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Bale wrap to drainage tile, a pinch on plastics supplies is spurring nationwide shortage

Contributed by Tyne Morgan Published on 11 May 2021

As the 2021 planting season is officially underway, many farm inputs and supplies are seeing a shortage. An ag chemistry shortage is impacting those trying to control weeds, but the pinch on products covers much more than crop inputs today.

“There's been a couple key things that have just really caused the supply chain to get backed up,” said Derrik Ellingson, chief strategic officer for Ellingson Companies in Fargo, North Dakota.

Ellingson Companies installs drainage tile and serves a number of industries, including agriculture. The company, which has been in business since 1970, said it focuses on waters solutions for its customers, and this year, a shortage of plastic supplies means installing drainage is coming at an added cost.

“There's definitely a shortage,” said Ellingson. “And obviously, when there's high demand, these guys are going to capitalize, which is driving the price up. And there is a shortage.”

He says anything that is a plastic-based product is in short supply.

“I don't think anyone could have ever expected the demand for plastic to drive through the roof,” he explains. “The car industry, boats, SUVs, side by sides, ATVs, home projects, all these decks people are putting in that’s plastic decking. Everybody is spending money taking care of these things. So it's just completely compounded into a problem that we are faced with here today."

From demand, to now production problems at plants, it’s a problem that first popped up last summer.

“Those hurricanes [last summer] took many of the petrochemical facilities offline for a period of time,” said Jennifer Van Dinter, head of integrated analytics, S&P Global Platts. “That's kind of what started this whole domino effect. And since then, there were more outages in December that were not necessarily planned events for maintenance. And then we had the deep freeze that hit Houston, New Orleans and all of the areas in between that took so many of those plastics plants, as well as refineries, offline for several weeks in many cases.”

As a result, from the raw goods to the end product, plastics prices are racing higher.

“We've seen a very strong run up in some of those prices of PVC, polypropylene; are all trading at highs that we haven’t seen for the last 10, maybe 15 years, depending on which product and in grade you're looking at,” said Van Dinter.

“We've seen about a 25 to 30 percent increase in costs in purchasing of what we're paying from a year ago today,” said Ellingson.

Bale wrap shortage

The input supply shortage isn’t just hitting the row crop side of agriculture. Livestock producers are also having trouble sourcing supplies.

“What is used to primarily hold hay bales together is a plastic product,” said Anthony Jones, owner of Jones Twine and Net Wrap in Sheldon, Missouri. “And we have a really interesting dynamic going on in the world with polyethylene, which is the resin material that is used to make silent rap baling twine net wrap.”

Jones said the impact at the farm supply level is a residual effect of the pandemic last year. The long tail of COVID-19 caused production problems around the globe.

“As we look at the supply, we're finding out from our USA manufacturers, from European manufacturers, from your Asia manufacturers, that there is an extreme global shortage,” said Jones.

As a result, he said prices are posting steep gains, and some supplies are even hard to find.

“With some of the silage wraps, we're seeing not just a 10 or 15 percent increase, but we're seeing 20, 30 or even 40 percent price increases on these coming down the line,” Jones added. “And we are hearing multiple manufacturers that are saying they might not even have products when we get close to the hay season.”

As hay season approaches, Jones said prices are climbing and supplies are dwindling. But he said it’s not just bale wrap seeing the supply pinch. Even metal-based steel reels are seeing climbing prices happening as there’s a shortage of product today.

“Even if it's just not the material cost, shipping is absolutely outrageous,” said Jones. “We're seeing shipping rates double, triple, even quadruple in some areas. That's just going to cause everything to skyrocket. And it's also going to cause shortage.”  end mark

This article originally appeared on the Farm Journal AgWeb website, April 28, 2021.

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