They’re on everyone’s mind. In a global supply and demand economy on the rebound from an unprecedented global event, we’re going to have issues. Below are my thoughts on the true source of inflation and shortages and what we can all do to work together to help each other out and hopefully get back to normal.
First is the production side.
Many of our vendors lost employees, first to quarantine, then, very sadly, some to death. This labor shortage is going to raise wages which is a good thing, but as consumers, we have to be ready to get our wallets out if we want to support those wages. Also, we can’t forget that those workers are paying more for everything they buy so the wage increases are often just keeping a lot of people at the same relative wage.
Next is demand.
There is an unprecedented interest in horticulture of all types. This is a great thing, but it does tax all the supply lines and drive costs up. Almost every truck of raw materials that we get is more expensive than the last. We used to have some negotiating power as a large buyer. Now that clout only means that we can still get materials when others can’t and only if we pay the current rates.
Next is shipping.
Many steamship lines shut down ships at the beginning of COVID and it is no small task to get them running again. Hundreds of ships even got scrapped at that time. It took months to get those ships spun up again. Then a ship got stuck in the canal. This caused a global backup. Now, US ports have been overloaded and ships are waiting weeks and months to unload causing more backup. That means there are more containers stuck here and in the ocean. That lack of containers has been a huge problem.
But wait, there’s more!
With a lot of time on their hands, consumers are buying more of everything. Most of it comes from overseas. Just the space in a container from China that used to cost 5k now costs 20k or more. All of it needs trucks to deliver. Rates on trucks are almost double what they were a year ago. The lack of truckers and trucks is the current biggest issue preventing ships from being unloaded at the port. In fact, we’ve had several long-term trusted vendors that normally send trucks all season warn us to buy all of our materials in advance for this season. That takes many hundreds of thousands of dollars plus storage and transportation fees. It is currently the only way to have reliable production.
All of this gets us to one conclusion…
We’re sorry that our prices are up. We honestly are. We know it is just another hit for people when many of us have less to spend. In spite of all of these hurdles and with a really great team at Paonia Soil Co. working extremely hard we have been able to mitigate many of these factors and slow our inflation to between 3 and 4.5% for all of Bomb Blends, including Raised Bed Mix, and for most of our amendments, while many of our competitors are raising prices 30-100%. That being said, some of our all coco coir products are up more than 60%. This is directly related to the cost of the shipping and is still going up for those that didn’t buy when we did.
- Advanced Material Sourcing – We’ve invested significant resources into advanced sourcing and have stockpiled these raw materials to keep our production lines moving and your stores and farms well-stocked all season!
- Price Drop on Dynamic Dressing – Our Dynamic Dressing compost is a product that relies almost exclusively on a local supply chain and we’ve invested heavily in expanding our composting infrastructure. As a result, we’re able to drop this price again for the second year in a row! Dynamic is used in many of our blends and sold on its own – so please take advantage of those savings!
- Local Trucking – We have local trucking partners that are saving us thousands vs the national average.
- Production Infrastructure – We’ve made innovative upgrades to our machines and have improved our procedures for increased efficiencies!
- New Retail Sales Resources – We’ve got new on-shelf displays this year designed to provide both your sales associates and your customers with easily accessible product information and endorsements.
Long story short
You and your customers pay a premium price for a premium product and we’re committed to reliably delivering just that. Just know that we are doing everything possible to keep 2022 prices down while keeping our quality high, our team fed and the soil flowing to everyone who needs it. Here’s to all of us having the best growing season yet!