Increased costs are typically the response when goods are going through shortages, but what happens when we add inflation on top of those prices? Well for some, more shortages.

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According to Reuters, there are some farm machinery companies that have stopped taking equipment orders from farmers as shortages of parts and labor mix with “escalating inflation”.

This isn’t new. Farmers have had problems gaining access to equipment and parts since COVID-19 rocked the supply chain. For some, overall costs for materials have jumped as much as 21%, said Reuters.

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And it’s not just small equipment manufacturers- larger ones have been fighting to do what they can to help farmers by protecting margins.

On a recent earnings call, Deere & Co said that they were going to pause advance orders for equipment that they don’t have in stock.

According to Reuters, farmer income is expected to drop $5.4 billion from 2021, especially as pandemic federal aid eases up.

As companies look at how they will handle inflation this year, they are weighing to what extent they can/will pass to consumers.

Companies are also looking to not suffer a loss from selling equipment too far into the future and having prices of preordered equipment raise.  This is why companies are looking into new ways to cushion the effect we could see this having on big equipment.

This could mean we could see what happened when there was a global chip shortage for cars, smartphones, and PCs.

When this happened, companies tried to manufacture all they could in-house rather than rely on others.

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