HomeBusinessAGCO CEO says he expects grain shortage to last into next year

AGCO CEO says he expects grain shortage to last into next year

Global grain shortages will likely last through the end of this year and into next year, AGCO Corp CEO Eric Hansotia told CNBC’s Jim Cramer on Monday.

“There’s just not enough grain in the world, and there won’t be for the rest of this year and probably even into next year. We have to have a tremendous harvest this year and next year just to close that gap on the grain gap,” Hansotia said in an interview on “Mad Money.”

The chief executive said that 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 stems from the same global rebound of demand for products and services following the height of the Covid pandemic. Suppliers weren’t able to keep up with demand because of shutdowns, according to Hansotia.

Complicating matters is the Russia-Ukraine war’s pressure on global grain supplies. However, a ship departed Ukraine for Lebanon on Monday, marking the first passage of a ship carrying Ukrainian grain through the Russia navy-dominated Black Sea since the war’s onset, according to Reuters.

Hansotia added that while AGCO sees some relief in the second half of the year, challenges still remain.

“There’s semiconductor chips in essentially everything that we build. And so that’s probably our biggest challenge remaining,” he said.

On the flip side, the company expects 30% growth this year in its precision agriculture business as farmers look to innovate.

“Farmers have never been under more pressure to produce more, and yet their input costs are up, so they want to do with less inputs … the only way to solve that equation is precision ag and technology,” Hansotia said.

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