SUPPLY CHAIN CRISIS HITS U.S. FARMERS HARD

SUPPLY CHAIN CRISIS HITS U.S. FARMERS HARD

BY PAUL MIRENGOFF IN AGRICULTURE, DEMOCRATS, SUPPLY CHAIN

My friend who reads the New York Times pointed me to a devastating front-page Times article about the supply chain mess. I think of the crisis in terms of getting products from ports to U.S. consumers. However, the Times article focuses on the problem of U.S. farmers getting produce to ports for shipment overseas

The article begins with this:

It’s just 60 miles from El Dorado Dairy in Ontario, Calif., to the nation’s largest container port in Los Angeles. But the farm is having little luck getting its products onto a ship headed for the foreign markets that are crucial to its business.

The farm is part of one of the nation’s largest cooperatives, California Dairies Inc., which manufactures milk powder for factories in Southeast Asia and Mexico that use it to make candy, baby formula and other foods. The company typically ships 50 million pounds of its milk powder and butter out of ports each month. But roughly 60 percent of the company’s bookings on outbound vessels have been canceled or deferred in recent months, resulting in about $45 million in missed revenue per month.

Naturally, the same shortage of truck truck drivers and congestion at American ports that prevents or delays items from getting to U.S. consumers prevents or delays farm produce items from getting to foreign markets. Thus, the supply chain problem isn’t just an inconvenience for rich folks, as Ron Klain apparently believes. It’s a whammy coming and going, and the victims are consumers of all classes, producers, and the U.S. economy.

The agriculture sector has been hit particularly hard. According to the Times:

Exporters say they are leaving significant amounts of money on the table as a result of supply chain problems. And many farmers are now struggling to keep up with soaring costs for materials like fertilizer, air filters, pallets and packaging, as well as find farmhands and drivers to move their goods.

A survey by the Agriculture Transportation Coalition, which represents exporters, found that 22 percent of foreign agriculture sales on average were being lost as a result of transportation challenges.

For example:

Mike Durkin, the chief executive of Leprino Foods Company, the world’s largest maker of mozzarella cheese, told House lawmakers this month that nearly all of the company’s 2021 ocean shipments had been canceled and rebooked for a later date. More than 100 of the company’s bookings this year had been canceled and rebooked 17 times, Mr. Durkin said, equating to a five-month delay in delivering their cheese.

In the interim, Leprino Foods has had to pay to hold its cheese in refrigerated containers in carrier yards, racking up an additional $25 million in fees this year.

The Times notes that the bipartisan infrastructure-plus legislation Congress just passed “aims to remedy supply chain backlogs by investing $17 billion in American ports, many of which rank among the least efficient in the world.” The bill “also includes funding to improve railways, roads and waterways, as well as a provision to fund pop-up container yards outside the Port of Savannah, in Georgia, to ease congestion.”

However, these are long-term solutions. They won’t ease the current crisis.

That crisis has political consequences. Rural Democrats acknowledge their unpopularity in rural America, a reality driven home by the recent election in Virginia. One warned that the party’s rural vote share might bottom out at zero.

That’s hyperbole, of course. But with the supply chain problem occurring on Joe Biden’s watch (and that of his absent Secretary of Transportation) and hitting especially hard in farm country, the Democratic share of the rural vote may continue to plunge for a while.

https://www.powerlineblog.com/archives/2021/11/supply-chain-crisis-hits-u-s-farmers-hard.php