What do you get when global demand climbs 20% since 2019 and global supplies fall 15%? The result is the current supply chain crisis.

The continuing supply chain issues and what farms are doing about them was one topic of conversation at the Vita Plus Midwest Dairy Conference held in Wisconsin Dells, Wis. Constance Cullman, president and CEO of the American Feed Industry Association, presented a few reasons why the U.S. is in this situation.

For one, our country has aging infrastructure when it comes to hauling products by land and water. “This is starting to catch up with us,” she noted.

In addition, the U.S. is built on a lean manufacturing model, one that focuses on just-in-time delivery and less inventory. That makes us a little less resilient in the face of disruptions, she explained. On top of that, labor shortages for jobs such as truck drivers that started long before the pandemic continue to affect how goods move across the countryside.

Beyond our borders, tariffs on inputs have added costs and interrupted access to some supplies. Mix in a global pandemic and the Russian invasion of Ukraine, and all of this has had a big impact on supply accessibility.

On the farm

During a panel discussion, three farm owners touched on how the current supply chain woes have changed their purchasing decisions. For Tim Kerfeld of Kerfeld Hill-View Farm in Melrose, Minn., he said they locked in a lot of inputs last fall, when prices were more reasonable. At their 270-cow dairy, they also keep more supplies on hand, from vaccines to chemicals, to ensure they have them when they need them.

J Hall of Hall’s Calf Ranch in Kewaunee, Wis., agreed. “We have gotten a lot more proactive,” he shared. “We keep more inventory on hand.” For supplies like antibiotics and vaccines, they have been maintaining six months’ worth of inventory. To protect this investment, they have a thermometer and alarm on the refrigerator where these products are stored.

With supplies that won’t go bad, such as diesel and oil, they purchase a year’s worth of product and store it. This ensures they have what they need to operate their 8,000 head calf ranch where they raise calves for more than 25 dairies.

To make the investment in more inventory, Hall said they worked closely with their banker, who has been supportive. A good relationship with your supplier is also important, noted Rebecca Davis of Barton Farms Co. in Homer, Mich.

On their hog and crop farm, where they manage 4,500 sows and market 110,000 pigs each year, it has been necessary to keep more products on hand than usual. “This is more overhead, and more cost tied up in storage,” she said, “but it’s worth it, because we need certain things to operate.” Maintaining relationships and planning ahead was the overall advice offered by this trio of farmers.

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(c) Hoard's Dairyman Intel 2022
July 4, 2022
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