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Shortages, price spikes slow building, equipment

Shortages, price spikes slow building, equipment

Combine and grain bins

New equipment is taking a few extra months to find its way out to the shop floors.

Ever since the pandemic began, shortages have become commonplace with significant effects in nearly every sector, including agriculture.

While the growing season is on schedule, any additional work that needs to be done has seen a slowdown.

“We were already booked out a couple of months, but then we had baseball-sized hail in our area in April, and then the derecho, so it’s been all hands on deck,” said Lucas Grout, general manager at Eastern Iowa Building in Fairfax, Iowa.

The company received more requests for farm buildings this year than in nearly the last 10 years, primarily tied to the spike in crop prices, Grout said. With the added requests, they are booked out for nearly a year.

The shortages in lumber and steel have caused some of those delays, but so has a jump in pricing for those materials. Grout said their supplier was able to keep them in good shape, but when those commodities cost more, it is going to cost more for them to put up buildings.

“If you called last year and now called in June this year, it might be up at least 25%,” Grout said. “Some people probably assume we are just trying to gouge them because we are busy, but unfortunately it’s because all the materials have gone up. A lot of them believe it’ll come back down, but that’s just not going to happen.”

While Grout said lumber prices are starting to stabilize, steel prices are still shocking to him. The latest data for U.S. hot rolled coil steel shows the price has risen nearly four times what it was in August.

“It blows my mind,” he said. “I don’t think it’s topped out yet.”

He said the slowdown in steel has put pressure on many construction companies that don’t have reliable suppliers.

With people buying at high prices, he said these higher prices could be around for a while.

“Until people stop buying it, they aren’t going to lower the price. That’s not a good business practice, right?” Grout said. “There was nothing left to buy, so (some suppliers) panic bought at whatever price they had to because they were behind the eight ball.”

The shortage has also been noticeable for equipment dealers. New equipment is taking a few extra months to find its way out to the shop floors. Mike McNall a store manager with Sloan Implements, said most of the issues have been with lawn and garden equipment, but it has spilled over to the ag industry.

With the continued demand, McNall said business has remained steady, so long as they can keep supply on the shelves.

“Everything is backed up, more than normal,” he said. “They are much slower in getting orders in. For most people, you are trading something in, so instead of doing it in June, you are getting it in August. The new machines are taking three months longer.”

He said it isn’t as impactful for farmers because with trade-ins, they still have their previous equipment until the new implement comes in, but it can still be frustrating.

The added factor of higher crop prices and additional profit has only increased demand.

“We’ve had people looking at combines right after they were planting corn, typically not a normal thing to be doing,” McNall said. “Then once they prove to themselves they have a good crop, I think they’ll be more active again.”

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