Potholes in the supply chain – part 2

March 10, 2022 | Kriss Nelson

During a supply chain panel at the Iowa Soybean Association’s Innovation to Profit Conference held last month, infrastructure and handling supply were hot topics.

The session was moderated by Mike Steenhoek, executive director of the Soy Transportation Coalition and featured Mike Ralston, president of the Iowa Association of Business and Industry (IABI); John Latham, president of Latham Hi-Tech Seeds and Kent Craighton, territory manager at Sukup Manufacturing.

Here’s a snapshot of what the panelists provided during the panel discussion:

Q: What is something regulatory in nature or where you would recommend deploying investment in a particular mode or infrastructure project?

Ralston says decisions should be made at a local level.

“When it comes to government spending, decision-making should be taken down to as close to a local government as we can,” says Ralston. “We think the folks in their local areas know what needs to be done. They know where that money needs to be spent.”

To maintain a competitive edge, Latham says the U.S. must invest in bridges and maintain our gravel system. For Latham Seeds, the gravel system quickly becomes a limiting factor in getting seed products to the country.

“Bridges and rural roads are an infrastructure concern not just in Iowa but in all states where Latham Seeds does business,” says Latham. “Compared to many countries, our highway system is one to be proud of. Our rural infrastructure and ability to easily move crops and livestock from rural areas to markets and ports is what keeps U.S. agriculture competitive in the world market.”

Craighton says infrastructure in the United States isn’t as deficient as other countries, but recognizes that if monies are committed toward those improvements, it needs to ensure it gets spent.

“The government needs to devote the money they claim to be committing to these things rather than spending it on everything else,” says Craighton. “I would encourage everyone to grab their congressmen’s ear and hold them accountable to spend their money where they said they were going to spend it.”

Q: Management of the supply chain has revolved around just-in-time delivery, allowing companies not to have a considerable overhead of products. Thoughts on just-in-time delivery?

Ralston says their members are expanding their inventories and storage capabilities.

“They are getting more raw materials in,” says Ralston. “For a long time, you didn’t want a bunch of inventory sitting in a warehouse because you weren’t making money on it. Now, if you don’t have it, you might not have it when you need it.”

In the seed business, Latham says that just-in-time delivery isn’t always customer-centric and presents its own challenges when handling live organisms.

“Seed is a very personal choice for each farm. Their acres are unique, as are the solutions to get the most from those acres,” says Latham. “If Latham Seeds were to implement just-in-time delivery, it would limit our ability to tailor products and treatments to what’s needed on the customer’s farm.”

They would also risk weather-related issues as our quality standards require Latham to halt seed cleaning and handling in frigid temperatures.

“On the flip side, the spring thaw can make on-farm delivery a challenge. In the end, we find that seed delivery to dealers and farmers brings peace of mind when arriving well ahead of the spring rush,” says Latham.

Craighton says given the supply chain problems, Sukup is increasing their inventory to safety stock levels.

“We give ourselves a little padding,” he says. “You have to be careful with that. It has to be managed. We are really careful not to overdo that, but we want to make sure we satisfy our needs out there.”

 

Q: The whole discussion of more processing in the United States, which means more local meal and oil being produced, has profound implications on the supply chain; what are the implications for storage?

Sukup, Craighton says, is a huge proponent of the biodiesel and ethanol industries. To help meet the growing demands of commercial and on-farm storage have been expanding the sizes of grain bins and products for those facilities.

“This has opened up 365 days per year of marketing capabilities,” Craighton says. “Having ethanol plants in your back door, crush plants are going to be really big for your industry and the ability to market and capitalize on premiums and on-farm storage you have the grain in your possession, and you are in control of its destiny.”

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