In a typical year, a savvy farmer might conclude harvest and then sit down with pencil and paper to plan out some logistical strategies that will benefit the operation over the long haul.
But 2021 has been anything but typical. Massive supply chain hiccups affecting everything from raw supplies (steel, lumber, etc.) to labor and transportation has led to shortages, delays and ramped-up demand across the agricultural industry.
“It’s frustrating beyond imagination right now,” says Gary Woodruff, district manager with GSI. “We’re used to throwing bodies at past problems, but I can’t think of any other time when there’s absolutely nothing anybody can do.”
Grain bin construction has been running at a brisk clip all year, Woodruff says, adding that anyone who wants to break ground on a new project in 2022 had better get the process started as soon as possible.
“If you want to have that bin done, it may be too late by November or December,” he says.
While 2021 brings a unique set of challenges to the table, proactive producers who develop three- to five-year plans have always held the upper hand, Woodruff adds.
“They’re going to be far better off than the person who has reacted to current circumstances,” he says. “They’ll probably get the work done they want and be where they need to be.”
Upgrading farm equipment will also be a sticky situation for at least another year, according to BigIron Auctions co-founder Mark Stock. The current supply pinch, coupled with an influx of retirements from older farmers, has fueled red-hot demand for all new and used equipment, but especially for machinery that is in good condition and less than 10 years old. That’s due in part to the fact that those retirees are renting their ground to younger farmers who now need to manage more acres.
“If you have a low-hour tractor that’s 5 or 6 years old, you’ll get really close to what you paid for it new,” he says.
Stock recalls seeing a used grain trailer earlier this year fetch more than the seller paid for it a decade ago, citing one recent example.
Farmland prices are also on the rise, Stock notes. Outside investors are somewhat responsible for this trend — they are often the last or second-to-last bidder versus end-user farmers, he says. Some may be gambling that corn prices will stay between $4.50 and $6 per bushel for the foreseeable future, making farmland investments a lucrative venture.
“They see real estate going up significantly over the next 10 years,” Stock says.