CoBank: Supply chains arguably in most dire condition
Businesses and industries wrestle with perhaps the worst supply chain bottlenecks to date.
National Hog Farmer
Oct 12, 2021
The U.S. economy is on a strong growth path and cash-rich consumers are spending robustly on both services and goods. Roughly 80% of the U.S. adult population has now received at least one vaccination shot, leading to renewed participation in many public activities. But while the U.S. economy is running hot, it is still very much in the grips of the pandemic. Its negative influence, however, has steadily shifted from curtailing demand to derailing supply chains.
According to a new Quarterly report from CoBank’s Knowledge Exchange, supply chains are arguably in the most dire condition since the start of the pandemic, as lead times for manufacturing inputs recently reached record highs. Persistent supply chain disruptions and labor shortages are adding significant costs to business operations, and consumers will feel these effects through higher prices for months to come.
“Supply chain snarls are likely to persist well into 2022, and so will elevated inflation,” said Dan Kowalski, vice president of CoBank’s Knowledge Exchange division. “The latest producer price index data for August was up 20% year-over-year, while the consumer price index increased just 5.2%. So, it’s clear that many businesses are passing only a small portion of those cost increases on to the final consumer. We expect that will change in the months ahead and many businesses will raise prices.”
Rapidly rising input costs and product shortages are hitting agriculture particularly hard, as ag commodity prices have flattened and inflation compresses margins. However, robust exports have kept much of agriculture in the black. The USDA currently projects that China will import $39 billion of U.S. ag products in 2022, up from an estimated $37 billion in 2021. While that forecast looks promising, success will be much more dependent on prices remaining high as volume is likely to fall.
Grains, farm supply & biofuels ...
Animal protein & dairy ...
Power, water & communications ...
more, including link to CoBank full report