Long before steam locomotives were even thought of the mighty Mississippi was carrying freight down the center of the country. During the first half of the 19th century many in and out of government saw no reason to build and expensive railroad where nature had given us rivers that we could use for free. Except that sometimes the Mississippi isn’t as mighty as many thought. Like right now. Low water, which happens from time to time, is causing big problems for people who want to ship corn and soybeans on the river, such big problems that their crops are in danger of rotting. However, the shippers don’t want to turn to railroads much less to trucks because shipping on the river is cheaper. As a layman I confess I am confused. How come it is better to risk losing an entire crop than paying more money for transportation? But I guess the river men know best with all of their modern intelligence technology. Still, low water on the river is not new. It has been a problem since at least the days of steam boats. Since railroads solved this problem for wheat farmers on the Great Plains well over a century ago I hope they may contribute to a solution today.
The shipper might get more out of the loss of grain from the commodity insurance than from the sale price consumed by the higher cost of rail shipment.
Oh, there’s low water on the Mississippi River all right. But the rot about crops rotting because they can’t be moved is…well, rot. I’m open to input from some of the more ag involved forum members, but…
Corn, for example, is normally “field dried”. The farmers let the corn plant die and leave it standing in the field. The kernels dry out, which is, to an extent, what is desired. There is a trade off. Leave it too long and ears drop off the stalk, dead stalks get blown down, etc . Then they’re lost to harvest. But harvest it too soon, with too much moister still in the kernels and it will have to be dried using natural gas/propane, electricity and labor. This can be costly. (I understand about 15% moister is what is desired.) Harvest it with a greater moister content and you’ll have to dry it or take a lower price for it.
Anyway, these crops aren’t highly perishable They can be dried and stored. That’s a very normal practice that takes place every year. Grain goes in to storage every year. Some of it then gets shipped on a slow boat to China. The article is misleading with regards to that.
Another dang fool thing in the article is that 60% of the US corn crop moves on the river. It don’t.
The river’s low water level is a problem. It’s not a catastrophe. The people involved will cope with the situation. We all (at least those of us in North America) will have all the bread, pork, potato chips, etc. we can buy. Next spring, the farmers will plant a new crop. And a newspaper reporter will write another sensationalized story about something else…
Around harvest time, it’s not unusual sometimes (usually when grain prices have been in a slump) to see items in the news about tight storage space to store the present harvest because the preceding year(s) crop is still there. A few years back the railroad expanded the extra boards (I was on one at the time) expecting a bigger than usual fall grain rush that didn’t happen. As I recall it wasn’t because the harvest was lower than expected, but that prices were down and those that could sit on their crop did so to wait for better prices.
Greyhounds has it right in observing that corn in river barges is in very stable condition and won’t be harmed by a few extra days or even weeks on the river. Moreover, that corn is destined for export through the Gulf ports not the American food supply.
The story that has not spread much beyond the ag community is the effect of this year’s drought on the corn supply in the upper Midwest. Officially the latest production estimate is a 15% reduction in the corn crop, but most people expect that to go up. Many fields have already been chopped for silage and yields are likely to be greatly reduced in those that are carried to harvest. As a result prices have gone from around $5/bu at the first of the year to $8 now. Some ethanol plants have already ceased production, and price rationing will effect other large scale users such as beef, chicken and pork producers. There is a nasty surprise coming to your local supermarket but the news just isn’t out there yet.
Does anyone have a statistic on how much of the export crop moves to the Gulf by rail as compared to the barge traffic? For that matter I wonder how much of the corn arriving at the upriver terminals does so by rail rather than truck.
Buddy of Mine is a Farmer he has only 1500 Acres he does farm. He is considered a small Farm anymore. Well he still has some of Last Years corn left over that he just sold at This Years Prices. Same with his Beans. Those Elevators do not sit Empty Year round. He laughed back in 1996 when everyone was going Corn for 5 Bucks a Bushel I wish I had some to sell He had 120K Bushels Left to sell. He bought a New Combine that year.
For the most part, corn is a slow transit commodity that can wait . I have heard that river levels are lower than last year, but they are still loading lots of corn into barges in Winona, MN.
Here in Minnesota, we look for about 13% moisture in the corn. Right now most of the corn around me(Rochester, MN) is already turned brown. Usually a farmer would let it field dry. Right now, propane prices are low and some farmers are harvesting and then drying their corn. This way they have the product in the bin, and do not take a chance of it being knocked down by a storm. On the other hand, one does not want the moisture content to go too low, the result is cracked or ‘shattered’ corn.
The other reason to harvest now is that they might have a production contract with an ethanol plant and need to deliver. South of us(45-50 miles) along the Iowa border, the crops are not doing very good this year. In western Minnesota, the rain has been spotty and field conditions can change quite fast as you drive along the highway. In central Minnesota, at least one ethanol plant has said that they might shut down production later this year as the forecast for corn yields in their area are quite low.
The farmers in our area are going to get good money for their crops again this year.
I don’t know where they were talking about in the LA Times that “The best crops of corn and soybeans in a generation” is located, but it’s apparently not in the mid-west. The same drought that has lowered the river has done a number on the corn crop.
Drove from the East Coast to Kansas in the middle of July - the fields in Indiana, Illinois, Missouri and Kansas looked pathetic for that time of year - bottom of the plants looked dry and ‘scorched’ and the height of the plants was nowhere near the height of similar crops in the East where there had been rain. The ‘Heartland’ harvest will be less than bountiful.
The crop , such as it is, will move to market in reasonable time, but perhaps not at a rate the grain shipper would prefer.
Barges can run lighter, of course, but then their costs go through the roof in terms of cost per bushel. The difference will drive the grain to rail - it almost always follows the lowest total delivered cost. A small change in the rate can change the whole market for a growing region - if the low water persists, a lot of Iowa beans might start moving to the Pacific Rim via Portland or Longview/Kelso instead of Europe via New Orleans or Galveston (especially if the Brazilians have a good soybean crop this year.).
As a rail counterpoint, try telling UP or BNSF they have to reduce their tonnage-per-train by 20% coming out of the Powder River Basin (and the utilities that their coal rates will go up 25% as a result. [}:)] The PRB/Appalachian coal cost boundary instantly moves west 300 miles.