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‘Unprecedented’ shortages arrive at ag businesses

‘Unprecedented’ shortages arrive at ag businesses

Machinery dealer

Supply issues can affect prices for ordering products and trade-in value at ag dealers.

FARLEY, Iowa — Paul Scherrman recently had a customer make a purchase at his implement dealership on a product that won’t arrive until the second half of 2022. For other customers, it can be an arrival time is uncertain.

The owner of J.P. Scherrman, Inc., in Farley, Iowa, said this has become the trend for many implement dealers in the agriculture industry as the supply chain has slowed down a lot of production.

“All three of our manufacturers have backlogs,” Scherrman said, “and it’s the same answers we get consistently, so it’s consistent throughout every industry. Disruption in the supply chain is there, whether that’s labor or components, it seems to be a combination of all the above. The other kicker to our problems is just the skyrocketing price.”

This slowdown in the supply pipeline is “unprecedented,” Scherrman said.

“I can remember one manufacturer several years ago that was way behind on manure spreaders and feed wagons — high usage and wearing equipment — and we had to adjust then,” he said.

Now, he pointed to the pandemic as one of the main reasons for why it has become so difficult to acquire parts and equipment.

“It shut down the world for a while and the labor force just hasn’t gotten back fully to work,” Scherrman said.

As far as when things will calm down, Scherrman said he’s hopeful there is better movement a year from now, but his concern lies on the current price increases and when those will start to go down.

“To me, a year is still taking a while,” he said. “If we have some type of consistency (in late 2022) — still expecting some sort of a backlog — I think we’d be fortunate. But the cost of steel and copper and plastic, with all their problems of availability, have just skyrocketed.”

He said this has created a new dynamic for customers looking for equipment with additional planning needed when making a purchase. Scherrman suggests adding a few months into the process just to account for delays, just so everything is ready for when the equipment is required.

The price fluctuations Scherrman referred to aren’t expected to slow down anytime soon. He has had conversations with his salespeople about how prices are expected to continue fluctuating even before a customer receives their product. That can affect the end price and even trade in value of machinery.

“We can say ‘here’s your price today’ but it might change when you get it,” Scherrman said. “We can show what trade in value is today, but it will be reevaluated in six to eight months or whenever it needs to.”

He said having to wait on trade-ins may decrease the value of the older machinery as farmers will likely need to put another season’s worth of hours on that equipment before their newly purchased equipment is available.

“If we don’t get that machine for a few months and it breaks down, well we gave a trade-in price for operating in a certain condition,” he said.

While there are plenty of worries about customers getting equipment, Scherrman reiterated that implement dealers are worrying about the same things, so patience will be important.

“I hope everyone understands we are in this together,” Scherrman said. “I wish we had the equipment and the manufacturer wishes they had it too. People are starting to realize they need to get in the order queue because they will still need it three months from now too.”

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