Farm Source director for Fonterra Richard Allen said while there were no category shortages, some inventory levels are not where they should be.
Imported rural supplies are taking much longer to ship into New Zealand but category shortages or gaps are not yet a problem, according to the rural servicing companies.
Covid-induced plant shutdowns and slowdowns and shipping costs and delays have necessitated careful and repeated planning, forecasting and ordering right along the supply chain, from overseas manufacturers to freight forwarders, importers, distributors, transport operators and the rural retailers.
“We are now forecasting 12 months ahead instead of three,” PGG Wrightson’s general manager – retail and water Nick Berry said.
“Our inventories have gone up and we are staying ahead of the demand, but there are a lot of frustrations and uncertainties.”
PGW might order 12 months ahead, expecting delivery in nine and have it turn up in six weeks, thereby incurring additional storage costs.
He said farmers and orchardists should plan carefully and order their immediate needs with local stores and field representatives.
There was no need for panic buying or over-ordering.
With the longest lead-in times, water products and irrigators come mostly from overseas and there are interruptions to steel supplies, computer chips and even rubber tyres, he said.
“As far as we can see, this state of affairs will be with us for the next 18 to 24 months,” he said.
Farmlands head of merchandise and agronomy Darryl Stretton said the biggest effects on co-op members so far were around fertiliser, feed and fuel.
These categories, for which Farmlands provides agency ordering and payment, had risen in price substantially.
Crop protection products had been in short supply, but that constraint was now easing.
Stretton advised farmers to plan carefully and commit early by working with co-op reps.
“There is no such thing any more as just-in-time ordering,” Stretton said.
“We are now ordering upwards of 12 months in advance and continually reviewing our needs.
“But there are no looming shortages in any categories.”
For the nationwide store network like Farmlands, internal distribution is also a major factor and is not operating optimally at present.
For PGW, Berry observed that non-urgent freight was getting bumped by transport operators in favour of urgent goods.
Vetpak director Steve Atfield said some products ordered from the United Kingdom in November had been pushed back to April arrival.
“Our normal lead time of two to three months is now five to six months,” Atfield said.
The veterinary supplies company had paid enormous increases in shipping costs and hadn’t yet passed these on.
Farm Source director for Fonterra Richard Allen said while there were no category shortages, some inventory levels are not where they should be.
“The past 24 months have really brought to the fore just how critical supply chain functions are for a country like New Zealand and our distance from the source,” Allen said.
Fonterra does not have a Kotahi-type shipping collaboration over inward goods, much of which is handled by importers and distributors.
Agricultural chemicals have been in short supply but the position has been manageable, Allen said.
Adequate magnesium is in stock for the spring demand, despite the constraints on China sources.
“Just-in-time has turned into just-in-case. I want to pay tribute to our supply chain members who have put in long hours on planning and replanning,” Allen said.
“This situation shows the benefits of scale in the co-op and the relationships we have with suppliers and vendors.
“We are holding more inventory and making our orders earlier, which is probably a good thing.”
To ease the load on internal transporters like Mainfreight, Farm Source has arranged for vendors to send some of their goods direct to stores, and even farms, rather than go through the big Fonterra distribution centre at Te Rapa.
