In an interview with CNBC, AGCO CEO Martin Richenhagen said he expects grain shortages to last into next year due to extreme weather in Russia, Ukraine, and the United States. I think it will probably be worse than expected, Richenhagen said. My view is that we’re going to see more demand than supply in the next six months or so…Even if the harvest this year would be as good as it was last year—which I doubt—there still wouldn’t be enough supply because of what happened this summer, he added.
There Will be a Global Shortage of Grains for at Least the Next Year, According to AGCO Corp CEO Eric Hansotia
The world may face grain shortages through next year, AGCO Corp CEO Eric Hansotia told CNBC’s Jim Cramer on Monday.
the supply of grain currently isn’t sufficient, and it probably won’t be until at least next year. We have to have a tremendous harvest this year and next year just to stay even, Hansotia said in an interview on Mad Money. According to the company’s CEO, the agricultural machinery manufacturer has the biggest order bank in its history, up 30% from last year in Europe and up 20% in the United States.
The industry’s supply and demand gap is a result of the global rebound of demand for products and services following the peak of the Covid pandemic. According to Hansotia, shutdowns prevented suppliers from keeping up with demand.
Farmers are Looking for New Ways to Innovate and The Company Expects a 30% Growth
A complicating factor is the Russia-Ukraine war’s impact on global grain supplies. However, according to Reuters, a ship departed Ukraine for Lebanon on Monday. This is the first ship carrying Ukrainian grain through the Russian navy-dominated Black Sea.
Hansotia said AGCO has seen some relief in the second half of the year, but still faces some challenges. “We use semiconductors in everything we make. That is probably the biggest challenge left,” he said.
As farmers look to innovate, the company expects 30% growth this year in its precision agriculture business. Farmers are finding it difficult to meet the new demand because their input costs are up, Hansotia explained. Their only choice is to do more with less, which means precision agriculture and technology.