional profiles. The fruit’s immunity-boosting qualities also make it an ideal snack choice during cold-and-flu season.”

Tierra Suelta, which translates to “loose soil,” is a woman- and minority-owned, vertically-integrated farming business that grows and ships tropical fruits, roots and specialty produce from its headquarters in Miami.

Oppy Bolsters Service Capabilities with New Calgary Facility

Thu, 20 Nov 2025 19:39:08 GMT

Vancouver, B.C.-based Oppy says it has expanded its capabilities and strengthened its commitment to Western Canada with a new office and warehouse facility in south Calgary. The grower, marketer and distributor of fresh produce says this addition will bolster its service capabilities across Canada’s Prairies.

“We identified a unique opportunity in this market to grow as a service provider focusing on distribution in Alberta, Saskatchewan and Manitoba,” says Stewart Lapage, vice president of supply chain and logistics with Oppy.

Oppy says this new location is double the size of its previous Calgary facility and is in response to its continued business growth and increasing demand for value-added logistic solutions. The company says it wants to increase its distribution in the Prairies by more than 200%, through both volume growth in its core categories as well as an increase in its specialty services offerings to its logistics customers.

This new office and warehouse facility features state-of-the-art packing lines, bagging equipment and specialized ripening and grading technologies to support a wide range of produce. Oppy says its new coolers, racking and floor plans allow for greater operational efficiencies.

And while Oppy says it packs and inventories hundreds of different products at the Calgary location, it sees the most growth in its kiwifruit, citrus and avocado categories.

As a cold service and value-added hub, the company says this Calgary location will serve Alberta as well as Western Canada for Oppy.

“It was the natural progression for our business,” Lapage says. “With Oppy recently integrating Dole Diversified North America into its business, we have access to expanded supply lines that will be a perfect fit for our customers here in Western Canada.”

The facility also features LED lighting for energy efficiency, EV chargers in parking lots, motion-controlled lighting to help support Oppy’s broader sustainability and innovation goals, with the capacity to invest in future automation technologies as well.

The company says it has added nearly a half a dozen new team members in Calgary and will add six more roles in the future as it scales its logistics and third-party service offerings. Oppy says this new Calgary location also supports the growth of its Oppy Transport, which has expanded to meet a growing demand for storage and distribution services.

“This space is a physical expression of our promise to grow in step with the Prairies and invest in long-term partnerships across the region,” says John Anderson, chairman, CEO and managing partner of Oppy. “Oppy is committed to evolving with our customers’ needs and finding new ways to deliver excellence across the supply chain.”

Bova Fresh Talks CREO Capital Partners Deal

Wed, 01 Oct 2025 19:13:41 GMT

Bova Fresh, of Boca Raton, Fla., recently sold to CREO Capital Partners , a Miami-based private equity firm that focuses on food, logistics and consumer investments.

Bob Wilhelm and Steve San Filippo founded Bova Fresh, which serves more than 250 retail and foodservice customers nationwide. Both Wilhelm and San Filippo will retain a stake in the business and lead daily operations.

“We just want to let the retailers know that we’ll continue to work hard and grow and procure the freshest fruit and vegetables for the best price possible with timely deliveries,” San Filippo told The Packer. “Really, nothing’s changed there. We’re going to continue to work hard and continue to grow and offer more items to the retailers as well.”

San Filippo says Bova Fresh will continue to focus on its core items, including strawberries, avocados, raspberries, blackberries, mangoes, pineapples and tropicals to both chain stores and foodservice. He says this deal helps the company with capital needed to grow and expand.

“It allows companies like us to raise capital for capital expenditures and to increase our acreage our strawberry farms in Florida,” he says. “We went from like 200 acres to over 350 acres now in Florida for the strawberry season this year coming up.”

He also says there’s some synergies with Bova Fresh’s Peruvian avocado pulp, that’s sold into Europe and CREO’s Insignia International, which sells Yucatan Guacamole into Mexico. San Filippo says he sees an opportunity to work together and to have some of the products available in the U.S.

San Filippo says that being a part of a vertically integrated platform such as CREO Capital Partners helps ensure food safety, transparency and efficiency as well as mitigating risks.

Robert Reavis, director at ButcherJoseph, which advised Bova Fresh in the deal, says Bova Fresh’s unique offering is the ability to connect with a significant number of growers in multiple countries to help fulfill large orders. Reavis also says that CREO’s portfolio contains a large number of end users of produce, so this deal will hopefully create some synergies in both production, customer base and sourcing of inputs.

“What Bova adds to that equation is that with the supply chain logistics disruption we’ve seen over the last year or so, or the last nine months or so, having a broad and diversified group of producers that you can go to in order to fulfill demand on the part of grocery store chains or restaurants is extremely valuable, especially when they’re diversified across different countries,” Reavis says. “What Steve and Bob and Bova Fresh were able to deliver to CREO’s platform was an extremely diversified supply base to go along with their very high-quality customer base. And that’s the sort of flexibility that private equity I think is looking for as they respond to the ongoing trends within the industry.”

Port of Caldera Disruptions Could Impact Retail Tropical Fruit Supplies

Fri, 08 Aug 2025 20:57:15 GMT

Fresh Del Monte has reported major shipping disruptions at Costa Rica’s Port of Caldera, where unusually strong ocean swells created a chokepoint for vessel access by tropical fruit exporters. The resulting congestion and vessel delays of up to five days at Costa Rica’s most important Pacific port is causing supply disruptions of tropical fruit, the company told The Packer in an email.

To learn the latest, The Packer connected with Raul Saca, senior vice president of global logistics for Fresh Del Monte, earlier today.

Have the strong ocean swells continued? Is there still a bottleneck for vessel access or has it started to clear?

Saca: The ocean swells have started to clear and have mostly come to a stop, with the exception of the days following the earthquake in the Russian Far East [Aug. 2], which affected the entire Pacific Ocean.

What tropical fruits have been impacted most?

The tropical fruits impacted the most by these disruptions are bananas and pineapples. These are the fruits exported in the largest quantities from Port of Caldera; however, other exports like ginger, dragon fruit and coffee are also impacted.

Raul Saca provides update on disruptions at Costa Rica’s Port of Caldera.

(Photo courtesty of Fresh Del Monte)

How might this impact prices and supplies of tropical fruits imported to the U.S.?

Supply of tropical fruits to the U.S. will ultimately be impacted due to the delays. In regard to pricing, we do not anticipate much impact.

Is there a potential for food waste? If vessels are delayed by five days, will this impact the freshness of products when they reach the U.S.?

Yes, possibly. Since produce is highly perishable, this definitely poses a challenge. With the vessel delays, the shelf life of the produce is diminished, ultimately affecting the freshness of products once they arrive.

What is Fresh Del Monte doing to alleviate the situation? Should retailers be prepared for reduced supplies?

We are adjusting wherever possible and cooperating with other shipping lines to minimize the effect of the delays. Retailers can expect schedule disruptions and reduced supplies in the coming weeks, but we are taking proactive steps to mitigate these potential delays. For example, we are swapping slots with other shipping lines. If both lines are going to the same destination, like Port Hueneme, we load the cargo in Caldera for our customers and theirs, and they load our cargo and theirs in Quetzal. This type of slot exchange and cooperation allows for one less vessel in each port, easing congestion once the ports become operational.

Share-ify Introduces Product Management Solution for Produce

Mon, 04 Aug 2025 12:01:59 GMT

In early July, Share-ify — a supply-chain integration service serving the food industry — introduced Clar-ify. The product item management solution, which is now available to current Share-ify clients and enterprise food industry partners, was created with the produce industry in mind, according to Angela Nardone, the company’s chief operating officer.

“So many people want to go to AI, but AI is only as good as your data, so we really have to get that right,” she says. “This is to help enable organizations to better use their AI tools.”

The produce industry is also not like other industries, Nardone explains.

“Not every industry has things like pack, label, grade and size. These are things that are wholly unique to produce, and we truly understand that,” Nardone says of the team behind Clar-ify. “A lot of times, when produce companies try to do things like item management, they are retrofitting produce concepts into oil and gas or finance [tools]; reworking fields to kind of focus on what they need out of a system.”

Given the extensive variables in produce, and the often less-than-ideal item management tools being used, Nardone says there are ample opportunities for people within an operation to identify products differently within whatever supply chain system, or systems, the operation uses.

She gives the example of grape tomatoes; someone might identify them by what they are, another person might use the packaging they came in, and a third might use their country of origin. Add in typos or inconsistent naming protocols and the supposed number of unique items can balloon artificially, a prime example of dirty data.

“It’s not uncommon for small companies to tell me ‘I have 5,000 items,’ Nardone says, adding that a situation of information gone wild like that is a big problem for reporting.

“If I think I’ve got 50 different varieties of tomatoes, but really I only have five, there’s a big difference in reporting, and you don’t really have the accuracy,” she adds.

A clarifying process

According to Shar-ify, Clar-ify is focused on item creation, governance and regulatory data accuracy. It includes features to:

Create and maintain items across systems
Capture compliance-critical data, including allergen declarations, ingredient sourcing and sustainability and label claims
Control versions and data integrity with built-in governance
Streamline approval workflows through necessary departments; and
Generate searchable digital catalogs with real-time item libraries

“It was purpose-built to eliminate the chaos of disconnected spreadsheets, siloed databases and legacy systems, while ensuring product data stays synchronized, verified and audit-ready,” Nardone says. “We help companies organize their item level information, and we help — if companies do have more than one system, which many companies do — connect all those systems and make sure that the data is consistent between all of them.

She says after making Clar-ify the focal point for an organization’s system of records, the goal is to clean up the dirty data.

“There is a cleansing function and service that we incorporate when people utilize Clar-ify,” she explains. That function involves things like cleaning up typos or unifying input styles — all caps versus title case, for example. After that, the goal is to create a governance policy of how future item data should look and be treated. This is done in cooperation with the client, Nardone says.

With the dirty data cleaned up and plans for how to keep new data squeaky accurate, users can focus on the future. For many, that future involves AI.

Improvements amplified by volume

Another unique detail of the produce industry is “that it is an industry predicated on high volume,” Nardone says.

“It’s not one cherry that I want to sell, I need to sell millions of pounds of cherries.”

As the saying goes, a million of anything is a big number. Even small improvements in data accuracy can have a big impact overall, Nardone says.

“Let’s just say you’re a company selling a million cases, so maybe you’re a smaller grower/packer/shipper, if you can improve a penny per case, that’s big money,” she says.

“This is an industry that’s got to manage the inches, and this is an inch that they can take back,” Nardone adds. “Better item accuracy, better decision making, better understanding of cost, better understanding of sales, better understanding of customer sales — all those kind of things that executives need to make better decisions.”

Aptean Introduces Fresh Produce ERP

Wed, 09 Jul 2025 19:12:41 GMT

Aptean, an Alpharetta, Ga.-based software company, announced July 9 the launch of Aptean Fresh Produce ERP (enterprise resource planning). The company described it as the evolution of its Produce Pro Software.

“Aptean Fresh Produce ERP isn’t just an upgrade — it’s the future of fresh produce technology,” says Marc Hatfield, regional account director for fresh produce at Aptean, in a news release. “We have taken everything customers love about Produce Pro and supercharged it with Aptean’s advanced technology and cloud-native architecture. Designed for a fast-moving, high-stakes market, this next ERP empowers produce operations to stay ahead.”

Produce Pro Software has been an ERP platform available to fresh produce distributors, wholesalers, foodservice providers, growers, packers, shippers, processors and terminal markets across North America for more than 30 years.

The new AI-powered Aptean Fresh Produce ERP is built on the robust Microsoft Business Central platform, according to the company, making it a secure, scalable, cloud-native solution.

“Aptean Fresh Produce ERP is a smarter way forward — intuitive, intelligent and built to grow with your business,” Hatfield says. “It unites the proven functionality of Produce Pro Software with the power of the cloud, offering greater scalability, accessibility and ongoing innovation. Backed by Aptean’s deep software expertise and a suite of integrated technologies like TMS, EDI, e-commerce, BI and more — fresh produce businesses evolve and thrive with solutions made specifically for them.”

United States Eases Port Fees On China-Built Ships After Industry Backlash

Fri, 18 Apr 2025 16:04:09 GMT

The Trump administration shielded on Thursday domestic exporters and vessel owners servicing the Great Lakes, the Caribbean and U.S. territories from port fees to be levied on China-built vessels, aiming to revive U.S. shipbuilding .

The Federal Register notice posted by the U.S. Trade Representative was watered down from a February proposal for fees on China-built ship s of up to $1.5 million per port call that sent a chill through the global shipping industry.

Ocean shipping transports about 80% of global trade — from food and furniture to cement and coal. Industry executives feared virtually every cargo carrier could face steep, stacking fees that would make U.S. export prices unattractive and foist annual import costs of $30 billion on American consumers.

“Ships and shipping are vital to American economic security and the free flow of commerce,” U.S. Trade Representative Jamieson Greer said in a statement. “The Trump administration’s actions will begin to reverse Chinese dominance, address threats to the U.S. supply chain, and send a demand signal for U.S.-built ships.”

Still, the fees on Chinese-built ships add another irritant to swiftly rising trade tensions between the world’s two largest economies as President Donald Trump seeks to draw China into talks on his new tariffs of 145% on many of its goods.

The revisions tackle major concerns voiced in a tsunami of opposition from the global maritime industry, including domestic port and vessel operators as well as U.S. shippers of everything from coal and corn to bananas and cement.

They grant some requested carve-outs, while phasing in fees that reflect the fact U.S. shipbuilders, which turn out about five vessels annually, will need years to compete with China’s output of more than 1,700 a year.

The USTR exempted ships that ferry goods between domestic ports as well as from those ports to Caribbean islands and U.S. territories. Both American and Canadian vessels that call at Great Lakes ports have also won a reprieve.

As a result, companies such as U.S.-based carriers Matson and Seaboard Marine would dodge the fees. Also exempt are empty ships arriving at U.S. ports to load up with exports such as wheat and soybeans.

Foreign roll-on/roll-off auto carriers, known as ro-ros, are eligible for refunds of fees if they order or take delivery of a U.S.-built vessel of equivalent capacity in the next three years.

The USTR set a long timeline for liquefied natural gas (LNG) carriers. They are required to move 1% of U.S. LNG exports on U.S.-built, operated and flagged vessels within four years. That percentage would rise to 4% by 2035 and to 15% by 2047.

The agency, which will implement the levies in 180 days, also declined to impose fees based on the percentage of Chinese-built ships in a fleet or on prospective orders of Chinese ships, as originally proposed.

The fees will be applied once each voyage on affected ships a maximum of six times a year.

Executives of global container ship operators, such as MSC and Maersk MAERSKb.CO, which visit multiple ports during each sailing to the United States, had warned the fees would quickly pile up.

Instead of a flat individual fee on large vessels, the USTR instead opted to levy fees based on net tonnage or each container unloaded, as was called for by operators of small ships and transporters of heavy commodities such as iron ore.

From October 14, Chinese-built and owned ships will be charged $50 a net ton, a rate that will increase by $30 a year over the next three years.

That will apply if the fee is higher than an alternative calculation method that charges $120 for each container discharged, rising to $250 after three years.

Chinese-built ships owned by non-Chinese firms will be charged $18 a net ton, with annual fee increases of $5 over the same period.

It was not immediately clear how high the maximum fees would run for large container vessels, but the new rules give non-Chinese shipping companies a clear edge over operators such as China’s COSCO 600428.SS.

The notice comes on the one-year anniversary of the launch of the USTR’s investigation into China’s maritime activities.

In January, the agency concluded that China uses unfair policies and practices to dominate global shipping.

The actions by both the Biden and Trump administrations reflect rare bipartisan consensus on the need to revive U.S. shipbuilding and strengthen naval readiness.

Leaders of the United Steelworkers and the International Association of Machinists and Aerospace Workers, two of five unions that called for the investigation that led to Thursday’s announcement, applauded the plan and said they were ready to work with the USTR and Congress to reinvigorate domestic shipbuilding and create high-quality jobs.

The American Apparel & Footwear Association reiterated its opposition, saying port fees and proposed tariffs equipment will reduce trade and lead to higher prices for shoppers.

At a May 19 hearing, the USTR will discuss proposed tariffs on ship-to-shore cranes, chassis that carry containers and chassis parts. China dominates the manufacture of port cranes, which the USTR plans to hit with a tariff of 100%.

The Federal Register did not say if the funds raised by the fees and proposed crane and container tariffs would be dedicated to fund a revival of U.S. shipbuilding.

(Reporting by Lisa Baertlein in Los Angeles, David Lawder and Andrea Shalal in Washington and Jonathan Saul in London; Editing by Jamie Freed, Clarence Fernandez and Gerry Doyle)

With FSMA 204 delay, companies have more time for digital transformation

Thu, 17 Apr 2025 18:25:36 GMT

On March 20 the Food and Drug Administration moved the compliance deadline for the Food Traceability Rule, also known as FSMA 204, from January 20, 2026, to July 20, 2028.

This reprieve was greeted as good news by companies struggling to determine how they were going to collect, track and report the required information, according to a news release from Inteligistics. However, the actual requirements of FSMA 204 remain unchanged.

FSMA 204 requires reporting within 24 hours of certain critical tracking events and key data elements — CTEs and KDEs. This requirement not only applies to each company notified by the FDA of a foodborne illness outbreak or food recall, but also for the companies from which they received the product or ingredients and the companies to which they shipped the product.

CTEs are triggered any time a food product moves (including from one location to another at the same company), is transformed (e.g., cooled or processed) or is handled significantly.

“Looking at their existing record-keeping and data collection, many companies got a reality check on how much there is to do, not only within their own four walls, but with their supply chain partners as well,” said Inteligistics CEO Gary Fleming. “At the same time, companies were beginning to see how the data could be used to improve operations, so they are continuing to move forward.”

Much of the product tracking and record-keeping of perishable products as they move from field to consumer has historically been manually recorded, captured in unconnected applications, or not been captured at all, according to Inteligistics. This limits the ability to spot bottlenecks and problems that could be costing companies significantly.

Assigning a GTIN and traceability lot codes and applying Produce Traceability Initiative labels to each case is the first step in creating a tracking mechanism, the company said. Collecting all the data into a system that can track, report and analyze all the end-to-end data is the ultimate goal.

This digital transformation automates data collection and tracking across data platforms to enhance visibility, efficiency, agility and decision-making — transforming traditional processes into intelligent, data-driven operations. For companies producing and selling perishable products, this reduces costs, labor and waste, according to Inteligistics.

“FSMA 204 was created because the FDA was not able to quickly perform trace-back and trace-forward investigations,” Fleming said. “This meant that tainted products remained in the supply chain for a longer period than was necessary, resulting in more people getting sick and additional people dying.

While delayed, FSMA 204 will solve problems by speeding up FDA investigations, resulting in quicker, more precise conclusions, which will help save lives, prevent unnecessary hospitalizations and minimize exposure to companies and the broader market affected by recall notices, he said.

“Beyond the food safety elements, the data capture and sharing now available from Inteligistics gives the industry visibility we have not had before, which enables us to be more efficient and strategic, reduce supply chain management costs and address problems that affect all our bottom lines today, while we prepare for FSMA implementation,” Fleming added.

String of unlucky weather slows Peruvian avocado and asparagus exports

Thu, 21 Sep 2023 13:09:32 GMT

Up-and-coming agricultural powerhouse Peru has enjoyed several years of growth in U.S. markets, steadily expanding market share in fresh produce commodities such as blueberries, grapes, avocados, onions and asparagus.

But will a recent spate of bad weather, combined with El Niño, slow down across-the-board optimism for this South American exporter?

Related news: U.S. imports of Peruvian onions grow

The 2023 Peruvian avocado season was caught in a series of ill-timed weather events, upending early-season crop forecasts and resulting in low volumes at harvest. Chilly temperatures in the summer months delayed the start of the season, followed by a winter heat wave that stunted fruit growth and dried up volumes, according to Mission Produce ’s CEO Stephen Barnard, on a recent earnings call.

What’s more, other commodities such as asparagus and onions have also experienced weather-related supply dips.

“Both Peru and Mexico have reduced imports in 2022, due to many contributing factors with mostly due to weather conditions. This decline in volume has continued into 2023 and has challenged industry and retailers,” Priscilla Lleras, executive director of the Peruvian Asparagus Importers Association , said in a news release.

A recent USDA statistics update echoed this year-over-year decline for asparagus, reporting that of the total imports for 2022, the U.S. imported 13% less in volume of Peruvian asparagus than the previous year.

With an El Niño weather pattern likely to disrupt typical weather patterns in Peru in the coming months, layered with the unpredictable effects of climate change, how do suppliers ride out weather-related hiccups?

Quick pivots possible with a diverse sourcing strategy

A leading supplier of avocados, Mission Produce was recently caught in the crosshairs of unfortunate weather events. The company reported lower-than-expected profits in the third quarter after “abrupt change in growing conditions” upended Peru’s harvest, CEO Stephen Barnard said on a recent third-quarter earnings call with investors.

The late season heat “negatively impacted anticipated volumes and fruit size across the Peruvian growing region,” Barnard said on the call. Mission Produce had set lower prices for customers earlier in the year anticipating a strong harvest. To pivot, the fresh produce broker leaned on its abundant supply out of Mexico and California to help offset lost volume from Peru.

“Our sourcing strategy diversifies our avocado procurement across multiple growing regions year-round. If supply is tight in one region due to natural or other causes, we source from other regions to promote a reliable supply of avocados,” Keith Barnard, Mission Produce’s senior vice president of sourcing, told The Packer in a statement. “During the Peru season, our other major origins for the U.S. market include California and Mexico.”

Related news: Peruvian avocado industry ‘stands up’ for sustainability

Fluctuating growing conditions are an inevitable part of agriculture, so we have strategies in place to reduce the impact of those fluctuations. Despite varying growing conditions year over year, Mission Produce has remained resilient, Barnard said in the statement.

U.S., China Container Shipping Rates Plummet 50%, Backlog of Unfilled Orders Grows

Fri, 23 Sep 2022 18:05:17 GMT

As backlogs at U.S. ports and climbing shipping rates plague the supply chain, new data shows shipping rates between the U.S and China are dropping by more than 50% in just a month.

Data provided by digital freight forwarding company Shifl shows China/U.S. spot freight rates, for shipping a 40-foot container from China to Los Angeles, dropped by $9,000. That’s a 51-percent drop between September and October.

Experts say China is slowing production due to a power crisis and the off-season coming into view, but issues remain due to a growing backlog of unfulfilled orders.

Earlier this week, AgDay reported that Port officials say strong American consumer demand has continued unabated for more than a year, as the Port of Los Angeles has seen a 30% increase in cargo volume so far this year. That’s as exports from the Port of Los Angeles dropped 23% in August.

It’s impacting agriculture in the U.S. because of record-high shipping rates. That’s coupled with the fact that some shipping lines are working to get empty containers back to factories in Asia as quick as possible.

Port of LA Backlog Issues Compound Supply Chain Concerns, Causes Exports to Sink 23%

Tue, 12 Oct 2021 16:41:12 GMT

Port officials say strong American consumer demand has continued unabated for more than a year, as the Port of Los Angeles has seen a 30% increase in cargo volume so far this year.

It’s impacting agriculture in the U.S. because of record-high shipping rates. That’s coupled with the fact that some shipping lines are working to get empty containers back to factories in Asia as quick as possible.

The Port’s executive director says they processed more empty containers in August than they ever have before.

“Trying to find a way to get an empty container chassis and truck power from the Chicago area up to the red River Valley of North Dakota to load up with soybeans, or no. 5 red wheat has been an elusive solution to all of us,” says Gene Seroka, executive director of the Port of Los Angeles. “The repositioning costs are extraordinarily high and only exacerbated with this import buying surge that we’ve witnessed and unfortunately, the trade policy that carried over from the last administration, which is part of the reason why we’re talking across stakeholder groups and trying to get big thinkers at the table and how we can do this. In fact, Peter Friedman recommended that we worked on near port locations of agricultural supply, where we can turn these empty containers in 12, 24 hours, get them back to port for the first acceptance day possible and load to an export vessel.”

Seroka says American exports in August at the Port were down almost 23% from last year at the same time.

Agriculture Left High Centered as Supply Chain Problems Expected to Persist Well into 2022

Tue, 19 Oct 2021 13:16:22 GMT

Equipment manufacturer CNH announced it’s idling production in Europe due to a shortage of semiconductors. Fertilizer prices are nearing new highs, with concerns mounting about whether enough supplies will reach the U.S in time for planting next spring. The supply chain issues are becoming one of the biggest concerns for agriculture, and some economists say as the bottlenecks reach a critical point, it could take at least a year to remedy the chaos currently taking hold of the global supply chain.

In early October, Southern California ports had 90 container ships in the port, 63 of which were waiting off the shore. And in Los Angeles, nearly 500,000 20-foot shipping containers were in waiting mode, as the cargo ships waited for ships to unload and space to open up to anchor at the ports.

The Ports of Los Angeles and Long Beach account for 40% of all shipping containers entering the U.S., which is a main source of the bottleneck dilemma. And it’s not just ships waiting to unload. The challenge is further fueled by an insufficient number of truck drivers to get the goods out of the Port and dispersed across the U.S.

Last week, the issue was discussed and debated at the White House. As a result, President Biden announced one solution: expanding operating hours at a key West Coast port. The Biden administration announced a brokered agreement that would turn the Port of Los Angeles into a 24-hour operation, seven days a week. The White House said the expanded hours would nearly double the time that cargo will be able to move in and out of port.

“I want to be clear this across-the-board commitment to going 24-7, this is a big first step in speeding up the movement of materials and goods through our supply chain,” said Biden. “But now we need the rest of the private sector chain to step up as well. This is not called a supply chain for nothing. This means the terminal operators, railways, trucking companies, shippers and other retailers as well.”

The private sector includes major U.S. retailers and transportation services like FedEx, Walmart, UPS and Home Depot. Those companies will be charged with ramping up operations in order to clear cargo from the ports which, in turn, the administration says will free up space at the port.

USDA at the White House

USDA Chief Economist Seth Meyer attended the virtual supply chain meeting with the White House, as agriculture is a key piece of the supply chain puzzle reeling from ramifications of the supply chain concerns.

“We are spending a lot of time on supply chain issues – most definitely a lot – but what you also want to avoid as an economist are unintended consequences of putting a policy in place that really shifts transportation,” Meyer told Farm Journal. “It kind of distorts it and says, ‘We’re going get more of this, and yet it’s going to hinder delivery of tractor parts,’ right? You don’t want to have those unintended spillover consequences. But we’re spending a lot of time saying, ‘Hey, what are the levers out there that government can help with? And you know, are those the ones that you want to pull?’”

Meyer says USDA is currently exploring ways the agency could help facilitate fixes, and what role USDA could play as the Biden administration works through one of its largest challenges.

“Is there a role at USDA to help say, ‘Okay, we’ll put inspectors in place and we’ll help facilitate this movement,’” Meyer adds. “What you’re looking for is you’re identifying the primary choke point and trying to solve that sometimes reveals that there are other choke points in which you have to move and try to solve. But I think that when the government says, ‘Hey, what can we do to improve throughput of these containers?’ that’s a good place to start.”

Can Policy Solve Supply Chain Problems?

After Biden’s announcement about expanded operating hours at West Coast ports, a push for policy could unveil other measures and steps the administration will need to take to find a solution. But is policy the fix for the supply chain issues rippling across the U.S. today? Economists have mixed views on whether policy can help solve an issue so complex.

“I tend to think that it can help the market sort things out. It’s not a fix in and of itself,” Meyer adds. “Can you make adjustments that help the market allocate those resources and sort them out? Are there things that the government can do to help facilitate those transactions?”

Texas A&M agricultural economist and co-director of the Agricultural & Food Policy Center says while government intervention could help, any action needs to be minor.

“We’re economists, and we would say that the markets need to work, and if the government can give a nudge here and there, fine. But basically, the markets are going allocate the resources out there,” says Outlaw. “And from my view, that’s really what I would think needs to happen.”

University of Missouri agricultural economist Scott Brown says policy won’t be the sole remedy for the supply chain issues today. However, he does think there are some barriers that could be removed to help free up more movement at ports.

“I will continue to say we need to do everything possible to clear those ports out,” says Brown. “Getting help from the administration there can be beneficial. Let’s not just overstate that we’re going to fix this overnight. It’s going to take time to work through many of the supply bottlenecks. And frankly, I think we will live with those supply bottlenecks for many months ahead. It’s not going to be a quick fix.”

Problems to Persist Months or Years?

Just how long will it take to work the severe wrinkles out of the supply chain? As the situation becomes more dire, economists are also mixed on just how long it will take to get the supply chain back in standard operating order.

A Wall Street Journal survey asked a group of economists that exact question. The survey found labor shortages and supply constraints are bigger risks to the economy than Covid-19. While the majority of economists surveyed (more than 30%) say they think supply chain disruptions will recede by Q2 of 2022, more than 10% see the issues lasting into 2023 or later.

USDA’s chief economist is in the camp it will take months, not a year.

“I think we’re still talking months, I really do,” says Meyer. “And it’s not just things like tractor parts, but it’s hauling food products, it’s hauling cattle, it’s all these transportation issues. It’s getting those truck parts back, it’s delivery of food products to the institutions. I think we’ve got a while to sort these things out. When I look at USDA, you’ve got short-run port resolutions as in opening for 24 hours, and then medium-term things where you try to improve the throughput by getting more truck drivers.”

Shortage of Truck Drivers Adding to the Issues

Last Month, USDA announced the availability of $3 billion to help with a host of concerns, including supply chain issues. Those funds will come from the Commodity Credit Corporation. That’s in addition to the $2 billion USDA already announced to put toward helping solve persistent supply chain issues. But one of the biggest bottlenecks is coming from a lack of truck drivers to move products. And groups like International Dairy Foods Association (IDFA) say there are quick fixes that could help get more drivers on the road.

“One way that the government could help potentially is in the infrastructure package that’s being discussed right now. There’s some money in there for trying to get some additional CDL drivers on the road between the ages of 18 and 21,” says Matt Herrick, vice president of communications for IDFA. “There’s a pilot program, which would allow some of these drivers who are below the age of 21 to drive interstate. That would be a big opportunity, I think, to get more truck drivers on the road and to do it safely.”

The other barrier that the White House could help remove is the maximum weights truck drivers are allowed to carry.

“Can we raise those truck weights? We’ve got increased demand in our sector, increased demand for our products. Can we keep those truck weights up in a safe way, but keep them elevated? And also, can we continue to raise the hours of operation and keep those elevated?” Herrick says. “And can we do that so truck drivers can stay on the road and make those deliveries in a safe manner?

As shippers try to raise wages in order to attract more drivers to get on the road, the action not coming without other costs. One grape grower told The Packer that new drivers are having trouble backing into tight spots to unload. The other issue is teaching younger drivers how to operate trucks with manual transmissions. One trucking operator told Farm Journal that many younger drivers haven’t trained on manual transmission trucks and can only drive ones with automatic transmissions.

Just When You Think Fertilizer Shortages are Improving, Trucker Vaccine Mandates Slam Supply Chain Into Disarray

Fri, 28 Jan 2022 13:06:03 GMT

Fertilizer availability concerns have plagued agriculture for months, but recent COVID-19 vaccine mandates in both the U.S. and Canada could take even more truckers off the road. As the supply chain is already wading through chaos and shortages of everything from food products to equipment parts, more fertilizer shortages could be coming just before spring.

Trucking industry experts warn while empty store shelves are being advertised as a product of these recent vaccine mandates, the issue will snowball into much more. The concerns derive from a recent vaccine mandate requiring truckers to be vaccinated before crossing the border. Truckers were previously exempt from federal travel restrictions. The new mandate went into effect on January 15,, 2022 in Canada, and on January 22, 2022 in the U.S.

Sending off the truckers from the East Coast.
Let's Goooo!!!!! pic.twitter.com/Okz6jeEyR8
— Bret 🍁 (@Bret_Sears) January 27, 2022

🇨🇦 pic.twitter.com/hdIellXNNj
— Andy Pasztor 🧼🧽 (@apasztor82) January 27, 2022

The Canadian Trucking Alliance estimates the mandate may block up to 20% of the 160,000 Canadian and American cross-border truckers from entering either Canada or the U.S. And in Canada, a convoy of truckers took to the road across Canada this week to protest the cross-border vaccine mandates. The protests started in Vancouver over the weekend and are expected to reach Ottawa by Saturday.

“I worked for two years to bring goods and services, and toilet paper and everything to everyone. We went through having no showers, no bathrooms, no food — we starved sometimes for days on end on the road — and nobody cared about us then, and now all of a sudden, they care,” convoy trucker Bridgette Belton, who owns and operates her own rig running food products and containers between Canada and the United States, told CBC News .

More Fertilizer Shortages?

And in the U.S., effects of driver shortages are just starting. Kelly Krapu is safety director for True North Compliance Services in West Fargo, North Dakota, a company that helps trucking companies and drivers navigate rules and regulations on the road. She says we haven’t seen the full extent of the impact considering the mandate for drivers coign to the U.S. only went into effect Saturday. “I have been told from some chatter in industry, and some of my customers is a lot of their fertilizer comes from Canada,” she says. “About 50% of Canada’s fertilizer is exported into the United States. So, if an unvaccinated driver is not allowed to go into Canada to pull that fertilizer out, we’re going to have some issues there. And then vice versa, even if the Canadian driver that’s going to pull some fertilizer down into the U.S. isn’t vaccinated, they’re not going to be allowed in.”

Krapu says it’s not that truck traffic is shuttered. She says it’s just severely throttled back since there are so many cross-border truck drivers unvaccinated. But there’s no definitive answer on just how many are still unvaccinated despite the new mandate. She says some drivers who aren’t vaccinated are opting for different routes that don’t take them across the border. So, that leaves fewer drivers able to transport goods, including everything from food and fertilizer, across the border.

“That is one of their concerns is how they’re going to get fertilizer back from Canada that they regularly have been getting easily from Canada for years,” says Krapu. “And now we’re going to have to figure out a new situation. They have some drivers that can go but if you had 14 drivers that could go and now you only have four, you have to be creative on how you’re going to get that done.”

Fewer Truckers to Go Across the Border

Krapu says estimates point to as few as 25% of current U.S. truck drivers are vaccinated. Shaun Haney who hosts Canada’s Real Agriculture says the estimates in Canada show anywhere from 10% to 30% of drivers going across the border are unvaccinated.

“Think of an example from an agriculture perspective of getting California fruits and vegetables into Canada has all of a sudden become a lot more challenging than it was previously,” Haney told AgDay. “And if it does, we’re also hearing those freight rates have gone up substantially. So a lot of concerns here and it kind of, in my mind, feels a little bit like a little bit of a self-inflicted wound.”

Krapu says a group of senators and governors sent a letter to the Biden administration asking for an extension to the implementation of the vaccine mandate. That wasn’t fruitful, and she says there aren’t currently any religious or medical exemptions truckers can file.

Severe Shortage of Truck Drivers

She says the issue is just adding another layer of difficulty into the supply chain, as trucker drivers were already in short supply.

“So currently with a truck driver shortage being as it is, we are seeing huge supply chain issues and have been for obviously, since the pandemic started. And that’s two-fold,” says Krapu. “We’re losing drivers to early retirement because of all of the regulations and mandates that are being imposed. So people have chosen early retirement, and then we’re not backfilling those retirement positions. And then it’s also we are losing people that industry because of vaccine mandates.”

Canadian grocers report some produce shelves are bare, and the cost of hauling everything from tomatoes to lettuce from the southern part of the U.S. has jumped 25%. It’s estimated about $45-billion worth of goods crosses the border every month and most of the trade between the two countries uses trucks.

Walmart Will Now Pay Starting Truck Drivers $110,000, Could It Backfire and Make the Nationwide Trucker Shortage Even Worse?

Fri, 08 Apr 2022 20:21:05 GMT

Trucking gained broad interest thanks to the big screen in the late 1970s. As Hollywood produced movies like “Smokey and the Bandit,” the trucking industry was widely talked about. Today, the tune has changed, and it’s a job that doesn’t boast the glamour it once did.

“We don’t have a ton of young people or other people just dying to get into the trucking industry,” says Kelly Krapu, safety director and compliance officer for TrueNorth Compliance Services. “It’s no longer a glamorous gig that people really want to get into anymore. So, we are going to continue to see shortages.”

Two years after the COVID-19 pandemic brought some businesses to a halt, supply chain issues continue to play out. A lack of drivers currently plaguing the trucking industry is one of those factors still impacting the supply chain.

“We’re currently about 80,000 drivers short in the trucking industry,” says Krapu. “In 10 years, they’re thinking it’s closer to 250,000 to 300,000 jobs that we’re going to be short in the trucking industry.”

As safety director and compliance manager, Krapu helps truck drivers and trucking companies navigate the regulations that have a tight grip on truckers today.

“I think we’re losing drivers not only to those short-haul drives or short-haul careers, but other careers that they can be in a more controlled environment and a little bit safer and more conducive to a family life,” she adds.

Walmart recently announced it’s upping starting salaries for the company’s truck drivers to between $95,000 to $110,000 a year, which is up from the current average starting salary of $87,000. The Wall Street Journal reports Walmart will also offer workers in other departments training to become a certified truck driver.

“It’s the latest sign of how big retailers are using their size to take greater control of their own supply chains as bottlenecks, capacity constraints and rising prices roil logistics operations,” reports Farm Journal Washington analyst Jim Wiesemeyer.

Training is another hurdle for attracting new truck drivers into the industry. In February, a new federal CDL requirement hit the trucking industry , which will require anyone obtaining a new CDL to go through weeks of training. The course will cost you up to $10,000.

Krapu says the rule was actually passed in 2018, but the industry kept seeing extensions until it actually went into effect this year. Without either the current Biden administration or the previous Trump administration stepping in to halt the new regulations, it could now cost those looking to get a CDL or upgrade to a Class A license, both time and money. The amount of time and course fee will vary by what type of license an individual is trying to obtain.

“If you need a Class A and all of the endorsements that would go with it, that’s 21 days of training and larger amounts of money at $8,500 to $10,000,” says Krapu.

Krapu says agriculture is exempt, as long as the driver stays within the 150-mile-radius air bubble. However, if you travel outside that zone, even for agricultural purposes, that’s when the new regulations could be stifling.

“If you were to go outside that 150 air miles to take corn to a grain elevator that’s outside the 150 miles, all of the federal regulations would apply to you. And that would include the commercial driver’s license requirement,” she says.

From new CDL requirements to vaccine mandates that impact truckers going across the border to Canada, Krapu says some truck drivers are finding better paying jobs that also allow better work-life balance.

“We’re losing drivers to non-truck driving jobs that are local,” says Krapu. “They can go work in a warehouse pulling packages for the same amount of money and very little risk.”

Inflation Already Costing Consumers, USDA Makes Large Upward Revisions in Food Price Forecast

Fri, 25 Mar 2022 21:35:47 GMT

USDA now expects food price inflation in 2022 to be from 4.5% to 5.5%, compared with 2021, based on the all-food Consumer Price Index (CPI). The prior outlook for food prices pegged the increase at 2.5% to 3.5%. Not a single or aggregate category is expected to decline.

Food away from home (restaurant) prices are forecasted to increase 5.5% to 6.5%, the third increase in as many months. Last month’s forecast was for a rise of 4% to 5%.

Food at home (grocery store) prices are now forecast to be up 3% to 4% in 2022, up from their previous forecast for an increase 2% to 3% from 2021 levels.

In 2021, grocery store prices increased 3.5% and restaurant prices were up 4.5%, with all food prices up 3.9% versus 2020 levels. The biggest increases in items tracked by USDA’s Economic Research Service (ERS) were the beef and veal category at 9.3% and the fresh vegetables category had the smallest rise of 1.1%.

(Farm Journal)

The overall food price CPI rose 1% from January to February and was up 7.9% from February 2021. The restaurant CPI increased 0.4% in February 2022 and was 6.8% higher than February 2021. Meanwhile, grocery prices were up 1.4% from January while those prices stood 8.6% higher than they were in February 2021.

The increases versus year-ago marks were substantial for many categories, and all categories saw gains. Prices for meats, poultry, and fish were up 13.1% from February 2021 while they edged up 0.9% from January—following a more modest rise of 0.2% seen from December to January. Prices for meats were 14.0% higher than a year ago, while beef and veal prices gained 16.2% and pork prices were 14.0% higher. The CPI for meats rose 0.8% from January, with a rise of 0.5% for beef and veal while pork prices moved up 0.7%.

Farmers Are Now Paying Above $5 For Off-Road Diesel, And It's More Than Just Russia to Blame

Tue, 14 Jun 2022 14:04:57 GMT

Gas prices keep crushing records in the U.S., but diesel prices are posting even more sticker shock as fears of a possible diesel shortage this year are also causing concerns. It’s not just retail diesel prices that are rapidly rising. There are now reports of farmers booking off-road diesel for farm use trending above the $5 mark, too.

(Farm Journal)

It’s an issue facing the trucking industry from coast to coast. AAA reports the national average diesel price is now $5.77 a gallon. A year ago, it was $3.21.

“It’s almost like every five minutes, I see the little live indicator tick up on our GasBuddy data,” Patrick De Haan, head of petroleum analysis, GasBuddy , told U.S. Farm Report two weeks ago.

GasBuddy tracks both diesel and gas prices in real time. And while the pain at the pump is something drivers are seeing across the country, it’s also an issue plaguing agricultural producers across the U.S.

“We had some farm diesel delivered yesterday, and it cost us $4.85 or $4.89 a gallon delivered. Two years ago, we bought fuel for just over $1,” Craig Moss, a farmer in Hull, Iowa, told Farm Journal’s Michelle Rook.

The rapid rise in input prices is eating into outlooks this year, even with high livestock and grain prices.

“It’s a challenging market, no doubt, buying $8 corn and $5.50 diesel; it’s a tremendous challenge for producers,” says David Newman, a pork producer in Myrtle, Mo.

While prices at the pump for both gas and diesel climbed this week, it’s a similar story for off-road diesel prices. A survey of farmers on Twitter drew a wide range of responses regarding the prices they are currently seeing. Farmers reported off-road diesel at $4.13 in the northern Corn Belt, while off-road diesel is now above $5 for those further east and in western states like Montana.

Research by Texas A&M Agricultural and Food Policy Center (AFPC) shows farmers are seeing nearly every input cost on their farm rise this year. Nitrogen prices produced the biggest increase, up more than 133% per acre year-over-year. Phosphorus and potassium fertilizer were up nearly 93% during that time. That was followed by fuel and lube, which jumped more than 86% compared to last year.

(Farm Journal)

The latest baseline projections from the University of Missouri Food and Policy Research Institute (FAPRI) also shows the sharp rise in fuels costs today.

“A 57% increase may or may not capture what’s happening right now throughout the whole calendar year of 2022, but it is capturing at least the part that we’re seeing right now,” says Bob Maltsbarger, a senior research economist with FAPRI.

FAPRI’s baseline projection shows even if fuel prices retreat the second half of this year, higher overall production costs will continue to sway balance sheets. Maltsbarger points out diesel prices vary by not only geography, but also by farm, especially considering crops like corn typically require more fuel use.

“It will vary quite a bit on the dollars-per-acre impact, but if you have about an equal increase on a percentage change basis, you will see those dollars per acre be more expensive in this calendar year,” he says.

Why Are Diesel Prices So High?

Why have diesel prices raced higher this year? It’s largely due to a shortage of refining capacity, not a shortage of oil, but the prices started to climb higher long before Russia invaded Ukraine.

“The nation is dealing with about a million barrels a day less of capacity than we had just three years ago. That’s the equivalent of about 5%,” De Haan explains. “So, not only is oil a problem with sanctions on Russia’s oil, but turning that oil into something like gasoline and diesel is also now a choke point.”

“Refineries have less capacity; we have about 1.2 million barrels a day of less capacity because of shutdowns that occurred prior to the pandemic,” says Debnil Chowdhury, vice president, head of Americas Refining, S&P Global Commodity Insights. “Also during the pandemic, we’ve had some convergence to biofuels’ facilities as well as a refinery that was hit by a hurricane and damaged to the point where it can’t really be run anymore.”

S&P Global Commodities is also watching the situation. At a time when the U.S. is typically building inventory, the opposite is occurring, which is also heightening concerns about a possible shortage.

“This is the year we’re running very low on inventory entering the summertime, and any type of impact on refining capacity is really going to increase the chance of the shortage,” says Chowdhury.

One Hurricane Away from a Diesel Shortage?

With supplies already tight, De Haan says the U.S. can’t afford to lose any refining capacity, which is a major risk considering NOAA is projecting an above-normal hurricane season.

“We’re probably one Category 3 storm away [from a shortage], and that Category 3 storm would have to take aim for an area roughly from the Mississippi River to Houston,” says De Haan. “That’s the really sensitive area. Not only could it affect refining, but it could affect offshore oil production.”

One of the reasons inventories are already tight is due to Hurricane Ida making a direct hit along the Gulf Coast. Refineries located near New Orleans went offline last fall, with some still not back online today. That major hurricane, and the devastation it caused, was one of the initial dominoes to fall for diesel prices.

“This all actually started before the war. It began in October of last year, when natural gas prices in Europe started to rise,” Chowdhury says. “The cost of natural gas increased substantially in Europe, and why that’s important to a Midwest farmer is because the cost of producing that diesel increased with it.”

Searching for Solutions

While the financial incentive is there today to pump more oil and increase refining capacity, one worker in the oil industry told U.S. Farm Report that the push to electric has investors concerned about the risk of such an investment. And considering it takes years for refining capacity to come online, that’s also not a solution today.

There’s talk of the Biden administration tapping into diesel reserves to help ease supply concerns, but De Haan says not only will that move have a minimal impact, it’s also a question of timing.

“It’s only a million barrels, so it’s not a infinite amount of supply,” he says. “The worry is that if we release those barrels of diesel now from areas in the Northeast, we’re also in the start of hurricane season. Now we do have some tropical activity. So when do you use the inventories? Do you use them now because of high prices? Or, do you wait for a bigger potential issue later this summer?”

(Farm Journal)

In order to relieve the tight diesel supply situation, Chowdhury points out the other option is for the government to wave the Merchant Marine Act of 1920, otherwise known as the Jones Act.

“The U.S. refiner now has to decide do we send product to Europe? We can send it via pipeline easily, but because of the Jones Act, which is a regulation that mandates U.S. flagged vessels from port to port, it’s not something that we could do now. And that’s something that the government could look at waving if we do face a shortage,” says Chowdhury.

The Jones Act is a federal statute that was established more than 100 years ago. It requires all vessels carrying good between two U.S. points be American-built, owned, crewed and flagged. The policy was created to help sustain American jobs, and in turn, generate economic benefits each year. Proponents claim the Jones Act has secured critical movement of goods over the years.

How Long Could the Diesel Price Pain Last?

While the industry searches for possible solutions, those who follow and track refineries don’t see a dramatic drop in diesel prices anytime soon.

“These prices are not going to go back to the levels we had at the beginning of 2021. It’s more likely that we’ll see maybe, you know, a $5 to $10 decline in crude price, and that would equate to maybe 50¢ to 60¢ on the diesel price itself. We’re not talking about a major relief,” Chowdhury says.

On the heels of diesel prices climbing higher again this week, anyone hoping for relief might have to look out beyond this year.

“It could take a couple of years. Keep in mind the longer we go down this road, and that demand eclipses supply, the more catching up we’re going to have to do,” De Haan says.

These ag equipment parts are in short supply

Tue, 28 Feb 2023 20:57:30 GMT

The National Farm Machinery Show (NFMS) earlier this month revealed one major theme: the supply chain is still posing major problems for ag equipment manufacturers. Leaders within the ag equipment sector say the supply chain issues have been a major hurdle in bringing some new equipment to market, and the issue could persist throughout 2023.

“The supply chain challenges that we experienced in 2021 and 2022 are with us for a little bit longer,” says Curt Blades, senior vice president of agriculture services for the Association of Equipment Manufacturers (AEM) .

From Case IH to Deere and Company, the equipment manufacturers admit issues sourcing parts has been a constant headache.

“Absolutely, it’s been an issue. Supply chains have been highly disruptive in the last 12, 18 to 24 months,” says Jahmy Hindman, Deere and Company chief technology officer (CTO).

Hindman says in the constant conversations Deere is having with their supply chain base, suppliers are telling them the situation looks to improve the second half of the year.

“It’s progressively getting better,” Hindman adds. “Our third quarter and fourth quarter of last year showed us the improvement in our ability to deliver the products that are being ordered to the marketplace. I expect that to continue in the first quarter of this fiscal year for us.”

AEM also sees improvement coming later this year, which means farmers could still face months of supply chain constraints.

“Maybe by the end of the year, we’ll begin to see some return to normalcy, whatever normalcy looks like,” says Blades.

Parts in Shortest Supply

Today, equipment manufacturers across the world are grappling with the same problem. The supply chain issues are not only ongoing, but hard to predict.

“We had this level of challenge, maybe now it’s a little bit less, but we’re not out of the woods,” says Kurt Coffey, head of Case IH for North America . “It could be tracks one day, it could be tires the next day. We have a lot of very unique, high-value, custom castings, a heat-treated custom casting, that you can’t just go get, and it’s a very unique supplier.”

Castings are the latest supply chain headwind to hit. No matter the type of equipment, manufacturers are saying castings are a major hurdle right now.

“It’s a little bit of a whack-a-mole strategy when it comes to the supply chain,” says James Shurts, president of the ag division for Great Plains . “It’s always something new, and it just happens to be that castings are our current issue and the current challenges. But it’s always something different.”

AEM recently conducted a survey of its members, showing:

The most sought-after component are tracks (and their included components):
Only 27% of optimal inventory is available.
In both agriculture and construction sectors, semiconductors and chips are in short supply.
44% optimal inventory is available across both sectors.

“The other things that are interesting are like wiring harnesses, which oftentimes are made in the Ukraine, or seat cushions, which are made in Texas in areas that were destroyed by floods. It’s not one thing, it’s a collection of things,” says Blades.

Case IH says as the parts in short supply continue to vary, the company is finding unconventional ways to address the issues.

“The last year or two has been custom castings, chips, tracks, tires,” says Coffey. “We actually pulled strategic sourcing in and went on third-party markets to go buy chips from third parties, millions of dollars of chips from a third party, bring them in, ship them to our partner suppliers so we can keep our lines going.”

The Biggest Issue? Labor

No matter what item is in scarce supply, the problem is bigger than one part or company.

“The underlying issue with all supply chain challenges are labor,” says Blades.

AEM also surveyed 179 equipment manufacturer executives about the supply chain late last year and found:

98% still face supply chain issues.
58% are experiencing continuously worsening supply-chain conditions.

The AEM survey showed equipment manufacturers of all size are getting creative to address the challenges, which includes increasing their inventory and supplier base, creating a more vertical integration of supply chains, certifying alternative suppliers, as well as focusing more on supply chain reliability than price.

Growing Optimism

Despite the constant supply chain obstacles, leaders at both John Deere and Case IH are optimistic.

“We’re not just hearing that it’s progressively getting better, we’re sensing it; we’re feeling it,” says Hindman. “We’re also seeing it come through in our delivery. So, as long as things continue on that trajectory, I feel pretty good about next year.”

“We’re not out of the woods, but we’re certainly in a better place than where we were, let’s say, a year, year and a half ago,” adds Coffey. “But we’re just going to keep fighting to make sure that we’re ready for whatever the customers need from us.”

Optimism is growing in the supply chain, even with some bumps still ahead, as agricultural equipment manufacturers continue to navigate uncharted waters with the supply chain.

Related Story:

John Phipps: Is it Even Feasible to Bring the Production of Chips and NH3 Back to the U.S.?

Signs Growing that the Global Supply Chain Crisis is Over

Fri, 23 Dec 2022 18:32:27 GMT

From the docks of Southern California and Europe to the parcel hubs in the Midwest and the store shelves in New York, signs are growing that the global supply-chain crisis is over, according to the Wall Street Journal (WSJ).

The COVID-19 pandemic that spawned product shortages, shipping bottlenecks and soaring transport costs may not be gone, but the WSJ reports goods are moving around the world again, reaching companies and consumers.

Despite widespread government and industry attempts to unwind the bottlenecks, the real break may have come in the demand slowdown that has eased the pressure on strained operations.

“As some of commodity prices and transportation costs begin to come down, we’re revisiting these costs with our suppliers,” says Bill Bolts of Lowe’s, on easing supply chain pressures.

On the Water

According to Drewry Shipping Consultants’ index for spot prices, to ship a 40-ft. container from Shanghai to Los Angeles the week of Dec. 22 was $1,992, down from $2,000 the week before and 82.2% below the 2022 high set in Jan.

U.S. container imports reached their lowest level in November since early 2020, and shipping heavyweight Maersk Line projects demand will decline next year from 2% to 4%. Freight rates that busted shipper budgets last year are sliding and broader costs for suppliers heading into 2023 are also retreating.

Rail Strike Derailed as Biden Signs Labor Bill

Mon, 05 Dec 2022 14:09:51 GMT

The Senate swiftly moved to pass a tentative rail agreement on Thursday with a landslide 80-15. This move followed the House’s favorable vote of 290 to 137 on Wednesday. President Biden signed the bill Friday morning, further derailing the looming labor strike.

Congress also voted on a paid sick leave bill, which the House moved to pass but the Senate chose to deny. The odds were close, however, with a vote of 52-43 .

Zippy Duvall, Farm Bureau president, says producers’ reliance on rail is what pushed AFBF to support and celebrate averting the rail strike.

“High diesel prices, a truck driver shortage, and low water levels on the Mississippi River have already made shipping conditions difficult,” Duvall said in an AFBF press release . “A rail strike would have had a devastating effect on the American economy, especially as families grapple with higher prices caused by inflation.”

“There was an industry-wide sigh of relief today after both Congressional chambers voted in favor of implementing the September TAs,” said The Fertilizer Institute’s Corey Rosenbusch. “Rail is critical to the movement of fertilizer year-round. Averting embargoes and production delays were crucial to not only ensuring we’re able to provide the fertilizers our nation’s farmers need, but also avoiding additional disruptions to a global market already constrained by geopolitical events and volatile energy prices.”

While some groups are applauding the outcomes, others are outraged.

The Brotherhood of Railroad Signalmen (BRS) spoke out on the votes in a press release :

“What took place in the United States Senate today is a symptom, and further illustration, of a larger issue in our country. Almost every elected member of Congress campaigns on being “for the working class”; the actions of many today demonstrated they are for the corporate class,” BRS said. “The dereliction of duty and inability to hold corporations accountable for a lack of good faith to their employees will not be forgotten.”

BRS says their work on the matter will continue, and they will “not be silenced.”

Tom Vilsack, USDA secretary, echoed each response, saying the rail system and workers both deserve protections.

“Our work doesn’t stop here. This Administration will continue to make progress on fostering economic growth and strengthening supply chains, and supporting workers who deserve protections in the workplace.”

According to Biden’s economic advisors, as many as 765,000 Americans — many union workers themselves — would have been put out of work in the first two weeks of shutdowns.

More on rail:

Congress “Likely” to Pass a Rail Deal this Week, According to Soy Transportation Coalition’s Steenhoek
Rail Strike Averted Until Dec. 4, Saving U.S. $2 Billion Per Day

Possible U.S. Rail Strike Now Back On the Table

Tue, 11 Oct 2022 13:54:35 GMT

A labor strike along U.S. railroads is still a possibility after the third-largest railroad union rejected a tentative labor agreement this week. The agreement had the support of the White House, but without all unions voting in favor of the agreement, a labor strike could still occur in mid-November.

Union leaders are arguing the railroads didn’t do enough to address worker concerns, largely surrounding working conditions and paid time off. Now, both sides will need to return to the bargaining table to avoid a possible strike once again.

The last close call happened just before the September 16th deadline, when a last-minute tentative agreement was struck, preventing a rail strike from taking place on that same date. Now, those labor conversations are back on as the Brotherhood of Maintenance of Way Employes Division Union opposed a potential five-year contract that already included a 24% raise in wages, as well as $5,000 in bonuses.

“The majority of the BMWED membership rejected the tentative national agreement and we recognize and understand that result,” said BMWED president Tony D. Cardwell in a statement. “I trust that railroad management understands that sentiment as well. Railroaders are discouraged and upset with working conditions and compensation and hold their employer in low regard. Railroaders do not feel valued. They resent the fact that management holds no regard for their quality of life, illustrated by their stubborn reluctance to provide a higher quantity of paid time off, especially for sickness. The result of this vote indicates that there is a lot of work to do to establish goodwill and improve the morale that has been broken by the railroads’ executives and Wall Street hedge fund managers.”

Transportation Nightmare

Strike or no strike, one veteran market analyst says rail issues are still severe, and now backlogs on the nation’s rivers due to low river levels mean even more emphasis will be placed on rail at a time when transportation logistics have been dubbed a “nightmare.”

“Well, even if we don’t have a rail strike, the rail is so congested and so problematic,” says Dan Basse of AgResource Company. “Today, it’s not going to make much difference. Rail prices are rising. If you look at the barge market heading to the Mississippi today, it costs one-and-a-half times to get beans to the Gulf as it would to load it and get it to China. It’s crazy what’s going on.”

Sourcing feed was already a problem for livestock producers and grain buyers in the western U.S. Issues nationwide mean everyone is paying more to get the essential grain.

“If you’re in Kansas or the Western Plains, you’re paying $2-over-plus for corn, if you can find it. It’s a problem,” says Basse.

While the third-largest rail labor union rejected the tentative agreement, all 12 unions, which represent nearly 115,000 workers, must ratify their contracts to prevent a rail strike. Four other rail unions approved their agreements with freight railroads.

By Monday midafternoon, the U.S. rail industry had yet to comment on the latest union development.

History of Ongoing Rail Strike Threat

As AgWeb first reported in July, a possible strike has been brewing all summer , with NGFA fearful a strike would occur in the middle of harvest. Fisher says even though a strike is prohibited by law ahead of Friday’s deadline, rail companies are shutting down shipments in advance in order to mitigate potential damages.

“The railroads don’t want to have the cars and equipment out in areas of the country where they can’t protect them very well,” Fisher adds. “So, they’re taking steps to mitigate damages. For our members, they’re looking at essentially not receiving their grain on time and not being able to then ship out the finished products such as ethanol, flour, things of that nature.”

Impact on Farmers

What will it mean for farmers? Max Fisher, NGFA chief economist, says a potential rail strike will have a severe economic impact on agriculture.

“From what I’m being told, we really cannot have the railroad stop even for a minute,” Fisher says. “With the railroads, there’s so much planning involved in every shipment that if we get them off plan, like have all the workers at home and so forth, it’s very hard to get things started again.”

Another potential problem is grain processing facilities and the backlog it could create. Fisher fears some NGFA members will be forced to shut down.

“I think there’s a very good chance we’re going to have shutdowns in the grain industry and at our processing facilities, not to mention the impact on our exports also,” Fisher says.

Trouble Shipping Grain And Feed Via Rail Far From Over, Concerns Now Growing About Possible Worker Strike At Harvest

Mon, 18 Jul 2022 20:00:15 GMT

Rail retains a vital role in the transportation of goods across the U.S., but this year, the 140,000- miles worth of railroad tracks across the country haven’t been immune to the supply chain chaos plaguing U.S. transportation sectors.

Now, a potential stoppage on the nation’s railways this fall is spurring concern, even after President Joe Biden signed an executive order Sunday to keep the nation’s rail traffic on track.

“What I’m hearing from our members is fewer equipment issues,” says Mike Seyfert, president and CEO of the National Feed and Grain Association (NFGA) . “The equipment and engines don’t seem to be breaking down, but the amount of time it’s taken to get the trains and the reliability of receiving them have.”

With more than 1,000 members today, NFGA represents everything from grain buyers and handlers to transportation companies who ship the grain.

“It seems to be most severe right now in the West, or for those who are trying to ship west on those lines that are going into the western part of the country,” says Seyfert. “Either for feed purposes, processing purposes, or export purposes to the western side.”

What’s Driving the Issues Shipping Via Rail?

Today’s rail issue centers around labor and the amount of time it’s taking to receive shipments via rail.

“The velocity to deliver trains is getting more and more difficult. You’re having challenges with having enough locomotives in different locations,” says Ken Erikson, senior vice president at S&P Global Fuels, Chemicals and Resource Solutions Group . “You have challenges with crews who may have been hit by weather, who may be hit by diversions, some of the rail crews timeout or they don’t have enough locomotive engineers in the right position.”

Eric Wilkey of Arizona Grain, Inc . is seeing the issue firsthand. Area farmers were in the middle of harvest, and Wilkey still hadn’t received the rail cars he needed.

“We’ve got a whole harvest that’s basically been received, and we haven’t been able to ship anything,” Wilkey told U.S. Farm Report at the end of June.

Wilkey says rail cars that were supposed to arrive in early May started to finally trickle in during the first part of July, but that was two months behind schedule.

“We never stopped the farmers from harvesting, so we have created some really large inventories and that has significant cash-flow impacts on us,” adds Wilkey.

Hearing Hints at Complexity of Issue

In April, the Surface Transportation Board (STB) stepped in, holding a hearing to get to the root of the rail issues. The hearing was full of differing opinions and pointed questions.

Just prior to the hearing, Landus Coop, which represents 7,000 farmer-owners in Iowa, submitted testimony saying rail issues meant they were only able to load half the number of shipments necessary, and the backlog meant farmers trying to haul grain to the coop were being turned away. The letter stated:

Landus is only able to load half the rate of shipments necessary today. With 450,000 bushels loaded in each train, this impact multiplies daily.
Farmers trying to haul grain to us today are getting turned away because we cannot make the inventory space for them. This is an important and optimal window of time when farmers must haul remaining old-crop inventory in preparation for harvest.
Disruption to inventory flow has led to increased handling costs and reduced customer service throughout Landus. We are experiencing lost business daily due to the disruption.
Grain bushels are getting “trapped” in pockets of surplus supply, while shipping destinations are experiencing a growing deficit in access to supply.
Our soy processing facility has experienced a 10% decrease in production over the past six months due to rail performance alone. This is in turn further impacting profitability and our ability to access markets where soybean meal is in highest demand.
Trucking is not a viable alternative transportation mode today due to labor shortages.

The letter went on to say “If this situation is not resolved quickly, we risk the potential for livestock producers in California and other states potentially running out of feed.”

Concerns About Labor Issues Growing Worse at Harvest

Rail carriers and unions are in the middle of labor negotiations right now. The collective bargaining process made headlines last week, as Biden had until Sunday, July 17, to create a Presidential Emergency Board (PEB). The move was an essential step in keeping the collective bargaining process on track, as well as keeping the nation’s railways operating.

“We are pleased that President Biden has taken an important step by creating a PEB to help all parties find a reasonable path forward,” says Association of American Railroads (AAR) president and CEO Ian Jefferies. “An agreement that allows both our hardworking employees and the industry to thrive into the future remains possible.”

AAR points out the Railway Labor Act governs collective bargaining for the rail industry, which aims to help parties reach an agreement without work stoppages or disruptions to U.S. freight rail movements.

While a crisis was averted with the president’s executive order, the collective bargaining process is far from over. Now, there are fresh concerns the ongoing labor dispute could come to a head just as harvest arrives in the Midwest this fall.

“Once we get into mid-September, there’s also a risk of some labor issues, even labor stoppage on some of the rail lines,” says Seyfert. “And so getting these things addressed now, and all of us working together before we get particularly into that fall harvest timeframe is essential. We’ve really never been in a situation where a reliable and resilient rail service is more important than it is now.”

Tense Labor Negotiations?

The April hearing in front of the STB gave a hint to just how tense those labor negotiations could continue to be. Rail carriers pointed out just how severely impacted they’ve been from what’s been dubbed the “Great Resignation,” and the issues getting labor back up to speed. Certain rail carriers also outlined the plans in place to get labor back to necessary levels to operate efficiently and smoothly.

However, rail workers place blame on the railroads, saying there’s more to the story. Mark Wallace, locomotive engineer, and vice president of Brotherhood Of Locomotive Engineers and Trainmen (BLET), which is North America’s oldest rail labor union, testified during the STB hearing in April.

“Since 1984, 40 railroads have been reduced to seven class one carriers, now largely controlled by speculators and hedge fund investors,” he stated. “This culture of profits over safety, customer service and the lives of railroad workers is now exposed as this industry is network fails on a daily basis.”

“Now, they signaled to us in meetings publicly and otherwise they are having some success in hiring again and getting crews successfully through training,” says Wilkey. “For the Midwest, there’s a little bit of time, but for us, there’s no time. We’re in harvest right now. And I don’t have time to wait another three months for crews to be trained.”

It’s not just the hearing that hinted toward prolonged trouble with train transportation. Grain handlers like Wilkey says current rail bids point to problems persisting into fall.

“These car values would be somewhere north of $1,000 per car this fall,” says Wilkey. “And so that’s the market sending signals that there’s going to be tightness, there’s going to be concerns.”

Typically, Wilkey says those bids would be around $100 per car.

Congress Urges STB to Take Action

In late June, 51 members of the U.S. House of Representatives signed a letter and sent to the STB regarding issues with the rail system in the U.S.. The letter asked STB to continue to work through the current rail issues with all stakeholders in order to address short-term challenges and find a resolution.

“On behalf of our constituents and farmers around the country, we write regarding poor rail service, which has limited fertilizer shipments, among other essential agricultural inputs and commodities, including grain and feed,” the letter stated.

“At a time when global fertilizer supplies and global crop production are highly disrupted, imposing shipping curtailments on fertilizer inputs and grain, as recently proposed by Union Pacific, will cause major supply chain disruptions, hurt American farmers, and exacerbate the food crisis considerably. We must ensure critical commodities reach essential industries and workers, such as America’s farmers, who are essential to feeding our nation and the world. Food is a national security issue, and we must treat it as such,” the 51 members wrote in the letter.

The Senate sent a similar letter to the STB in May.

Wait Times Cause Economic Pain

As the labor battle plays out, the short-term issues are causing grain handlers economic pain.

“There have been significant economic impacts,” says Wikley. “I would estimate since the first of the year, today, there’s been in the order of $100 million paid out by the industry to solve this logistics problem that’s developed. And that’s just outside of the bounds of normal.”

The battle over labor seems to have a long tail, as those in the grain industry try to work together to make sure this major shipping vein doesn’t buckle.

Dissecting Congress' $1.2T Infrastructure Plan, What's In It For Agriculture?

Wed, 10 Nov 2021 15:45:03 GMT

After months of infrastructure debate and setbacks, compromise spurred the House of Representatives to pass the Senate’s infrastructure bill . With a key vote of 228-206, the “ Infrastructure, Investment and Jobs Act” heads to President Biden’s desk for his signature.

The bill was passed by the Senate nearly three months prior, with the Senate cast a 69-30 vote on August 10, 2021.

According to Pro Farmer Washington Correspondent Jim Wiesemeyer, the bill contains $550 billion in new spending that will take place over the next five years. Part of that funding will be dedicated to roads, bridges and rail, as well as expanding electric vehicle charging stations. Another big piece of the legislation that could impact rural America is the broadband piece of the package.

Solving Supply Chain Challenges?

But for one transportation guru within agriculture, this could also help ease some of the supply chain constraints crippling agriculture.

“The supply chain challenges over the past year have highlighted the reality that we can get supply right, and we can get demand right, but if we do not get infrastructure right, we, as an industry and as a broader economy, will not flourish,” says Mike Steenhoek, Executive Director of the Soy Transportation Coalition (STC). “In addition to the overall stress confronting our global supply chain, a number of specific disruptions – Hurricane Ida, the Suez Canal, the I-40 bridge near Memphis, the Colonial Pipeline, etc. – have provided a vivid reminder that if one of our critical junctures goes awry for any number of reasons, the consequences to the broader economy can be profound.”

According to the American Soybean Association (ASA) , the legislation includes provisions to address truck driver shortages, including hours-of-service changes.

While the topline items in the bill sound packed with funds to help the United States’ infrastructure, what’s in it for agriculture?

Steenhoek says the biggest piece will be mending a problem that was apparent even before the supply chain challenges. He says crumbling infrastructure within agriculture, including dated locks and dams, could become an even bigger issue for getting exports loaded and shipped.

“A number of the key provisions of the bill – specifically the $110 billion in funding for roads and bridges and the $17 billion for ports and waterways – will clearly enhance the competitiveness of U.S. agriculture,” adds Steenhoek.

According to the Soy Transportation Coalition, the $548 in additional spending will be combined with existing baseline and will amount to $944 billion over five years. But when you extend that over eight years, he says the tally becomes $1.2 trillion.

STC broke down the funding that will impact agriculture as:

Transportation Categories ($284 billion; 52% of new spending):

Roads, bridges, and major projects: $110 billion
- Includes $40 billion for bridge repair, replacement, and rehabilitation
Passenger & freight rail: $66 billion

Public transit: $39 billion
Airports: $25 billion
Ports and waterways: $17 billion
Safety: $11 billion
Electric vehicle infrastructure: $7.5 billion
Electric/zero emission buses: $5 billion
Electric/zero emission ferries: $2.5 billion
Reconnecting communities: $1 billion

Other Categories ($256 billion; 48% of new spending)

Electric and power infrastructure: $65 billion
High-speed internet: $65 billion
Clean drinking water: $55 billion
Resilience and western water infrastructure: $50 billion
Environmental remediation: $21 billion

Additionally, Steenhoek says there’s a pilot program introduced by Sen. Mike Rounds (R-SD) that could help fuel the use of soybeans in construction and other projects.

Another element Washington watchers are bringing to light–a foreign freight car ban.

Wiesemeyer reported on Monday that buried in the plan is a foreign freight car ban that will likely catch China’s attention.

“The ban would effectively apply to freight cars manufactured by China,” reported Wiesemeyer. “Freight cars couldn’t have more than 20% of such content one year after the department issues the new regulations. The maximum would drop to 15% three years after regulations are issued.”

Wiesemeyer says manufacturers could be fined between $100,000 to $250,000 for each freight car that’s in violation. The Transportation Department could prohibit repeat violators from providing additional freight cars for operation on the U.S. freight railroad system. Manufacturers would also have to certify that they meet the requirements annually.

How will the federal government pay for the new plan?

Wiesemeyer says it will come from several different areas.

“The five-year spending package will be paid for by tapping $210 billion in unspent Covid-19 relief and $53 billion in unemployment insurance aid, which some states have halted, along with an array of smaller pots of money, like petroleum reserve sales and spectrum auctions for 5G services,” reports Wiesemeyer. “However, it will add $256 billion in projected deficits over 10 years, according to the Congressional Budget Office.”

What’s Next?

While the House Democrats scored a victory with the passage of the long-awaited infrastructure plan, there are still some major ticket that remain as unfinished business for the administration. The largest may be the highly debated Build Back Better (BBB) plan.

Just last week, the Biden administration unveiled a scaled down version of the original plan. The BBB now has a price tag of $1.75 trillion. And with a key procedural vote early Saturday, the House of Representatives moved the plan another step closer.

Wiesemeyer reports House Majority Leader Steny Hoyer (D-Md.) said the legislation would be passed before the Nov. 25 Thanksgiving holiday. In their statement, moderates said they would allow for a vote no later than the week of Nov. 15. But that could delay final action into December, when Congress must grapple with a Dec. 3 gov’t funding deadline and raising the debt ceiling, both of which will spark conflict with Republicans.

While many agricultural groups came out in support of infrastructure, the BBB plan isn’t striking the same chord of support. Agricultural Retailers Association ARA sent a statement following the infrastructure vote, applauding what the group called a “critical piece of legislation,” however, the group had the opposite direction of BBB moving another step closer to passage yet this year.

“ARA is strongly opposed to the House’s Build Back Better bill. The tax increases included in this plan would not only counteract any economic recovery but also result in steep cost increases for consumers,” said ARA.

John Phipps: How Dire is the World's Energy Crisis?

Mon, 01 Nov 2021 19:07:47 GMT

China used to import lots of coal from Australia. When the Australian government criticized Beijing for obstructing a study about the origins of COVIC, the Chinese government stopped those imports, which has crippled power generation in their rapidly recovering economy. They began to import from Europe, and Australia is now exporting to Europe. That illogical situation and multiple other factors, illustrate how the world has blundered into an energy crisis.

While coal is one factor, the largest is natural gas. Electricity producers had enthusiastically switched to gas-turbine plants for economic and environmental reasons. Covid drastically reduced demand resulting in US NG prices below $2. Meanwhile liquefied natural gas exports had finally begun to take off, offering financial hope to all the fracking and its NG production. Looking at the US Energy Information Agency projections, higher gas prices could prompt fracking to ramp up idled production, but relief from higher prices won’t come until late next year. Farmers are already experiencing it via truly astronomical nitrogen prices. Last fall we paid about $450 per ton for ammonia. Our local price today just went over $1000.

This theme of Covid shutdown coupled with the shift to greener energy, along really bad decisions, has led to a network of shortages that threaten home heating in Britain and Germany, electricity in Brazil, and bizarrely enough solar panel production as the availability of power in China has sharply cut silicon production. But wait, there’s more! Nuclear power plants were being shut down around the globe. Climate-change-induced drought cut hydropower output due to low reservoir levels. We’ve all seen photos of Lake Meade behind Hoover Dam which is running 25% lower output. It’s even more severe in Brazil where hydropower supplies over 60% of the electricity.

In this turmoil, the U.S. is probably in better shape than other countries due to our considerable resources, generation capacity, infrastructure, and above all, wealth. The transition to greener energy sources was limping along before Covid, but its economic whipsaw of demand and prices has created a true global energy crunch.

The collective noun for a group of swans is a lamentation. Given the black swan events we’re seeing in energy, it’s aptly named.

The Input Supply Chain is Scary for U.S. Farmers, Here's Why it May Be Worse in Brazil

Tue, 26 Oct 2021 13:32:13 GMT

As farmers race to finish harvest, the 2022 crop scenario is turning scary. Input prices continue to climb with some farmers fearing they may not even be able to source enough glyphosate and glufosinate for next year.

Stone X Group says according to their data, the Midwest wholesale anhydrous ammonioa nitrogen prices have risen approximately $434 since Sept. 10. That marks a 65% increase in just over a month, or $72 a week.

Even with climbing costs, at today’s commodity prices, agricultural economists at Purdue University say weighing corn versus soybean acres for next year really is a tossup.

“Somewhat surprisingly, both corn and soybeans were profitable this year, but corn was actually more profitable than soybeans in 2021,” says Michael Langemeier, Purdue University ag economist and a co-author of the monthly Purdue CME Ag Economy Barometer. “Looking at 2022, it’s about even. There really is no advantage towards corn or soybeans, despite the fact that nitrogen prices have increased substantially.”

Langemeier says farmers need to factor in all of their input costs, not just the role increased input costs will play.

“We have to remember for soybeans, cash rents are an extremely important expense for soybeans,” he added during the U.S. Farm Report College Roadshow last week. “It’s up to 40% of the cost of production. Phosphorus and potassium prices are also up substantially. So right now, there really isn’t an advantage towards corn or soybeans, at least in the eastern Corn Belt.”

As painful as prices are for U.S. farmers, South American producers are faced with a similar dilemma. However, Langemeir says the situation in South America may be more dire.

“I think it could be actually worse in Brazil than it is in the United States,” he says. “My understanding is Brazil imports most of their fertilizer needs – even more than we do.”

South America’s production is still a wild card for the overall production picture entering the 2022 growing season. Jim Mintert, a Purdue ag economist who also co-authors the Barometer, says while acreage is projected to be up in South America, that’s still unknown. And he says the production picture in the southern hemisphere always plays a vital role in demand.

“On the demand side, I think that’s really the bigger issue is when do we see a recovery and demand for exports, particularly to China, that’s going to be the driver on the soybean side,” says Mintert. “We’re holding up pretty well on the corn side. But a tremendous amount of uncertainty in terms of what this rise in input prices is going to do to production next year. And I think the thing that people are probably most worried about is what’s going on with nitrogen. In the short run, we can get by with some minimal applications of P and K, but not nitrogen, at least on corn. So, that’s going to be the bigger issue here as we continue through the fall and into the winter.”

As Bayer Warns of More Glyphosate Shortages, Here's How Severe the Situation Could Be this Spring

Thu, 22 Sep 2022 02:03:46 GMT

Glyphosate was already in short supply heading into the 2022 planting season, but another black swan event is putting an even tighter squeeze on supplies.

On Friday, Bayer sent a note to retailers saying due to production issues with a third-party ingredient supplier, the company won’t be able to fulfill some of its previously booked orders. Bayer declared a force majeure, which means due to the issue being out of Bayer’s control, the company will be able to escape contractual obligations.

(Farm Journal)

In a statement to Farm Journal, Bayer says: “Recently a supplier of a raw ingredient needed to produce glyphosate suffered a mechanical failure, which may have some short-term impacts on our production of the active ingredient to manufacture glyphosate. Our supplier is on track to restore production, we’ve sourced additional materials and made other mitigation efforts to help best manage this situation. We expect any impact to be marginal in terms of our annual glyphosate production.”

Glyphosate Squeeze

Bayer didn’t quantify just how much of an impact it will have on overall production, but says it’s continuing to work diligently with customers to address their needs.

(Farm Journal)

A newly released Farm Journal survey found even before the latest announcement, 57% of farmers say they had difficulty sourcing inputs for the 2022 season. Of those who had trouble booking inputs, 86% say herbicides were the issue.

Of those experiencing issues securing herbicides, 90% reported glyphosate is in the shortest supply for 2022.

Will The USDA Pop-Up Site Solve The Clogged Ports Issue?

Wed, 02 Feb 2022 20:52:54 GMT

Clogged ports amassed with shipping container vessels have captured news headlines since COVID-19 slammed the global supply chain.

Earlier this week, USDA announced a partnership with the Port of Oakland to ease congested ports and supply chain issues through a 25-acre pop-up site dedicated to agricultural companies for container filling purposes.

Following the pop-up announcement, various politicians have debated whether it will add further headache or relief.

Empty Opportunities

Rep. John Garamendi (D-Calif.) says the USDA partnership with the Port of Oakland “isn’t going to solve the problem” because shippers deliver product to the U.S. and leave ports with empty containers. He says ocean carriers currently have an exemption from antitrust laws that will continue to allow them to leave ports with empty containers “until there is a law in place that says you can’t do it.”

USDA Secretary Tom Vilsack responded saying his department’s efforts in the partnership are “not the only solution, but an important first step.” He says his work in communicating with ocean carriers has brought three major shipping companies back to the Port of Oakland, and he plans the same for the Ports of L.A. and Long Beach.

Pete Buttigieg, U.S. transportation secretary says the partnership will help American farmers and agricultural producers move their product to market “while also making better use of empty containers that are causing congestion at the ports.”

Ownership

According to White House Ports Czar John Porcari, only 2% of the global shipping market is U.S. flagged vessels. The three largest shipping companies running through California ports hail from China, Taiwan and Korea.

Garamendi sees the congested ports as international trade issue that requires the U.S. to put pressure on foreign countries. He says the U.S. Department of State has been in contact with these foreign countries, yet the port congestion has only expanded from 40% congestion to 70%.

Vilsack says his administration wants to do more for the port but hasn’t received a budget from the government to carry out further action. Regarding the pop-up, his team plans to use $5 million in funds from the Commodity Credit Corporation to:

• Pay 60% of the startup cost
• Provide pre-cool refrigerated shipping containers for perishables
• Offer $125 subsidy to offset logistic costs of moving containers to the pop-up

Weighing the Cost

Adjustments to truck-carrying capacity has been heavily debated as a solution to ports. Truck size and weight are established at the state level, with federal oversight.

Porcari says he has an ongoing discussion with the Federal Motor Carrier Safety Administration about increasing truck carrying capacity.

“This is not just a short-term issue related to the difficulties in exporting right now,” says Porcari. “This is a perennial issue that has be tackled in our infrastructure to accommodate those larger weights.”

Vilsack echoed Porcari saying ports and truck capacity are an “interesting” issue when considering the bipartisan infrastructure bill. He says as bridges and roads are repaired across the U.S., they can be strengthened to handle more weight and offer “greater resilience and efficiency in the long term.”

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Walmart Will Now Pay Starting Truck Drivers $110,000, Could It Backfire and Make the Nationwide Trucker Shortage Even Worse?

Inflation Already Costing Consumers, USDA Makes Large Upward Revisions in Food Price Forecast

Farmers Are Now Paying Above $5 For Off-Road Diesel, And It's More Than Just Russia to Blame

Why Are Diesel Prices So High?

One Hurricane Away from a Diesel Shortage?

Searching for Solutions

How Long Could the Diesel Price Pain Last?

These ag equipment parts are in short supply

Parts in Shortest Supply

The Biggest Issue? Labor

Growing Optimism

Signs Growing that the Global Supply Chain Crisis is Over

On the Water

Rail Strike Derailed as Biden Signs Labor Bill

Possible U.S. Rail Strike Now Back On the Table

Transportation Nightmare

History of Ongoing Rail Strike Threat

Impact on Farmers

Trouble Shipping Grain And Feed Via Rail Far From Over, Concerns Now Growing About Possible Worker Strike At Harvest

Read More: U.S. Rail Strike Averted For Now As Biden Steps In Before Sunday’s Deadline

What’s Driving the Issues Shipping Via Rail?

Read More: Livestock Producers Report Being Just Days Away From Running Out of Feed Due to Shipping Rail Issues

Hearing Hints at Complexity of Issue

Concerns About Labor Issues Growing Worse at Harvest

Tense Labor Negotiations?

Congress Urges STB to Take Action

Wait Times Cause Economic Pain

Dissecting Congress' $1.2T Infrastructure Plan, What's In It For Agriculture?

Solving Supply Chain Challenges?

While the topline items in the bill sound packed with funds to help the United States’ infrastructure, what’s in it for agriculture?

Another element Washington watchers are bringing to light–a foreign freight car ban.

How will the federal government pay for the new plan?

What’s Next?

John Phipps: How Dire is the World's Energy Crisis?

The Input Supply Chain is Scary for U.S. Farmers, Here's Why it May Be Worse in Brazil

As Bayer Warns of More Glyphosate Shortages, Here's How Severe the Situation Could Be this Spring

Read more: Exclusive: How Did FBN Do The Impossible And Source Glyphosate for 2022? It Was Costly, But Paying Off Now

Glyphosate Squeeze

Will The USDA Pop-Up Site Solve The Clogged Ports Issue?