Coronavirus Causing Major Supply Chain Issues for the Agriculture Industry
The Coronavirus crisis is impacting every aspect of the U.S. economy. This includes agriculture. While it is true that businesses such as restaurants are taking a sudden and substantial hit, the hit to agriculture will likely be in the form of a prolonged downturn.
Coronavirus is the latest in a string of misfortunes that continue to chip away at the agricultural industry. These include flooding and other weather disasters, the trade war, and commodity prices that are below the cost of production.
There are other less obvious hits to agriculture caused by the coronavirus that many people outside of the industry may not consider. One of these is supply chain issues. As logistics are disrupted and efforts proceed to slow the spread of the virus, multiple connected industry sectors are being impacted.
One example of supply chain issues has to do with hay farmers and exporters. The decline of imports into the U.S. means that there are few empty shipping containers for hay exporters to fill and send across the globe. With fewer containers, it is difficult to move hay efficiently so it just sits.
Shipping lines usually book containers filled with hay on a vessel to go overseas every two or three weeks. Booking is now eight weeks or more out.
There have been bottlenecks at ports in other countries as ships wait to be offloaded with U.S. products such hay, dairy and other farm products. The Chicago Mercantile Exchange has shut down floor trading of all products until “further notice,” though electronic trading will continue.
Sprawling global food production and distribution shocks illustrate the COVID-19 pandemic’s seemingly boundless capacity to suffocate economies worldwide and upend even the most essential business and consumer markets. While supplies of staple grains such as rice and wheat have seen limited disruption so far, problems with planting and logistics are mounting.
U.S. and Canadian exporters are grappling with a shortage of refrigerated containers to supply goods, as voyages of container ships from China to the West Coast are down by a quarter due to reduced demand because of lockdowns. Containers are tough to get right now according to several U.S.-based trade groups. The general consensus seems to be that if a company needs five containers, they can expect to find one.
Across the globe, supply chain issues are multiplying for a variety of reasons. Laborers cannot get to the fields for harvesting and planting. There aren’t enough truckers to keep goods moving. Air freight capacity for fresh produce has plummeted as planes are grounded. Unfortunately, the only solution to these problems is to wait the COVID-19 crisis out.