Readers have been briefed on the ongoing semiconductor shortage that may last a "couple of years." The auto industry has grabbed the spotlight as the hardest-hit industry, with some of the world's biggest manufacturers restricting production.
According to a new report, the worldwide chip shortage is impacting the agriculture industry that may last for a couple of years and has already impacted the price of potato chips.
Hoosier Ag Today reports, "The biggest factor impacting the ability of US farmers to produce the food we need has nothing to do with the weather, the markets, trade, regulations, or disease. The worldwide shortage of computer chips will impact all aspects of agriculture for the next two years and beyond... farm equipment manufacturers have halted shipments to dealers because they don't have the chips to put in the equipment... not only have combine, planter, tillage, and tractor sales been impacted, but even ATV supplies are limited. Parts, even non-electric parts, are also in short supply because the manufacturers of those parts use the chips in the manufacturing process. As farmers integrate technology into all aspects of the farming process, these highly sophisticated semiconductors have become the backbone of almost every farming operation."
Rabobank's Global Economics & Markets desk commented on the Hoosier Ag Today report and cautioned on the "technological wonders of a global economy based on just-in-time supplies of a few key inputs from only a few locations; and then demand surged due a virus that ran rampant through said global economy; and supply chains got snarled for that, and other reasons; and now a lack of silicon chips even impacts on the price of potato chips (in the US) and chips (in the UK)."
The shortage has caused Reynolds Farm Equipment, one of Indiana's largest John Deere dealers, to inform customers that order times are unknown at the moment because production for specific equipment has been disrupted because of the lack of chips.
Bane Welker Equipment, which carries Case farm equipment and several other notable brands with dealerships in Indiana and Ohio, urged customers to plan ahead. The dealership warned customers that combine harvesters, planters, tillages, and tractor supplies have been limited because of the chip shortage. They even said ATV supplies are limited. All of this has severely dented sales for the dealership.
Farmers have been rapidly integrating technology into the farming process for the last decade. Agricultural technology has enabled farmers to produce higher crop yields, decrease water, fertilizer, and pesticides, which keeps food prices down and saves the environment. Though as Rabobank described earlier when chips go missing the technological wonders of a global economy come crashing down.
"In the U.S., we love our quick-fix solutions, which usually involve federal government bailouts. This time, however, that solution will not work to solve the shortage," said Hoosier Ag Today.
Intel's CEO Pat Gelsinger has been the latest in a chorus of voices to warn about the ongoing semiconductor shortage that will last for a "couple of years."
Gelsinger said U.S. dominance in the chip industry had dropped so much that only 12% of the world's semiconductor manufacturing is made in the U.S., down from 37% about 25 years ago.
"And anybody who looks at supply chain says, 'That's a problem.' This is a big, critical industry and we want more of it on American soil: the jobs that we want in America, the control of our long-term technology future," he said.
Chip giant Taiwan Semiconductor Manufacturing Co. is also warning that the shortage will continue throughout this year and maybe extended into 2022.
The worsening shortage is not just crushing the auto industry. It's also spilling over into farming, where some farmers are unable to source new equipment. What this means is used farm equipment prices are about to skyrocket in price.