KANSAS CITY, MISSOURI, US – As the world slowly trends toward some sense of normalcy with the number of COVID-19 vaccinations rising and cases and deaths declining, the fallout from this once-in-a-century pandemic on the global grain industry continues to linger, and in some cases, worsen.
Although the grain, flour and feed industries have demonstrated a remarkable ability to maintain, and in some cases, increase production during the pandemic, the bigger challenge has been transporting grain and grain-based products in a timely manner through a global supply chain that has descended into dysfunction.
The pandemic has produced a perfect storm that conspires against the efficient movement of all goods, including agricultural products. That storm includes a labor shortage affecting all modes of grain transportation, temporary shutdowns of some of the world’s largest ports — particularly in China — in an attempt to prevent the virus from spreading, and a massive hurricane that halted traffic at the Port of New Orleans for several weeks in September. Couple these supply-side issues with soaring consumer demand for all types of products as the world emerges from the worst days of the pandemic, and it’s easy to see how demand is outstripping supply.
Shortages are being felt at every link in the agricultural global supply chain. Grain producers are unable to get inputs for their planted crops. Grain handlers are struggling to transport grain to end users due to a shortage of truck drivers and rail and port workers. Feed millers are struggling to keep enough feed ingredients in stock to fortify their products, and frustrated consumers often can’t find bread and other grain-based products on the grocery shelves due to supply chain bottlenecks.
The pandemic has exposed the global supply chain as more susceptible to dysfunction than anyone could have imagined two years ago. It also has demonstrated that supply chains are only as strong as their weakest link and, even in this increasingly automated world, cannot function properly without a full complement of workers.
The result of the sputtering supply chain in the face of high demand is, of course, surging prices for every product imaginable. A silver lining for the grain industry, particularly those who produce and merchandise grains and oilseeds, has been that skyrocketing prices have meant a chance to finally cash in after a seven-year stretch of depressed prices. The world’s major agribusiness companies are taking advantage of grain marketing opportunities and strong demand for their products in this volatile market to produce consistently positive quarterly earnings reports for the first time in several years. But unless the global logistics nightmare is remedied soon (some analysts predict the problems will persist well into 2022), product shortages and rampant inflation will far outweigh any advantage linked to high grain prices.
Reaching herd immunity by vaccinating as much of the global population as possible is part of the solution, but it’s equally important that governments and private industry provide incentives that will draw potential workers off the sidelines and into the workforce.
Until that missing link is addressed, the supply chain will remain weakened and inefficient.