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

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

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

The managing director said the agricultural machinery maker had the largest order bank in its history, up 30% from last year in Europe and 20% in the United States.

The gap between industry supply and demand stems from the same global rebound in demand for products and services following the peak of the Covid pandemic. Suppliers have been unable to meet demand due to closures, according to Hansotia.

The pressure of the Russian-Ukrainian war on the world’s grain supply complicates matters. However, a ship left Ukraine for Lebanon on Monday, marking the first passage of a vessel carrying Ukrainian grain through the Russian navy-dominated Black Sea since the start of the war, according to Reuters.

Hansotia added that while AGCO is seeing some relief in the second half, challenges remain.

“There are semiconductor chips in pretty much everything we build. And so that’s probably our biggest challenge left,” he said.

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

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

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