Supply chain disruptions from fertilizer, to fuel, to equipment and equipment parts have plagued the agriculture industry for several months, but there isn’t an end in sight.
Eric Raby, senior vice president of Americas for CLAAS was at Commodity Classic at New Orleans, Louisiana, providing customers with some answers to some of their questions. The key takeaway, says Raby, is although they aren’t able to predict the future, the company is working on being as transparent as possible.
Currently, when it comes to inflation and the rising costs of products, Raby says the company looks at pricing on more of an annual basis, so costs are being absorbed by the company. The longer this goes on, though, the less likely it will be that those costs will be completely absorbed by the companies.
“In some cases, we are having to pass [that added cost] on. And in some cases, it’s not pricing, but it’s availability. So we might not be able to supply a particular machine in the current 2022 model year, it might be 2023. And then we’ll just need to understand with the customer, we want to maintain that pricing that was quoted to you before, and that’s our ultimate goal,” Raby explains. “In all honesty, there’s no difference in whether you’re the farmer, the dealer, the manufacturer, or the input provider — at some point in time, we have to pass some of those costs along.”
If the supply chain issues continue on, mitigating circumstances are going to play a role, and as Raby explains, one of these techniques may include not relying on a sole supplier for components.
“It’s true in some cases, but in others, there’s a lot of competition like in the rubber tire industry, we’ll start looking at other suppliers to fill in some of those gaps. So that’s going to be continual,” Raby notes, adding this could be a positive side to the story, as it will allow for diversification to the supply chain. “So hopefully we can introduce some new technologies maybe that we didn’t have before, but also mitigate some of the risk on supply in the future. But there is no silver bullet for this.
“It’s going to be something that our industry — our global economy — is going to have to be looking toward in the future on how we need to handle the together.”
Check out the full conversation between Eric Raby and RealAgriculture’s Kara Oosterhuis, below: