BAKERSFIELD, Calif. (KERO) — Some of your favorite products are missing from the shelves because supply chain issues are still prevalent. And that backup is also affecting the Kern County agricultural community.
Agriculture is an integral part of Kern County's economy but as supply chain issues continue to be an issue, a grower and a representative with the Kern County Department of Agriculture said the impact on local growers will have customers paying even more for fresh produce.
Daniel Palla, a farmer with the Kern County Farm Bureau, said the backlog has also caused issues with exporting goods.
"Ag has been greatly affected by supply chain issues. We’ve been affected on the import of products, fertilizers and pesticides have skyrocketed in price. Obviously, materials and metals have also gone up in price a lot.”
“Also on the other side we’re having an increased expense in growing the product," continued Palla. "But what we’re having also an issue with exporting the product. The containers and the ports have been a constant problem. Getting products overseas has been a great problem and if we’re unable to ship it, then we are unable to sell it and it's causing the prices to go down.”
We’ve seen the images often: ports backed up at the coast and dozens of industries saying they are being affected by supply chain issues. The deputy director of Kern County Consumer and Agriculture, Cerise Montanio, said while a number of businesses are dealing with this issue it is different for agriculture.
“This is mother nature. You can’t stop it. These are perishable products so it affects our industry - the agriculture industry - just on a different level than the other industries that are trying to export non-perishable commodities.”
Cerise said one of the biggest issues their department has seen locally is transferring the products.
“Every day we have cancellations or postpone inspections. A lot of that is just due to the shippers that we work with. They can’t secure transportation so they’re having to make adjustments, redirect their shipments to other places either domestically or to countries that they can get transportation for.”
Montanio said it’s been a struggle being able to coordinate shipments. She said the biggest problem has been transportation. Securing containers and vessels internationally is a huge obstacle. She also added while ships are at the ports waiting to be offloaded they have to wait to upload them and get the produce exported.
Domestically Montaino says the problem comes back to transit.
“During COVID, there were so many people that stopped working and less people driving trucks and working in the logistics industry creates a huge backlog for getting these shipments out whether they’re domestic or international.”
But the biggest difference will be in consumers’ wallets.
“What we’re going to end up seeing is price increases because there’s just such a huge demand for the ag industry to get their products out in a timely manner and the payment is just going to be out of our pockets,” said Montanio.
And when it comes to fixing the issue, Palla says there has not been a lot of change.
“There’s been a lot of talk on fixing the supply chain issue though on the ground we’ve noticed no difference in anything.”
Despite supply chain issues, Montanio says the latest crop report for the state ranks Kern County agriculture as number two in the state bringing in more than $7.6 billion.
What's Causing the Supply Chain Issues
According to Business Insider: "The supply-chain crisis is the result of COVID-19 disruptions paired with a boom in demand. Shortages of workers, equipment, and space have only made the issue worse."
What's Causing the Disruptions?
According to ABC News, "analysts say that the lingering effects of COVID-19 mitigation strategies essentially reduced the production of goods and services, and the supply-chain shortages now happening are the result of struggles to return to pre-pandemic levels."
"Economists believe there are several factors contributing to the supply-chain shortages, including a growing number of workers quitting jobs key to keeping things running smoothly. A record 4.3 million Americans quit their jobs in August -- the most since the Department of Labor started tracking this data in 2000."
There is also an increase in demand. Jonathan Gold, vice president of supply chain policy at the National Retail Federation, told Business Insider that "Demand grew so rapidly in the past two years that it's equivalent to about 50 million new Americans joining the economy."
That demand results in a "bullwhip effect." Robert Swinney, an operations professor at Duke University’s Fuqua School of Business, explained that "as companies see increased demand for their products, they scramble to keep up. This can create distortions that ripple through supply chains."
“Imagine a retailer sees demand increase 10 percent for a product,” he said. “Anticipating continued growth, it inflates its orders with suppliers not by 10 percent, but by 15 percent. Now their supplier sees a 15 percent increase in retailer orders. Also anticipating further growth, the supplier inflates its orders with its suppliers not by 15 percent, but by 20 percent. This pattern can repeat at each link in the supply chain.”
And the government's attempt to help people weather the pandemic may have also had unintended consequences on the supply chain. As Yossi Sheffi from MIT Sloan Management Review explains: "In the U.S., the government poured trillions of dollars into the economy in order to help people who lost their jobs or were otherwise in financial distress during the pandemic. These benefits included enhanced unemployment assistance, child tax credits, and expanded food stamp benefits. Government largesse, however, was not precisely targeted and ended up fueling many purchases, leading to a huge increase in demand for many specific goods."
The good news is things may get better sooner rather than later.
"By the second quarter of 2022, manufacturers and their suppliers may reach a better understanding of actual demand and inventory constraints, minimizing phantom orders," wrote Sheffi. "Suppliers may also have time to invest in expanded capacity in those segments where they expect demand to stay high."
Others however argue that supply chain issues will continue through 2022 and may not improve until 2023.
How is the Agricultural Industry Doing in Kern County?
23ABC took a deeper look at the most recent crop report from the Kern County Department of Agriculture and Measurement Standards and found out which local crops are the top five commodities in this area as of 2020.
- According to the report, grapes are the top commodity with a value of over $1.4 billion. In 2019 grapes were number two.
- Following grapes is citrus. Both fresh and processing have a value of over $1.3 billion. Citrus was ranked third in 2019.
- Almonds fell two spots from 2019 from first to third with a value of more than $1.1 billion.
- Pistachios came in fourth with a value of just under a billion dollars.
- And in fifth place is milk with a value of over $661 million.
Both pistachios and milk saw no change in ranking from 2019 to 2020. The report for 20-21 has not yet been released.