Victorian farmers have been warned the bottlenecks choking global supply chains are unlikely to be resolved before 2023, amid predictions the state's harvest won't be immune from the import and export headaches.
The supply chain challenges, which are leading to widespread delays of machines and in the delivery of parts ahead of harvest, have been compounded by a global shortage of rubber and microchips, industrial disputes at the Port of Melbourne and booming steel prices.
"I have never seen lead times as long as they are today," Case IH Australia and New Zealand managing director Pete McCann said.
"It is the perfect storm."
Mr McCann warned the 250 farmers and industry people, who attended Victorian Farmers Federation's global supply chain update webinar, of lengthy delays of up to 12 months on new machinery.
"From a farm machinery point of view, all we need is time," he said.
"With the government stimulus package extended... the increase in overall demand is very hard to forecast with most machinery companies forecasting 12 months out.
"The other part slowing the supply is global demand - all of the agricultural regions across the world are on a fantastic wicket at the moment from the point of commodity price and seasons, so it is the perfect storm."
Congested ports, COVID-19 disruptions, and a surge in demand were just half of the story of the nation's supply woes, Mr McCann said.
Exacerbating the manufacturing meltdowns is the global shortage of semiconductor microchips that were expected to continue to hold up production deep into 2023.
A typical 130-horse powered tractor has well over 1000 semiconductor microchips, Mr McCann said, controlling everything from the headlights to the entertainment system to GPS navigation.
"That is causing a shortage from a point of finishing manufacturing of the machine you have ordered," he said.
"The supply issues are not the parts Case IH build, it is the components of second and third party suppliers.
"The components that came out of Europe were heavily impacted by COVID in the early days and trying to catch up with that lost production is a huge challenge."
Supply chain woes now pose a threat to get crops out of fields, with Victorian farmers scrambling to get spare tyres, hydraulic hoses and rubber products ahead of harvest, with replacements expensive and difficult to find.
"We are yielding a storm that started 10 years ago when we had an oversupply of tyres... so (businesses) stopped planting rubber trees and we are feeling that pressure now," Mr McCann said.
"We have had an enormous uptake on machinery, as well as mining, and there is a large constraint on tyres for new machines."
Access to raw materials, including steel, plastic, rubber, has been scarce during the pandemic, and manufacturers are preparing for even more blows after power shortages forced several Chinese smelters to cut production last month.
"Steel pricing has gone through the roof and availability is a challenge," Mr McCann said.
The benchmark price for hot-rolled steel hit an all-time in the United States this month, climbing to $1825 a tonne. This reflects a surge of more than 200 per cent since January last year when steel traded at US$500-$800/tonne.
During the early months of the 2020 shutdowns, many steel mills shut off production predicting a deep global recession. However, Australia's COVID stimulus packages, combined with record-high grain prices, stimulated buy-ups in the machinery sector.
That quick rebound caught steel mills and machinery manufacturers off-guard.
Coronavirus cases at the Port of Melbourne, combined with rolling strikes and huge congestion at the docks, further threaten imports and exports during harvest.
"There have been massive issues with COVID and labour shortages," Mr McCann said.
"Even a labour shortage of trucks to pick it up from ports to deliver to the dealership has been hard to have a timely delivery.
"(We experienced striking stevedores) who refused to take our combines off (ships) in Western Australia, who we had to pay the transport companies to sail back to Melbourne, unload and put them on a truck and drive them to WA.
"It isn't cost-effective to be double handling a million-dollar combine."
The supply lag has Mr McCann urging farmers to plan ahead for harvest 2022.
"While our industry is so buoyant and demand is so high, we still have COVID to deal with - I wouldn't want to put a timeline on when this is going to correct itself," he said.
"If you're looking at updating a fleet or changing additional machines, I would talk to a dealer as soon as you can because you will have to plan this out - customisation is working on a 12-month lead time."
The import challenges are ricocheting across Australia's entire agricultural supply chain.
"Freight issues and congestion, severe power shortages in China, unprecedented global demand and Covid continue to cause disruptions in the agriculture supply chain," Nutrien Ag Solutions managing director Rob Clayton said.
"At this stage, it's difficult to determine how this will impact the production and supply of ag inputs for the coming season but we are working with our suppliers to ease the disruption and sure up supply as much as possible.
"Given these extreme supply challenges we are seeing globally, it's very important growers have early conversations with their farm advisors or agronomists to help businesses better forecast what inputs will be required.
"This will give us the best possible chance of ensuring our growers have access to the right products at the right time."