Supply Chain

United States Eases Port Fees On China-Built Ships After Industry Backlash

Fri, 18 Apr 2025 16:04:08 GMT

The Trump administration shielded on Thursday domestic exporters and vessel owners servicing the Great Lakes, the Caribbean and U.S. territories from port fees to be levied on China-built vessels, aiming to revive U.S. shipbuilding .

The Federal Register notice posted by the U.S. Trade Representative was watered down from a February proposal for fees on China-built ship s of up to $1.5 million per port call that sent a chill through the global shipping industry.

Ocean shipping transports about 80% of global trade — from food and furniture to cement and coal. Industry executives feared virtually every cargo carrier could face steep, stacking fees that would make U.S. export prices unattractive and foist annual import costs of $30 billion on American consumers.

“Ships and shipping are vital to American economic security and the free flow of commerce,” U.S. Trade Representative Jamieson Greer said in a statement. “The Trump administration’s actions will begin to reverse Chinese dominance, address threats to the U.S. supply chain, and send a demand signal for U.S.-built ships.”

Still, the fees on Chinese-built ships add another irritant to swiftly rising trade tensions between the world’s two largest economies as President Donald Trump seeks to draw China into talks on his new tariffs of 145% on many of its goods.

The revisions tackle major concerns voiced in a tsunami of opposition from the global maritime industry, including domestic port and vessel operators as well as U.S. shippers of everything from coal and corn to bananas and cement.

They grant some requested carve-outs, while phasing in fees that reflect the fact U.S. shipbuilders, which turn out about five vessels annually, will need years to compete with China’s output of more than 1,700 a year.

The USTR exempted ships that ferry goods between domestic ports as well as from those ports to Caribbean islands and U.S. territories. Both American and Canadian vessels that call at Great Lakes ports have also won a reprieve.

As a result, companies such as U.S.-based carriers Matson and Seaboard Marine would dodge the fees. Also exempt are empty ships arriving at U.S. ports to load up with exports such as wheat and soybeans.

Foreign roll-on/roll-off auto carriers, known as ro-ros, are eligible for refunds of fees if they order or take delivery of a U.S.-built vessel of equivalent capacity in the next three years.

The USTR set a long timeline for liquefied natural gas (LNG) carriers. They are required to move 1% of U.S. LNG exports on U.S.-built, operated and flagged vessels within four years. That percentage would rise to 4% by 2035 and to 15% by 2047.

The agency, which will implement the levies in 180 days, also declined to impose fees based on the percentage of Chinese-built ships in a fleet or on prospective orders of Chinese ships, as originally proposed.

The fees will be applied once each voyage on affected ships a maximum of six times a year.

Executives of global container ship operators, such as MSC and Maersk MAERSKb.CO, which visit multiple ports during each sailing to the United States, had warned the fees would quickly pile up.

Instead of a flat individual fee on large vessels, the USTR instead opted to levy fees based on net tonnage or each container unloaded, as was called for by operators of small ships and transporters of heavy commodities such as iron ore.

From October 14, Chinese-built and owned ships will be charged $50 a net ton, a rate that will increase by $30 a year over the next three years.

That will apply if the fee is higher than an alternative calculation method that charges $120 for each container discharged, rising to $250 after three years.

Chinese-built ships owned by non-Chinese firms will be charged $18 a net ton, with annual fee increases of $5 over the same period.

It was not immediately clear how high the maximum fees would run for large container vessels, but the new rules give non-Chinese shipping companies a clear edge over operators such as China’s COSCO 600428.SS.

The notice comes on the one-year anniversary of the launch of the USTR’s investigation into China’s maritime activities.

In January, the agency concluded that China uses unfair policies and practices to dominate global shipping.

The actions by both the Biden and Trump administrations reflect rare bipartisan consensus on the need to revive U.S. shipbuilding and strengthen naval readiness.

Leaders of the United Steelworkers and the International Association of Machinists and Aerospace Workers, two of five unions that called for the investigation that led to Thursday’s announcement, applauded the plan and said they were ready to work with the USTR and Congress to reinvigorate domestic shipbuilding and create high-quality jobs.

The American Apparel & Footwear Association reiterated its opposition, saying port fees and proposed tariffs equipment will reduce trade and lead to higher prices for shoppers.

At a May 19 hearing, the USTR will discuss proposed tariffs on ship-to-shore cranes, chassis that carry containers and chassis parts. China dominates the manufacture of port cranes, which the USTR plans to hit with a tariff of 100%.

The Federal Register did not say if the funds raised by the fees and proposed crane and container tariffs would be dedicated to fund a revival of U.S. shipbuilding.

(Reporting by Lisa Baertlein in Los Angeles, David Lawder and Andrea Shalal in Washington and Jonathan Saul in London; Editing by Jamie Freed, Clarence Fernandez and Gerry Doyle)

Second U.S. Port Strike Averted as Union, Employers Reach Deal

Thu, 09 Jan 2025 15:11:20 GMT

The union representing 45,000 dock workers on the U.S. East and Gulf Coasts and their employers on Wednesday said they reached a tentative deal on a new six-year contract, averting a strike that could have snarled supply chains and taken a toll on the U.S. economy.

The United States Maritime Alliance employer group and the International Longshoremen’s Association, in a joint statement, called the agreement a “win-win.” The deal includes a resolution in automation, which had been the thorniest issue on the table.

“This agreement protects current ILA jobs and establishes a framework for implementing technologies that will create more jobs while modernizing East and Gulf coast ports — making them safer and more efficient, and creating the capacity they need to keep our supply chains strong,” the groups said.

Terms of the deal were not disclosed.

The talks had been extended until Jan. 15 to hammer a deal on automation. Shipping industry executives had been concerned that the parties would not be able to overcome their impasse, leading to a second ILA strike just days before President-elect Donald Trump’s Jan. 20 inauguration.

A three-day ILA strike in October triggered a surge in shipping prices and cargo backlogs at the 36 affected ports. Longshoremen returned to work after employers agreed to a 62% wage increase over the next six years.

ILA and USMX have agreed to continue operating under the current contract until the union can meet with its full Wage Scale Committee and schedule a ratification vote, and USMX members can ratify the terms of the final contract.

(Reporting by Gnaneshwar Rajan in Bengaluru; Editing by Alan Barona and Leslie Adler)

Trade Associations Urge Biden Administration To Act Now To End Port Strike

Thu, 03 Oct 2024 18:11:33 GMT

A coalition of over 270 local, state and federal trade associations have signed a letter urging President Biden and his administration to use all of its authorities to end the port strike, get the ports open and get the parties back to the negotiating table.

Click here to read the full letter.

The associations involved represent:

American manufacturers
Farmers and agribusinesses
Wholesalers
Retailers
Restaurants
Importers
Exporters
Distributors
Transportation and logistics providers
Additional supply chain stakeholders

The Ag Retailers Association (ARA) is among the groups who sent the letter and is encouraging members to let them know how the strike will impact their businesses.

Background:
A port strike along the East and Gulf coasts began on Oct. 1 and will halt the flow of a wide range of goods, potentially leading to shortages and higher costs. According to an estimate from the Anderson Economic Group, a one week strike would cost the U.S. economy about $2.1 billion.

Your Next Read: East and Gulf Coast Dockworkers Now on Strike Over Wage Demands, Halting Key U.S. Cargo Shipments

How Important is U.S. Ag and Food to the Economy?

Fri, 27 Sep 2024 01:31:10 GMT

As the saying goes, “numbers don’t lie,” and this rings especially true in the 2023 Feeding the Economy report, showing the economic importance of U.S. food and agriculture to communities throughout the nation.

Sponsored by 25 food and agriculture groups across all areas of the food supply chain, the report illustrates the food and agricultural impact on local and nationwide economic activity, underscoring the sector’s resilience and reliability amid a number of global and domestic disruptions.

“Feeding the Economy demonstrates how agriculture is connected to each stage of the supply chain, every item in the grocery store and relied upon by multiple other indispensable industries. The report provides insightful data and research on how the food and agriculture industry consistently generates a positive trade balance as well as millions of jobs while boosting economic vitality in rural and urban areas,” says Mike Seyfert, president and CEO of the National Grain and Feed Association.

Economic Output

Showing an increased economic output in all 50 states compared to the 2022 report, the industries contributed to over $8.6 trillion, nearly 20%, of the country’s economic activity. In addition, the industries accounted for over $202 trillion in export value.

Reflecting a rebound in national economic activity, the largest total output gains were from Hawaii (31%), North Dakota (26%), New York (23%), Nevada (22%) and Florida (21%), according to the report.

Agriculture and food businesses also contribute over $947 trillion to federal and state taxes, including $565.3 trillion and $382.5 trillion, respectively.

Jobs and Wages

Despite the economic challenges and disruptions associated with the COVID-19 pandemic, in 2023, a total of 22,924,189 million jobs are tied directly to the food and agriculture sector, claiming $927.4 billion in wages. This contributes to a total of over 46.2 million jobs and $2.6 trillion in wages supported across the whole supply chain, increasing nearly 2% since 2019.

Productivity

“The strength and growth highlighted in this year’s report reinforce that agriculture is evolving and innovating to meet the demands of the 21st century,” the report says.

USDA notes that between 1948 and 2019, land use for agriculture decreased by 28% while land productivity grew nearly four times and labor productivity grew more than 10 times, the report adds, with agriculture’s total factor productivity growth rate among the highest of U.S. sectors.

While producers raise crops, produce and livestock on two of every five acres of U.S. soil, millions of other U.S. workers fulfill jobs in over 200,000 food manufacturing, processing and storage facilities to strengthen the food supply chain across the world. Additionally, approximately 200,000 retail food stores and over 1 million restaurant locations provide food for communities from coast to coast.

The sheer number of jobs and total of wages, taxes and export values highlight the vitality of the industry to our nation. However, for many Americans, both rural and urban, agriculture and food are more than simply a paycheck.

“American agriculture is really the foundation of our lives and our economy. This study reveals the numbers, and maybe some of the spirit, of this one indispensable sector,” says Roger Cryan, chief economist at the American Farm Bureau Federation.

The full report can be found on the Feeding the Economy website .

John Phipps: Is There Really a Shortage of Truck Drivers?

Mon, 14 Aug 2023 16:07:06 GMT

Cast your mind back to early 2022 and the headline-grabbing Trucker Shortage . My conclusion then was there wasn’t much hard data to substantiate that alarm. There has always been a need for truckers and perversely there seems to have always been ample qualified workers to fill it.

It didn’t take an economics degree to figure out the problem: truckers simply weren’t being compensated enough to entice and keep workers. Now a year and a half later the headline is the demise of one of America’s largest trucking companies – Yellow Trucking – and the end of 30,000 jobs they represent.

(Farm Journal)

Freight companies are struggling now with reduced demand, which threatens even more trucking jobs. At some point most of us begin to wonder about these alleged shortages. Adding to the muddled picture of jobs and pay is the historically low unemployment rate which emphatically illustrates how small the pool of potential employees is.

Related Story: Walmart Will Now Pay Starting Truck Drivers $110,000, Could It Backfire and Make the Nationwide Trucker Shortage Even Worse?

For trucking, which is often a career step up from entry wage employment, increases in the minimum wage by many states has helped low-wage employees keep up.

Since the pandemic, the surprising strength of low wage compensation compared to skilled or managerial wages removes some motivation for workers to consider a trucking job. Note the inversion after the pandemic of which income quintile is seeing greater wage increases.

Trucking companies have long dealt with astonishing turnover rates since the prospective employee pool was large and already qualified. New CDL licenses are issued to about half the current trucker numbers each year. Short-lived shortages are not limited to employees either.

Related Story: SHIP IT Act Could Save Truck Drivers Up to $10,000 and Cover CDL Costs

I started looking back at the numerous “shortages” and dire predictions of the last few years. At least some semiconductor chips, for example, are in now surplus, even a glut. We’ve discovered more new sources for lithium than anyone imagined. Ditto for copper, cobalt, and phosphates.

It appears markets can remedy shortages faster than we have imagined, and the few stubborn scarcities are sidestepped with alternative solutions. Not always, but certainly more than the hysterical headlines suggest.

There will always be warnings about trucker shortages, I suspect, but not from truckers.

Signs Growing that the Global Supply Chain Crisis is Over

Fri, 23 Dec 2022 18:32:27 GMT

From the docks of Southern California and Europe to the parcel hubs in the Midwest and the store shelves in New York, signs are growing that the global supply-chain crisis is over, according to the Wall Street Journal (WSJ).

The COVID-19 pandemic that spawned product shortages, shipping bottlenecks and soaring transport costs may not be gone, but the WSJ reports goods are moving around the world again, reaching companies and consumers.

Despite widespread government and industry attempts to unwind the bottlenecks, the real break may have come in the demand slowdown that has eased the pressure on strained operations.

“As some of commodity prices and transportation costs begin to come down, we’re revisiting these costs with our suppliers,” says Bill Bolts of Lowe’s, on easing supply chain pressures.

On the Water

According to Drewry Shipping Consultants’ index for spot prices, to ship a 40-ft. container from Shanghai to Los Angeles the week of Dec. 22 was $1,992, down from $2,000 the week before and 82.2% below the 2022 high set in Jan.

U.S. container imports reached their lowest level in November since early 2020, and shipping heavyweight Maersk Line projects demand will decline next year from 2% to 4%. Freight rates that busted shipper budgets last year are sliding and broader costs for suppliers heading into 2023 are also retreating.

Shippers Note ‘Notoriously Difficult’ Railroads During Latest Hearing

Wed, 14 Dec 2022 15:00:00 GMT

Shippers urged the U.S. railroad regulator to create more competition in the industry during hearings in which Union Pacific was called to explain a spike in service restrictions.

Shippers used the public forum to air grievances about an industry structure that they say gives railroads the power to boost prices and pad their profit even as service suffers.

Companies, including Cargill Inc. and Ag Processing Inc., pointed to reduced workforces as one of the main culprits for railcar curtailments.

Lance Fritz, the chief executive officer of Union Pacific, said service has suffered because the railroad didn’t have enough train crews at the beginning of the year and has hired 1,400 train and yard workers to address the problem. As service deteriorated, customers added railcars to the network to move goods. That exacerbated the congestion and forced the railroad to use embargoes to clear out railcars from switching yards and tracks, Fritz said.

“Excess freight-car inventory disrupts the alignment of our network resources,” he said. “It requires us to use more crews and more locomotives to handle the same amount of business, and it produces congestion on our lines of road and in our terminals.”

More on rail:

Rail Strike Derailed as Biden Signs Labor Bill
Rail Strike Averted Until Dec. 4, Saving U.S. $2 Billion Per Day

Rail Strike Derailed as Biden Signs Labor Bill

Mon, 05 Dec 2022 14:09:51 GMT

The Senate swiftly moved to pass a tentative rail agreement on Thursday with a landslide 80-15. This move followed the House’s favorable vote of 290 to 137 on Wednesday. President Biden signed the bill Friday morning, further derailing the looming labor strike.

Congress also voted on a paid sick leave bill, which the House moved to pass but the Senate chose to deny. The odds were close, however, with a vote of 52-43 .

Zippy Duvall, Farm Bureau president, says producers’ reliance on rail is what pushed AFBF to support and celebrate averting the rail strike.

“High diesel prices, a truck driver shortage, and low water levels on the Mississippi River have already made shipping conditions difficult,” Duvall said in an AFBF press release . “A rail strike would have had a devastating effect on the American economy, especially as families grapple with higher prices caused by inflation.”

“There was an industry-wide sigh of relief today after both Congressional chambers voted in favor of implementing the September TAs,” said The Fertilizer Institute’s Corey Rosenbusch. “Rail is critical to the movement of fertilizer year-round. Averting embargoes and production delays were crucial to not only ensuring we’re able to provide the fertilizers our nation’s farmers need, but also avoiding additional disruptions to a global market already constrained by geopolitical events and volatile energy prices.”

While some groups are applauding the outcomes, others are outraged.

The Brotherhood of Railroad Signalmen (BRS) spoke out on the votes in a press release :

“What took place in the United States Senate today is a symptom, and further illustration, of a larger issue in our country. Almost every elected member of Congress campaigns on being “for the working class”; the actions of many today demonstrated they are for the corporate class,” BRS said. “The dereliction of duty and inability to hold corporations accountable for a lack of good faith to their employees will not be forgotten.”

BRS says their work on the matter will continue, and they will “not be silenced.”

Tom Vilsack, USDA secretary, echoed each response, saying the rail system and workers both deserve protections.

“Our work doesn’t stop here. This Administration will continue to make progress on fostering economic growth and strengthening supply chains, and supporting workers who deserve protections in the workplace.”

According to Biden’s economic advisors, as many as 765,000 Americans — many union workers themselves — would have been put out of work in the first two weeks of shutdowns.

More on rail:

Congress “Likely” to Pass a Rail Deal this Week, According to Soy Transportation Coalition’s Steenhoek
Rail Strike Averted Until Dec. 4, Saving U.S. $2 Billion Per Day

Congress “Likely” to Pass a Rail Deal this Week, According to Soy Transportation Coalition’s Steenhoek

Wed, 30 Nov 2022 12:30:53 GMT

President Joe Biden late Monday called on Congress to pass legislation immediately to adopt the tentative agreement between railroad workers and operators that was approved by labor and management negotiators in September “without any modifications or delay — to avert a potentially crippling national rail shutdown.”

Biden noted the deal “provides a historic 24% pay raise for rail workers. It provides improved health care benefits. And it provides the ability of operating craft workers to take unscheduled leave for medical needs,” adding that “since that time, the majority of the unions in the industry have voted to approve the deal.

Biden said a rail shutdown “would devastate our economy. Without freight rail, many U.S. industries would shut down.”

According to Biden’s economic advisors, as many as 765,000 Americans — many union workers themselves — could be put out of work in the first two weeks alone.

Meanwhile, the advisors say communities could lose access to chemicals necessary to ensure clean drinking water. Farms and ranches across the country could be unable to feed their livestock.

“As a proud pro-labor president,” Biden said he is “reluctant to override the ratification procedures and the views of those who voted against the agreement. But in this case — where the economic impact of a shutdown would hurt millions of other working people and families — I believe Congress must use its powers to adopt this deal.”

Next Steps in Congress

House Speaker Nancy Pelosi (D-Calif.) said in a statement that the House this week would “take up a bill adopting the tentative agreement — with no poison pills or changes to the negotiated terms — and send it to the Senate.”

Mike Steenhoek, executive director at the Soy Transportation Coalition, feels this action will lead to a solution.

“I think the [odds Pelosi will reach an agreement] is really high because the republicans will support it,” Steenhoek says. “There may be some on the democratic side that say they need to hold out on concessions for workers. But with the President urging it, along with the board recommendations, I think there will be quick passage.”

If an agreement isn’t made by the cooling-off deadline of Dec. 5 (Brotherhood of Railroad Signalmen), Steenhoek says there will likely be a reduction in rail service as early as the end of this week.

More on the rail strike:

Rail Strike Update: Labor Deal Deadline Shortened to Dec. 5
A Possible Rail Strike is Quickly Approaching Unless Congress Steps In

Rail Strike Averted Until Dec. 4, Saving U.S. $2 Billion Per Day

Thu, 10 Nov 2022 22:05:45 GMT

A tentative rail labor deal showed promise at the beginning of October, but was rejected by the third largest rail union, amplifying concerns of a strike. However, the strike threat has been held off until Dec. 4.

The National Carriers’ Conference Committee (NCCC) and the Brotherhood of Maintenance of Way Employees Division of the International Brotherhood of Teamsters (BMWED) have agreed to extend the current cooling off period until at least Dec. 4, according to an announcement Wednesday.

The current period had been set to expire Nov. 19, and the statement issued indicated it “is subject to further extension to maintain alignment, if necessary, with other labor organizations. This extension eliminates the threat of a near-term freight rail service disruption.”

Union leaders are arguing the railroads haven’t done enough to address worker concerns, largely surrounding working conditions and paid time off. Specifically, in the last attempted deal, unions opposed a potential five-year contract that already included:

A 24% raise in wages
$5,000 in bonuses

The Association of American Railroads (AAR) has issued analysis that indicated a rail strike and nationwide freight railroad shutdown could cost $2 billion per day.

Seven of nine unions have ratified the proposed pact and two, including the BMWED and the Brotherhood of Railroad Signalmen, have not. The next votes are scheduled for Nov. 14 and Nov. 21.

More on rail:

Possible U.S. Rail Strike Now Back On the Table
New Demands by One Labor Union Renews Concerns about Possible Railroad Strike in November

Is the U.S. Now Officially in a Recession?

Fri, 28 Oct 2022 20:19:07 GMT

Friday brought mixed news for the economy. While data from the Commerce Department inflation pressures remained high last month, the Labor Department’s Employment Cost Index indicated a slowdown in private-sector wage growth for the third quarter.

Even with a glimmer of hope, the Federal Reserve is still widely expected to bump interest rates another 75 basis points as the Fed works to get inflation under control. And with a recession looming, consumers are already adjusting their spending habits at the meat counter.

“The short answer is yes, we’re seeing consumer behavior change,” says Glynn Tonsor, professor of Ag Economics at Kansas State University who also tracks consumers buying habits through the Meat Demand Monitor.

So, are we in a recession? Tonsor says that’s something you can continue to debate, but it’s more important to watch changes in behaviors versus debating the definition.

“It’s easy to get caught up in the discussion and definition of a recession,” says Tonsor. “I encourage us to hone in on his consumer behavior changing the way you phrase the question and it gets the right way. And price sensitivity, consumers are responding to price stronger than they were a year or two ago. And I think that’s because real wages have declined, and when I say real wages, the cost of living has gone up more than what people are making. So there’s a price squeeze or the financial belt has been tightened in a lot of households.”

Tonsor says meat protein is one of several categories there’s evidence consumers are tightening their belt in their buying decisions.

“We’re seeing some trading down within the protein complex,” adds Tonsor. “Think about going from a bacon product to a ham product, or from a ribeye steaks to a sirloin steak. There’s a lot of examples like that. But the meat demand monitor project at K-State gives us a lot of points on that. And the short answer is yes.”

There’s also a debate on what’s fueling inflation, a factor in the recession debate. The supply chain issues are one, but some also think excessive government spending is fueling the higher prices consumer are seeing.

While the debate on why inflation is so high will continue, Lonnie Hobbs, Jr., a PhD candidate in Ag Economics at Kansas State University says it’s not just one thing aiding the higher costs.

“In terms of the supply chain, we’re seeing these rise in prices because of a variety of factors such as rising transportation costs, rising cost of ingredients, rising costs of the processing that goes along with a lot of these products,” says Hobbs. “We are seeing rising prices in all areas that can at times be good for the farmer [prices they receive], but in terms of consumers, it may alter some of their purchasing decisions.”

The transportation issues aren’t going away either. Low river levels and a looming rail strike in mid-November are two transportation issues that could fuel higher transportation costs. So, will the supply chain transportation issues go away anytime soon?

“In the short term? I will say no, I would see this going on into the next year,” says Hobbs. “I think over time, things will get better, especially as the labor force begins to pick up. But I do think that this is something that farmers should be aware of moving into the new year.”

Possible U.S. Rail Strike Now Back On the Table

Tue, 11 Oct 2022 13:54:35 GMT

A labor strike along U.S. railroads is still a possibility after the third-largest railroad union rejected a tentative labor agreement this week. The agreement had the support of the White House, but without all unions voting in favor of the agreement, a labor strike could still occur in mid-November.

Union leaders are arguing the railroads didn’t do enough to address worker concerns, largely surrounding working conditions and paid time off. Now, both sides will need to return to the bargaining table to avoid a possible strike once again.

The last close call happened just before the September 16th deadline, when a last-minute tentative agreement was struck, preventing a rail strike from taking place on that same date. Now, those labor conversations are back on as the Brotherhood of Maintenance of Way Employes Division Union opposed a potential five-year contract that already included a 24% raise in wages, as well as $5,000 in bonuses.

“The majority of the BMWED membership rejected the tentative national agreement and we recognize and understand that result,” said BMWED president Tony D. Cardwell in a statement. “I trust that railroad management understands that sentiment as well. Railroaders are discouraged and upset with working conditions and compensation and hold their employer in low regard. Railroaders do not feel valued. They resent the fact that management holds no regard for their quality of life, illustrated by their stubborn reluctance to provide a higher quantity of paid time off, especially for sickness. The result of this vote indicates that there is a lot of work to do to establish goodwill and improve the morale that has been broken by the railroads’ executives and Wall Street hedge fund managers.”

Transportation Nightmare

Strike or no strike, one veteran market analyst says rail issues are still severe, and now backlogs on the nation’s rivers due to low river levels mean even more emphasis will be placed on rail at a time when transportation logistics have been dubbed a “nightmare.”

“Well, even if we don’t have a rail strike, the rail is so congested and so problematic,” says Dan Basse of AgResource Company. “Today, it’s not going to make much difference. Rail prices are rising. If you look at the barge market heading to the Mississippi today, it costs one-and-a-half times to get beans to the Gulf as it would to load it and get it to China. It’s crazy what’s going on.”

Sourcing feed was already a problem for livestock producers and grain buyers in the western U.S. Issues nationwide mean everyone is paying more to get the essential grain.

“If you’re in Kansas or the Western Plains, you’re paying $2-over-plus for corn, if you can find it. It’s a problem,” says Basse.

While the third-largest rail labor union rejected the tentative agreement, all 12 unions, which represent nearly 115,000 workers, must ratify their contracts to prevent a rail strike. Four other rail unions approved their agreements with freight railroads.

By Monday midafternoon, the U.S. rail industry had yet to comment on the latest union development.

History of Ongoing Rail Strike Threat

As AgWeb first reported in July, a possible strike has been brewing all summer , with NGFA fearful a strike would occur in the middle of harvest. Fisher says even though a strike is prohibited by law ahead of Friday’s deadline, rail companies are shutting down shipments in advance in order to mitigate potential damages.

“The railroads don’t want to have the cars and equipment out in areas of the country where they can’t protect them very well,” Fisher adds. “So, they’re taking steps to mitigate damages. For our members, they’re looking at essentially not receiving their grain on time and not being able to then ship out the finished products such as ethanol, flour, things of that nature.”

Impact on Farmers

What will it mean for farmers? Max Fisher, NGFA chief economist, says a potential rail strike will have a severe economic impact on agriculture.

“From what I’m being told, we really cannot have the railroad stop even for a minute,” Fisher says. “With the railroads, there’s so much planning involved in every shipment that if we get them off plan, like have all the workers at home and so forth, it’s very hard to get things started again.”

Another potential problem is grain processing facilities and the backlog it could create. Fisher fears some NGFA members will be forced to shut down.

“I think there’s a very good chance we’re going to have shutdowns in the grain industry and at our processing facilities, not to mention the impact on our exports also,” Fisher says.

U.S., China Container Shipping Rates Plummet 50%, Backlog of Unfilled Orders Grows

Fri, 23 Sep 2022 18:05:17 GMT

As backlogs at U.S. ports and climbing shipping rates plague the supply chain, new data shows shipping rates between the U.S and China are dropping by more than 50% in just a month.

Data provided by digital freight forwarding company Shifl shows China/U.S. spot freight rates, for shipping a 40-foot container from China to Los Angeles, dropped by $9,000. That’s a 51-percent drop between September and October.

Experts say China is slowing production due to a power crisis and the off-season coming into view, but issues remain due to a growing backlog of unfulfilled orders.

Earlier this week, AgDay reported that Port officials say strong American consumer demand has continued unabated for more than a year, as the Port of Los Angeles has seen a 30% increase in cargo volume so far this year. That’s as exports from the Port of Los Angeles dropped 23% in August.

It’s impacting agriculture in the U.S. because of record-high shipping rates. That’s coupled with the fact that some shipping lines are working to get empty containers back to factories in Asia as quick as possible.

The U.S. is Now 30 Days Away From a Possible Railroad Labor Strike

Thu, 18 Aug 2022 01:50:01 GMT

Delays on U.S. railroads have been a growing problem for shipping agricultural goods all year. Labor discussions are ongoing and with the grain industry concerned about a possible labor stoppage in mid-September , which would be the height of Midwest harvest.

Just this week, the White House-appointed Presidential Emergency Board (PEB) released a recommendation as part of the ongoing collective bargaining process. Both sides have 30 days to accept those recommendations. If the two parties don’t agree, then rail workers are allowed to go on strike as of Sept. 16.

Max Fisher, Chief Economist, National Grain and Feed Association (NGFA) has been watching the situation closely. He says the biggest takeaway from the Emergency Board’s recommendation is a 24% wage increase over five years for rail labor.

“You may be asking, ‘Where does that stand with respect to where the two sides were at?’ The rail carriers were at 17% for what they were offering, and rail labor, what they were requesting, was 31%. So, 24% is right in between those two figures,” says Fisher.

Congress Holds the Power to Intervene

While workers can legally go on strike starting Sept. 16 if they don’t choose to adopt the board’s recommendations, Congress can intervene if workers decide to strike Sept. 16.

“If history repeats itself, the last time we had a stoppage was in the early 1990s,” he says. “And I believe it lasted one day, maybe two days, before Congress passed a bill prohibiting a lockout or strike. Essentially, the two sides had to then go back to work on reaching agreement. So, Congress has a lot of power here. We would like to think they’re going to exercise it, and we’re certainly going to encourage them to exercise it because stopping the railroads would be very, very bad for the agricultural economy.”

Fisher says the railroads have been working to hire more workers, but considering the current labor shortage and shipping delays, he expects rail delays to last another year. The rail delays have been so bad, some feed users report being just days away from running out of feed . Those delays could be inevitable even if a strike is averted in September.

Trouble Shipping Grain And Feed Via Rail Far From Over, Concerns Now Growing About Possible Worker Strike At Harvest

“Obviously, it could get worse if the trains were just to completely stop. But the service right now, even without a stop, is just not the best,” says Fisher. “There’s still a lot of delays as far as bringing rail cars to facilities, pulling them and delivering them. So, now the grain industry is still not in a good spot with respect to rail transportation.”

Tense Labor Negotiations

The April hearing in front of the STB gave a hint to how tense those labor negotiations could continue to be. Rail carriers pointed out how severely impacted they’ve been from what’s been dubbed the “Great Resignation,” and the issues getting labor back up to speed. Certain rail carriers also outlined the plans in place to get labor back to necessary levels to operate efficiently and smoothly.

However, rail workers place blame on the railroads, saying there’s more to the story. Mark Wallace, locomotive engineer, and vice president of Brotherhood of Locomotive Engineers and Trainmen (BLET), North America’s oldest rail labor union, testified during the STB hearing in April.

“Since 1984, 40 railroads have been reduced to seven class one carriers, now largely controlled by speculators and hedge fund investors,” he stated. “This culture of profits over safety, customer service and the lives of railroad workers, is now exposed as this network fails on a daily basis.”

Union Pacific, which is also part of the labor negotiations between rail workers and freight railroads over a new labor contract, signaled in July that the two sides were still far from reaching an agreement.

“I wish we could have gotten an agreement earlier in the process,” Union Pacific’s Lance Fritz said. “But the railroads and the union leadership are pretty far apart right now in terms of what we think is an appropriate settlement on wages.”

The talks involve nearly 115,000 union rail workers and more than 30 railroads and started in 2020.

BNSF Train Derails This Week

A BNSF train derailed between Hereford, Texas, and Dawn, Texas, early Wednesday morning. While the cause is still unknown, on-the-ground reports say pieces of the track were scattered around where the rail cars derailed and piled up.

Photos showed the aftermath of the accident. Sources from around the Hereford area describe that part of the rail line as extremely busy, with a train passing through that spot nearly every 15 minutes.

“BNSF can confirm that at approximately 5 a.m. CT, an eastbound intermodal freight train derailed 17 cars northeast of Hereford, Texas,” a BNSF communications spokesperson told Farm Journal. “There were no injuries to the train crew. Our teams are on site with equipment to clear the area and restore the track. The estimated time to reopen our first main train is mid-afternoon. The cause of the derailment is under investigation.”

@tyne_agtv Train derailment outside of Hereford, Texas early this morning. BNSF confirmed 17 cars derailed and says cause is under investigation. #train #derailment #railroad #agriculture #supplychainissues ♬ Oh No - Kreepa

Maps of BNSF routes shows that specific line runs as far west as California, evening leading the Port of Los Angeles, a port known as one of the world’s busiest seaports and a leading gateway for international trade in the Western Hemisphere.

Derailments have been a concern for grain shipping industry experts, especially considering the high heat in the South and Southwest this year. The triple digit heat could cause railways to buckle.

Trouble Shipping Grain And Feed Via Rail Far From Over, Concerns Now Growing About Possible Worker Strike At Harvest

Mon, 18 Jul 2022 20:00:15 GMT

Rail retains a vital role in the transportation of goods across the U.S., but this year, the 140,000- miles worth of railroad tracks across the country haven’t been immune to the supply chain chaos plaguing U.S. transportation sectors.

Now, a potential stoppage on the nation’s railways this fall is spurring concern, even after President Joe Biden signed an executive order Sunday to keep the nation’s rail traffic on track.

“What I’m hearing from our members is fewer equipment issues,” says Mike Seyfert, president and CEO of the National Feed and Grain Association (NFGA) . “The equipment and engines don’t seem to be breaking down, but the amount of time it’s taken to get the trains and the reliability of receiving them have.”

With more than 1,000 members today, NFGA represents everything from grain buyers and handlers to transportation companies who ship the grain.

“It seems to be most severe right now in the West, or for those who are trying to ship west on those lines that are going into the western part of the country,” says Seyfert. “Either for feed purposes, processing purposes, or export purposes to the western side.”

What’s Driving the Issues Shipping Via Rail?

Today’s rail issue centers around labor and the amount of time it’s taking to receive shipments via rail.

“The velocity to deliver trains is getting more and more difficult. You’re having challenges with having enough locomotives in different locations,” says Ken Erikson, senior vice president at S&P Global Fuels, Chemicals and Resource Solutions Group . “You have challenges with crews who may have been hit by weather, who may be hit by diversions, some of the rail crews timeout or they don’t have enough locomotive engineers in the right position.”

Eric Wilkey of Arizona Grain, Inc . is seeing the issue firsthand. Area farmers were in the middle of harvest, and Wilkey still hadn’t received the rail cars he needed.

“We’ve got a whole harvest that’s basically been received, and we haven’t been able to ship anything,” Wilkey told U.S. Farm Report at the end of June.

Wilkey says rail cars that were supposed to arrive in early May started to finally trickle in during the first part of July, but that was two months behind schedule.

“We never stopped the farmers from harvesting, so we have created some really large inventories and that has significant cash-flow impacts on us,” adds Wilkey.

Hearing Hints at Complexity of Issue

In April, the Surface Transportation Board (STB) stepped in, holding a hearing to get to the root of the rail issues. The hearing was full of differing opinions and pointed questions.

Just prior to the hearing, Landus Coop, which represents 7,000 farmer-owners in Iowa, submitted testimony saying rail issues meant they were only able to load half the number of shipments necessary, and the backlog meant farmers trying to haul grain to the coop were being turned away. The letter stated:

Landus is only able to load half the rate of shipments necessary today. With 450,000 bushels loaded in each train, this impact multiplies daily.
Farmers trying to haul grain to us today are getting turned away because we cannot make the inventory space for them. This is an important and optimal window of time when farmers must haul remaining old-crop inventory in preparation for harvest.
Disruption to inventory flow has led to increased handling costs and reduced customer service throughout Landus. We are experiencing lost business daily due to the disruption.
Grain bushels are getting “trapped” in pockets of surplus supply, while shipping destinations are experiencing a growing deficit in access to supply.
Our soy processing facility has experienced a 10% decrease in production over the past six months due to rail performance alone. This is in turn further impacting profitability and our ability to access markets where soybean meal is in highest demand.
Trucking is not a viable alternative transportation mode today due to labor shortages.

The letter went on to say “If this situation is not resolved quickly, we risk the potential for livestock producers in California and other states potentially running out of feed.”

Concerns About Labor Issues Growing Worse at Harvest

Rail carriers and unions are in the middle of labor negotiations right now. The collective bargaining process made headlines last week, as Biden had until Sunday, July 17, to create a Presidential Emergency Board (PEB). The move was an essential step in keeping the collective bargaining process on track, as well as keeping the nation’s railways operating.

“We are pleased that President Biden has taken an important step by creating a PEB to help all parties find a reasonable path forward,” says Association of American Railroads (AAR) president and CEO Ian Jefferies. “An agreement that allows both our hardworking employees and the industry to thrive into the future remains possible.”

AAR points out the Railway Labor Act governs collective bargaining for the rail industry, which aims to help parties reach an agreement without work stoppages or disruptions to U.S. freight rail movements.

While a crisis was averted with the president’s executive order, the collective bargaining process is far from over. Now, there are fresh concerns the ongoing labor dispute could come to a head just as harvest arrives in the Midwest this fall.

“Once we get into mid-September, there’s also a risk of some labor issues, even labor stoppage on some of the rail lines,” says Seyfert. “And so getting these things addressed now, and all of us working together before we get particularly into that fall harvest timeframe is essential. We’ve really never been in a situation where a reliable and resilient rail service is more important than it is now.”

Tense Labor Negotiations?

The April hearing in front of the STB gave a hint to just how tense those labor negotiations could continue to be. Rail carriers pointed out just how severely impacted they’ve been from what’s been dubbed the “Great Resignation,” and the issues getting labor back up to speed. Certain rail carriers also outlined the plans in place to get labor back to necessary levels to operate efficiently and smoothly.

However, rail workers place blame on the railroads, saying there’s more to the story. Mark Wallace, locomotive engineer, and vice president of Brotherhood Of Locomotive Engineers and Trainmen (BLET), which is North America’s oldest rail labor union, testified during the STB hearing in April.

“Since 1984, 40 railroads have been reduced to seven class one carriers, now largely controlled by speculators and hedge fund investors,” he stated. “This culture of profits over safety, customer service and the lives of railroad workers is now exposed as this industry is network fails on a daily basis.”

“Now, they signaled to us in meetings publicly and otherwise they are having some success in hiring again and getting crews successfully through training,” says Wilkey. “For the Midwest, there’s a little bit of time, but for us, there’s no time. We’re in harvest right now. And I don’t have time to wait another three months for crews to be trained.”

It’s not just the hearing that hinted toward prolonged trouble with train transportation. Grain handlers like Wilkey says current rail bids point to problems persisting into fall.

“These car values would be somewhere north of $1,000 per car this fall,” says Wilkey. “And so that’s the market sending signals that there’s going to be tightness, there’s going to be concerns.”

Typically, Wilkey says those bids would be around $100 per car.

Congress Urges STB to Take Action

In late June, 51 members of the U.S. House of Representatives signed a letter and sent to the STB regarding issues with the rail system in the U.S.. The letter asked STB to continue to work through the current rail issues with all stakeholders in order to address short-term challenges and find a resolution.

“On behalf of our constituents and farmers around the country, we write regarding poor rail service, which has limited fertilizer shipments, among other essential agricultural inputs and commodities, including grain and feed,” the letter stated.

“At a time when global fertilizer supplies and global crop production are highly disrupted, imposing shipping curtailments on fertilizer inputs and grain, as recently proposed by Union Pacific, will cause major supply chain disruptions, hurt American farmers, and exacerbate the food crisis considerably. We must ensure critical commodities reach essential industries and workers, such as America’s farmers, who are essential to feeding our nation and the world. Food is a national security issue, and we must treat it as such,” the 51 members wrote in the letter.

The Senate sent a similar letter to the STB in May.

Wait Times Cause Economic Pain

As the labor battle plays out, the short-term issues are causing grain handlers economic pain.

“There have been significant economic impacts,” says Wikley. “I would estimate since the first of the year, today, there’s been in the order of $100 million paid out by the industry to solve this logistics problem that’s developed. And that’s just outside of the bounds of normal.”

The battle over labor seems to have a long tail, as those in the grain industry try to work together to make sure this major shipping vein doesn’t buckle.

Livestock Producers Report Being Just Days Away From Running Out of Feed Due to Shipping Rail Issues

Tue, 12 Jul 2022 20:46:53 GMT

Rail bottlenecks in the U.S. are not improving, and in some cases, growing more severe. Feed users in California and the Southwest are having issues sourcing grain, with some reporting they are paying $3 over the CBOT price to secure grain by truck. Not only are feed users on the brink of running out of grain, but there are also concerns the rail issues could grow worse during harvest this fall.

The National Grain and Feed Association (NGFA) says their members have been seeing issues since late winter and early spring, which then caused the Surface Transportation Board (STB) to hold a hearing in August. While the industry thought the issues would improve by summer, labor issues are not getting better.

“What I’m hearing from our members is fewer equipment issues and that the equipment and engines seem to be not breaking down, but the train times - the amount of time it’s taking to get the trains - and the reliability of receiving them is still quite a problem in in quite a few areas of the country,” says Mike Seyfert, President and CEO of NGFA.

Fears of Running Out of Feed

According to Trains.com , Foster Farms, the largest chicken producer in the western U.S., asked federal regulators to issue an emergency service order last week that would direct Union Pacific to prioritize corn shipments that thousands of dairy cattle and millions of chickens and turkeys depend upon.

”The point has been reached when millions of chickens will be killed and other livestock will suffer because of UP’s service failures,” Foster Farms wrote in its request to the Surface Transportation Board this week .

Seyfert says the emergency order shows the seriousness of the issue.

“At times in in the past several months, we have heard from more than one member that has had severe difficulty getting feed, sometimes being within several hours of being short,” says Seyfert.

While a combination of weather, supply chain issues and other factors are creating the severe scenario, the main issue seems to revolve around labor. According to NGFA, railroads were already down about 25% in staffing prior to the COVID-19 pandemic. Then, problems during the pandemic only exacerbated the labor issue.

Ken Erikson, senior vice president at S&P Global Fuels, Chemicals and Resource Solutions Group, says the training required to bring employees back on the railroad is something that takes time, similar to what airlines are experiencing with pilots and other staff.

“The railroads had on a mandated requirement, instituted position railroad systems out there for precision scheduled railroads, part of the requirements to meet for the federal government,” says Erkison. “So, they thought they didn’t need as much crews if they can automate some things or be able to have greater visibility and trains. Well, the reality is they got so far behind they had furloughed a lot of crew members. And you just can’t bring crews back overnight without adequate training and to bring equipment back that’s offline to get a condition again. These things take long lead times.”

Congress Urges STB to Take Action

This week, 51 members of the U.S. House of Representatives signed a letter and sent to the STB regarding issues with the rail system in the U.S.. The letter asked STB to continue to work through the current rail issues with all stakeholders in order to address short-term challenges and find a resolution.

“On behalf of our constituents and farmers around the country, we write regarding poor rail service, which has limited fertilizer shipments, among other essential agricultural inputs and commodities, including grain and feed,” the letter stated.

“At a time when global fertilizer supplies and global crop production are highly disrupted, imposing shipping curtailments on fertilizer inputs and grain, as recently proposed by Union Pacific, will cause major supply chain disruptions, hurt American farmers, and exacerbate the food crisis considerably. We must ensure critical commodities reach essential industries and workers, such as America’s farmers, who are essential to feeding our nation and the world. Food is a national security issue, and we must treat it as such,” the 51 members wrote in the letter.

The Senate sent a similar letter to the STB in May.

More Issues Due to Labor Discussions/Disputes?

Another issue with labor are union and other labor discussions and disputes. Erikson points out the International Longshore and Warehouse Contract with Pacific Maritime Association expires Friday, July 1. Erikson says the two parties have been negotiating and committed to stay working, there could be other ripple effects.

“They’ve committed to stay working, but what we’ve seen as the diversion of cargo moving to the West Coast or to the U.S. Center Gulf, areas that move a lot of cargo, but also you have requirements and equipment demand to other regions that hasn’t been there. So now you move the problem elsewhere,” says Erikson.

Ahead of Friday’s expiration, the L.A. port chief sees no disruptions on eve of contract lapsing. Farm Journal Washington correspondent Jim Wiesemeyer reports the head of the US’ busiest port said he doesn’t foresee strikes at about 30 West Coast maritime hubs even as the labor contract for 22,000 dockworkers is about to lapse without a new deal. “Anything’s possible, but it will not happen,” Port of Los Angeles Executive Director Gene Seroka said Wednesday.

The labor issues could be far from over, as the four major rail lines are in the middle of a labor dispute with the unions. With the timeline on the table today, there are concerns those issue could grow more severe and possibly cause even more rail issues during the fall months, which is a busy time with harvest.

“They’re currently in a 30 day cooling off period, where they’re no longer working on arbitration,” Seyfert explains. “There’s some actions the President can take in mid-July to appoint a board, which can then make some recommendations that can be acted on. There’s 30 days there. Then, there’s 30 days for the railroads and in the labor to work together to determine to accept or not accept that.

Once we get into mid-September, there’s also a risk of some labor issues, even labor stoppage on some of the rail lines. And so getting these things addressed now and all of us working together before we get particularly into that fall harvest, where we’ve really never been in a situation where a reliable and resilient rail service is more important than it is.”

Seyfert says there have been recommendations made to the Surface Transportation Board (STB) regarding more transparent reporting by the railroad, as well as a request for railroads to submit service plans. There are also additional steps Congress could take to help resolve a portion of the rail bottlenecks.

Are Surprisingly Strong Cash Grain Bids Exposing Reality of U.S. Corn Supplies?

Wed, 29 Jun 2022 11:25:54 GMT

Commodity markets continue to see wild swings to finish out the month of June, but a story that’s catching the eye of many farmers is basis. Strong cash grain bids are sparking questions about not only how tight corn supplies actually sit today, but severity of the issues getting the grain to feed users located in areas of the country that need it.

Joe Vaclavik of Standard Grain says the cash market is creating opportunities for farmers still holding on to old crop grain.

“It’s not everywhere, but there’s a lot of areas with positive corn basis, in particular, and I think we’ll find out a little bit more on June 30 about that situation,” says Vaclavik. “What are the grain stocks? Where are they located? Why is it so tough for, say, an ethanol plant to procure corn, even when cash is $8 or better?”

Have Grain to Sell? Check Your Local Basis Bids Now

Could USDA’s Report This Week Reveal Answers?

Thursday, June 30, is when USDA will release its updated look at planted acre s, as well as a more current snapshot of grain stocks in the U.S. and around the world. He says with current cash basis levels, it will be a major focus of Thursday’s reports.

“It’s really a phenomenal situation,” says Vaclavik. “And it is an underlying positive in regard to the markets. Now, that doesn’t mean that the board has to rally from here, but I’d say it’s a supportive factor.”

Mike North of ever.ag works with livestock producers across the country. He says for feed users in the western half of the country, specifically California and the Southwest, sourcing grain is becoming more difficult. He says there are feed users even paying as much as $3 over the board just to get the grain they need.

Railroad Issues Make California Dairy Producer Worry About Growing Corn Shortages

“Basis absolutely suggests that corn supply is tight; there is no way around that fact when basis moves to the extremes that it is,” says North. “Even with high prices on the board, it is suggestive that it is hard to find, source and move corn from point A to point B. And as a consequence, you do start to question what the yield was last year, the stocks numbers that have been reported previously, or is it that we have enough corn just kind of sitting there that producers are unwilling to sell because they’re comfortable? It’s hard to fully answer that question.”

Issues Sourcing Feed Farther West

The other issue for producers in drought-stricken areas of the West is the fact feed is becoming more scarce, according to North.

“Water is already scarce,” he says. “There are allocations in California for usage, it’s a difficult situation. And it’s only getting worse, because as these allocations for water continue to shrink so does the capacity to grow crops. We’re taking a feed pile that has already been running light and making it lighter.”

North says in order to keep these operations running, and to keep the animals fed, feed users are paying more.

“When we talk about the road ahead, what’s going on in the Midwest will have big ripple effects as you work further out into the West and the South,” says North. “That becomes further complicated by railcar shortages and labor shortages and all of the other peripheral things that wrap themselves around just pure supply discussions.”

The Price Risk in Both Directions

Vaclavik says even with the updated look at acreage and stocks later this week, he thinks there’s a tremendous amount of risk in both directions for grain prices.

“Weather forecasts can turn on a dime and bring the markets along with them” he says. “At the same time, I think you’ve got a Federal Reserve and central banks that are essentially trying to induce a recession. They won’t say that, but that’s what they’re trying to do. They need to reduce economic activity in order to reduce inflation. They don’t even care if unemployment rises by 1% or 2%, I don’t think at this point in time, so that you’ve got so many risks.”

From recession, to the reality of reduced grain flows due to the war in Ukraine, Vaclavik reminds producers the markets are wading through a combination of unknowns.

“I’ve never seen anything like this before,” says Vaclavik. “Just try to have an idea of your risk profile, know where you stand. If things work, lock them up. Because you know, these markets can move dollars, dollars per bushel and grains in the course of a week. It’s possible and it’s in both directions.”

Farmers Are Now Paying Above $5 For Off-Road Diesel, And It's More Than Just Russia to Blame

Tue, 14 Jun 2022 14:04:57 GMT

Gas prices keep crushing records in the U.S., but diesel prices are posting even more sticker shock as fears of a possible diesel shortage this year are also causing concerns. It’s not just retail diesel prices that are rapidly rising. There are now reports of farmers booking off-road diesel for farm use trending above the $5 mark, too.

(Farm Journal)

It’s an issue facing the trucking industry from coast to coast. AAA reports the national average diesel price is now $5.77 a gallon. A year ago, it was $3.21.

“It’s almost like every five minutes, I see the little live indicator tick up on our GasBuddy data,” Patrick De Haan, head of petroleum analysis, GasBuddy , told U.S. Farm Report two weeks ago.

GasBuddy tracks both diesel and gas prices in real time. And while the pain at the pump is something drivers are seeing across the country, it’s also an issue plaguing agricultural producers across the U.S.

“We had some farm diesel delivered yesterday, and it cost us $4.85 or $4.89 a gallon delivered. Two years ago, we bought fuel for just over $1,” Craig Moss, a farmer in Hull, Iowa, told Farm Journal’s Michelle Rook.

The rapid rise in input prices is eating into outlooks this year, even with high livestock and grain prices.

“It’s a challenging market, no doubt, buying $8 corn and $5.50 diesel; it’s a tremendous challenge for producers,” says David Newman, a pork producer in Myrtle, Mo.

While prices at the pump for both gas and diesel climbed this week, it’s a similar story for off-road diesel prices. A survey of farmers on Twitter drew a wide range of responses regarding the prices they are currently seeing. Farmers reported off-road diesel at $4.13 in the northern Corn Belt, while off-road diesel is now above $5 for those further east and in western states like Montana.

Research by Texas A&M Agricultural and Food Policy Center (AFPC) shows farmers are seeing nearly every input cost on their farm rise this year. Nitrogen prices produced the biggest increase, up more than 133% per acre year-over-year. Phosphorus and potassium fertilizer were up nearly 93% during that time. That was followed by fuel and lube, which jumped more than 86% compared to last year.

(Farm Journal)

The latest baseline projections from the University of Missouri Food and Policy Research Institute (FAPRI) also shows the sharp rise in fuels costs today.

“A 57% increase may or may not capture what’s happening right now throughout the whole calendar year of 2022, but it is capturing at least the part that we’re seeing right now,” says Bob Maltsbarger, a senior research economist with FAPRI.

FAPRI’s baseline projection shows even if fuel prices retreat the second half of this year, higher overall production costs will continue to sway balance sheets. Maltsbarger points out diesel prices vary by not only geography, but also by farm, especially considering crops like corn typically require more fuel use.

“It will vary quite a bit on the dollars-per-acre impact, but if you have about an equal increase on a percentage change basis, you will see those dollars per acre be more expensive in this calendar year,” he says.

Why Are Diesel Prices So High?

Why have diesel prices raced higher this year? It’s largely due to a shortage of refining capacity, not a shortage of oil, but the prices started to climb higher long before Russia invaded Ukraine.

“The nation is dealing with about a million barrels a day less of capacity than we had just three years ago. That’s the equivalent of about 5%,” De Haan explains. “So, not only is oil a problem with sanctions on Russia’s oil, but turning that oil into something like gasoline and diesel is also now a choke point.”

“Refineries have less capacity; we have about 1.2 million barrels a day of less capacity because of shutdowns that occurred prior to the pandemic,” says Debnil Chowdhury, vice president, head of Americas Refining, S&P Global Commodity Insights. “Also during the pandemic, we’ve had some convergence to biofuels’ facilities as well as a refinery that was hit by a hurricane and damaged to the point where it can’t really be run anymore.”

S&P Global Commodities is also watching the situation. At a time when the U.S. is typically building inventory, the opposite is occurring, which is also heightening concerns about a possible shortage.

“This is the year we’re running very low on inventory entering the summertime, and any type of impact on refining capacity is really going to increase the chance of the shortage,” says Chowdhury.

One Hurricane Away from a Diesel Shortage?

With supplies already tight, De Haan says the U.S. can’t afford to lose any refining capacity, which is a major risk considering NOAA is projecting an above-normal hurricane season.

“We’re probably one Category 3 storm away [from a shortage], and that Category 3 storm would have to take aim for an area roughly from the Mississippi River to Houston,” says De Haan. “That’s the really sensitive area. Not only could it affect refining, but it could affect offshore oil production.”

One of the reasons inventories are already tight is due to Hurricane Ida making a direct hit along the Gulf Coast. Refineries located near New Orleans went offline last fall, with some still not back online today. That major hurricane, and the devastation it caused, was one of the initial dominoes to fall for diesel prices.

“This all actually started before the war. It began in October of last year, when natural gas prices in Europe started to rise,” Chowdhury says. “The cost of natural gas increased substantially in Europe, and why that’s important to a Midwest farmer is because the cost of producing that diesel increased with it.”

Searching for Solutions

While the financial incentive is there today to pump more oil and increase refining capacity, one worker in the oil industry told U.S. Farm Report that the push to electric has investors concerned about the risk of such an investment. And considering it takes years for refining capacity to come online, that’s also not a solution today.

There’s talk of the Biden administration tapping into diesel reserves to help ease supply concerns, but De Haan says not only will that move have a minimal impact, it’s also a question of timing.

“It’s only a million barrels, so it’s not a infinite amount of supply,” he says. “The worry is that if we release those barrels of diesel now from areas in the Northeast, we’re also in the start of hurricane season. Now we do have some tropical activity. So when do you use the inventories? Do you use them now because of high prices? Or, do you wait for a bigger potential issue later this summer?”

(Farm Journal)

In order to relieve the tight diesel supply situation, Chowdhury points out the other option is for the government to wave the Merchant Marine Act of 1920, otherwise known as the Jones Act.

“The U.S. refiner now has to decide do we send product to Europe? We can send it via pipeline easily, but because of the Jones Act, which is a regulation that mandates U.S. flagged vessels from port to port, it’s not something that we could do now. And that’s something that the government could look at waving if we do face a shortage,” says Chowdhury.

The Jones Act is a federal statute that was established more than 100 years ago. It requires all vessels carrying good between two U.S. points be American-built, owned, crewed and flagged. The policy was created to help sustain American jobs, and in turn, generate economic benefits each year. Proponents claim the Jones Act has secured critical movement of goods over the years.

How Long Could the Diesel Price Pain Last?

While the industry searches for possible solutions, those who follow and track refineries don’t see a dramatic drop in diesel prices anytime soon.

“These prices are not going to go back to the levels we had at the beginning of 2021. It’s more likely that we’ll see maybe, you know, a $5 to $10 decline in crude price, and that would equate to maybe 50¢ to 60¢ on the diesel price itself. We’re not talking about a major relief,” Chowdhury says.

On the heels of diesel prices climbing higher again this week, anyone hoping for relief might have to look out beyond this year.

“It could take a couple of years. Keep in mind the longer we go down this road, and that demand eclipses supply, the more catching up we’re going to have to do,” De Haan says.

Vilsack Announces $2B in Funding to Transform U.S. Food System

Thu, 02 Jun 2022 00:38:43 GMT

Transforming the U.S. food system by improving supply chains and addressing issues exposed by the Covid-19 pandemic will be detailed today by USDA Secretary Tom Vilsack during a speech at Georgetown University.

The over $2 billion package includes previously announced funding to expand meat and poultry processing and to finance new infrastructure such as cold storage facilities, but there $600 million in new aid to support food supply chain infrastructure outside meat processing. The plan also includes $400 million for regional food business centers, up to $300 million for a new organic transition initiative and $75 million to support urban agriculture.

The initiatives are funded through the American Rescue Plan that was enacted in March 2021 and other relief legislation. On Thursday, Vilsack will be in Ohio with Democratic Rep. Marcy Kaptur to visit a full-service grocery store in central Toledo called Market on the Green.

The package includes $650 million in funding and loan assistance for meat and poultry processing projects, including $275 million to help entrepreneurs who have had trouble getting credit. Another $100 million would go toward training workers in meat processing. Another $600 million is earmarked for improving food supply chain infrastructure, including cold storage and refrigerated trucks, outside of meat and processing.

Other funding in the plan includes:

$200 million to help fruit and vegetable growers comply with food safety regulations.
$400 million to create regional food business centers that will provide coordination and technical assistance and other support to small and mid-size businesses involved in processing, distribution and aggregation.
$155 million to expand USDA’s Healthy Food Financing Initiative, which is aimed at reducing food deserts.
$90 million to prevent and reduce food loss and waste.
$60 million farm-to-school programs that increase markets for smaller-scale farmers through child nutrition programs.

The announcement comes as supermarkets and distributors are pushing back on higher prices from food makers, as escalating inflation drives more consumers to rethink their spending. The Wall Street Journal reports ( link ) that Kroger Co. and other grocery chains said they are asking brands to prove why higher prices are necessary before accepting them, and warning manufacturers that they will stop carrying products if food companies won’t negotiate prices. Some companies said they are switching to new meat suppliers with cheaper products and are delaying price changes for items like canned goods.

Retailers generally have been passing price increases along to consumers, and executives have said that for months shopper demand has remained strong. Industry executives said that is starting to change, as consumers increasingly look for ways to stretch their dollars.

Filling A Tractor Tank Daily Now Costs Some Farmers $1,000, Double What It Did a Year Ago

Fri, 20 May 2022 20:17:40 GMT

Filling a tractor tank daily now costs some farmers $1,000, twice what it was a year ago. And the most intensive part of the farming season is still ahead.

U.S. diesel prices are the highest ever, with warnings of shortages, especially in the eastern U.S.

“Diesel is the lifeblood of farming,” Iowa corn and soybean farmer Ben Riensche told Bloomberg.

Diesel Prices Just Hit a New Record High, Here's Why a Diesel Shortage May Be Next

Tue, 10 May 2022 21:18:45 GMT

Farmers are already faced with a shortage of equipment parts, tires and some crop inputs. Now, due to increased demand and a drop in production, a diesel shortage may be next as the largest diesel distribution hub in the U.S. is sitting on supplies at a 30-year low.

Record gap between gasoline and diesel, but the gap will start to shrink very soon- not by leaps and bounds, but slowly. https://t.co/oFGj8piR3h
— Patrick De Haan ⛽️📊 (@GasBuddyGuy) May 9, 2022

Diesel prices hit a record again this week. The national average price of diesel is now $5.54 per gallon, which is an increase of 22 cents from last week, which was when the most recent record was set. Data shows there’s no state that’s currently seeing diesel prices below $5.12 per gallon.

So, what’s causing the historic run-up in prices?

It’s a combination of things, but Russia, supply chain trying to play catch-up and lower production along the East Coast are all adding to the dire supply situation.

“Diesel supply is short all over the world due to sanctions against Russian oil and much higher post-pandemic demand as supply restocking takes place,” says Peter Meyer with S&P Global Commodity Insights.

Meyer adds the “just in time” supply chain model only exacerbates the problem as the supply chain works through issues that date back to the Covid-19 pandemic.

Some farmers are now even reporting farm diesel prices are higher than on-road diesel, which is typically not the case.

Record prices are one thing, but getting your hands on enough diesel may be the next issue for farmers.

“Certain areas of the country have seen shortages already and we expect that to continue. Supplies at New York Harbor–a hub for diesel distribution–are at a 30-year low,” says Meyer. “As such, the East Coast of the U.S. has been hit especially hard, resulting in diesel prices above $6.00 per gallon in that area, well over the equivalent of $250 per barrel. Exports of U.S. gasoline, diesel, and jet fuel to Latin America is also very high, adding to the tightness.”

(Farm Journal)

The bottlenecks in the diesel supplies are not a shortage of oil that the U.S. is dealing with, even with the sanctions against Russia. Instead, Meyer says it’s a shortage of refining capacity on the East Coast.

The problem on the East Coast is refining capacity, not so much the supply of oil,” he says. “East Coast capacity has been cut in half from 1.6 million barrels per day to 800,000 barrels per day over the past 10 years as half of the refineries in the east have shuttered. Lower production capacities and higher post pandemic demand has caused this squeeze in the eastern U.S.”

Meyer says making price forecasts is proving to be extremely difficult considering, but margins are enticing refiners to produce as much diesel as possible.

“When the profit margin on producing diesel is over $70 per barrel, every refining company in the US will be doing all they can to produce as much as they can,” says Meyer. One bright spot may be that after a cold spring, heating oil demand will obviously diminish quickly in the summer months.”

Meyer also says renewable diesel production may actually benefit from the historic spike in diesel prices, but he points out soy oil, which is still the predominate feedstock, continues to take its lead from the oil product markets and is overpriced for many.

Diesel Export Ban Looming?

There’s a higher demand around the globe for products like diesel, heating oil and jet fuel, which are known as “middle distillates” since they are made from the middle of the boiling range when oil is turned into products. The U.S. currently exports more than 1-million barrels of distillates every day to countries such as Mexico, Brazil and Chile.

So could an export ban be coming for diesel fuel?

AgriTalk host Chip Flory put that question to Farm Journal Washington analyst Jim Wiesemeyer during this week’s “Signal to Noise.” Wiesemeyer says while it’s not known to be on the table at this point, anything his possible. You can listen to that discussion here.

Walmart Will Now Pay Starting Truck Drivers $110,000, Could It Backfire and Make the Nationwide Trucker Shortage Even Worse?

Fri, 08 Apr 2022 20:21:05 GMT

Trucking gained broad interest thanks to the big screen in the late 1970s. As Hollywood produced movies like “Smokey and the Bandit,” the trucking industry was widely talked about. Today, the tune has changed, and it’s a job that doesn’t boast the glamour it once did.

“We don’t have a ton of young people or other people just dying to get into the trucking industry,” says Kelly Krapu, safety director and compliance officer for TrueNorth Compliance Services. “It’s no longer a glamorous gig that people really want to get into anymore. So, we are going to continue to see shortages.”

Two years after the COVID-19 pandemic brought some businesses to a halt, supply chain issues continue to play out. A lack of drivers currently plaguing the trucking industry is one of those factors still impacting the supply chain.

“We’re currently about 80,000 drivers short in the trucking industry,” says Krapu. “In 10 years, they’re thinking it’s closer to 250,000 to 300,000 jobs that we’re going to be short in the trucking industry.”

As safety director and compliance manager, Krapu helps truck drivers and trucking companies navigate the regulations that have a tight grip on truckers today.

“I think we’re losing drivers not only to those short-haul drives or short-haul careers, but other careers that they can be in a more controlled environment and a little bit safer and more conducive to a family life,” she adds.

Walmart recently announced it’s upping starting salaries for the company’s truck drivers to between $95,000 to $110,000 a year, which is up from the current average starting salary of $87,000. The Wall Street Journal reports Walmart will also offer workers in other departments training to become a certified truck driver.

“It’s the latest sign of how big retailers are using their size to take greater control of their own supply chains as bottlenecks, capacity constraints and rising prices roil logistics operations,” reports Farm Journal Washington analyst Jim Wiesemeyer.

Training is another hurdle for attracting new truck drivers into the industry. In February, a new federal CDL requirement hit the trucking industry , which will require anyone obtaining a new CDL to go through weeks of training. The course will cost you up to $10,000.

Krapu says the rule was actually passed in 2018, but the industry kept seeing extensions until it actually went into effect this year. Without either the current Biden administration or the previous Trump administration stepping in to halt the new regulations, it could now cost those looking to get a CDL or upgrade to a Class A license, both time and money. The amount of time and course fee will vary by what type of license an individual is trying to obtain.

“If you need a Class A and all of the endorsements that would go with it, that’s 21 days of training and larger amounts of money at $8,500 to $10,000,” says Krapu.

Krapu says agriculture is exempt, as long as the driver stays within the 150-mile-radius air bubble. However, if you travel outside that zone, even for agricultural purposes, that’s when the new regulations could be stifling.

“If you were to go outside that 150 air miles to take corn to a grain elevator that’s outside the 150 miles, all of the federal regulations would apply to you. And that would include the commercial driver’s license requirement,” she says.

From new CDL requirements to vaccine mandates that impact truckers going across the border to Canada, Krapu says some truck drivers are finding better paying jobs that also allow better work-life balance.

“We’re losing drivers to non-truck driving jobs that are local,” says Krapu. “They can go work in a warehouse pulling packages for the same amount of money and very little risk.”

Inflation Already Costing Consumers, USDA Makes Large Upward Revisions in Food Price Forecast

Fri, 25 Mar 2022 21:35:47 GMT

USDA now expects food price inflation in 2022 to be from 4.5% to 5.5%, compared with 2021, based on the all-food Consumer Price Index (CPI). The prior outlook for food prices pegged the increase at 2.5% to 3.5%. Not a single or aggregate category is expected to decline.

Food away from home (restaurant) prices are forecasted to increase 5.5% to 6.5%, the third increase in as many months. Last month’s forecast was for a rise of 4% to 5%.

Food at home (grocery store) prices are now forecast to be up 3% to 4% in 2022, up from their previous forecast for an increase 2% to 3% from 2021 levels.

In 2021, grocery store prices increased 3.5% and restaurant prices were up 4.5%, with all food prices up 3.9% versus 2020 levels. The biggest increases in items tracked by USDA’s Economic Research Service (ERS) were the beef and veal category at 9.3% and the fresh vegetables category had the smallest rise of 1.1%.

(Farm Journal)

The overall food price CPI rose 1% from January to February and was up 7.9% from February 2021. The restaurant CPI increased 0.4% in February 2022 and was 6.8% higher than February 2021. Meanwhile, grocery prices were up 1.4% from January while those prices stood 8.6% higher than they were in February 2021.

The increases versus year-ago marks were substantial for many categories, and all categories saw gains. Prices for meats, poultry, and fish were up 13.1% from February 2021 while they edged up 0.9% from January—following a more modest rise of 0.2% seen from December to January. Prices for meats were 14.0% higher than a year ago, while beef and veal prices gained 16.2% and pork prices were 14.0% higher. The CPI for meats rose 0.8% from January, with a rise of 0.5% for beef and veal while pork prices moved up 0.7%.

Seattle Selected for Port Pop-Up to Ease Ag Supply Chain

Fri, 18 Mar 2022 22:07:18 GMT

USDA announced on Friday another ag commodity “pop-up” port will be opening to temporarily house ag containers for shipping.

The Northwest Seaport Alliance is partnering the USDA to bring the Port of Seattle a 49-acre pop-up site that will accept both dry and refrigerated agricultural products for temporary storage.

AgDay reports the Northwest Seaport Alliance saw a nearly 30-percent decline in the export of ag commodities in the last six months of last year, with the ratio of loaded versus empty container exports shifting to predominately empty containers since May of 2021.

A similar pop-up site launched at California’s Port of Oakland earlier this month, along with U.S. Department of Transportation partnership with the Port of Savannah in Georgia.

More on the Way

USDA says they will continue to seek opportunities to partner with additional ports or other intermodal container facilities to help American farmers and agricultural producers move their product to market.

“The pandemic revealed vulnerabilities across our supply system and as the economy has made an historic recovery, it has put additional strain on the supply chain,” Vilsack says. “The Biden-Harris Administration is calling out ocean carriers that are taking advantage of the situation to leverage undue profits and are treating U.S. agricultural companies and producers unacceptably.”

The National Milk Producers Federation (NMPF) and the U.S. Dairy Export Council (USDEC) praised the launch in a news release today, saying the site will help to “deliver relief” to agricultural exporters grappling with supply chain struggles. However, they feel this site is only one leg of the supply chain race.

“We urge the administration to build on today’s great news by expanding further to inland locations.” says Jim Mulhern, NMPF president. “We urge Congress to move forward swiftly with legislative solutions to the supply chain crunch by passing the Ocean Shipping Reform Act and advancing immigration reform to address the growing labor challenges facing our dairy farms and plants.

Bridge the Gap

Adjustments to truck-carrying capacity has been heavily debated as a solution to clogged ports.

White House Ports Czar John Porcari says he has an ongoing discussion with the Federal Motor Carrier Safety Administration about increasing truck carrying capacity, as truck size and weight specifications are established at the state level, with federal oversight.

“This is not just a short-term issue related to the difficulties in exporting right now,” says Porcari. “This is a perennial issue that has be tackled in our infrastructure to accommodate those larger weights.”

Vilsack echoed Porcari saying ports and truck capacity are an “interesting” issue when considering the bipartisan infrastructure bill. He says as bridges and roads are repaired across the U.S., they can be strengthened to handle more weight and offer “greater resilience and efficiency in the long term.”

Read more from AgWeb:
> Will The USDA Pop-Up Site Solve the Clogged Ports Issue?
> John Phipps: It’s Not a Chain, It’s a Web

If You Think Fertilizer Prices are Bad Now, Here's Why China Could Make the Situation Even Worse

Fri, 18 Mar 2022 16:06:55 GMT

The fertilizer market has been hit with black swans for nearly a year. And as farmers face anhydrous ammonia prices at $1500 per ton, prices are proof of just how bad the situation has become.

For those wondering if they should lock up their #fertilizer for the '23 corn crop, take a look at these #corn/fertilizer ratio charts.

Anything from July forward (dotted line) is what you would be securing 8 - 12 months out. Not a great relationship this far out. pic.twitter.com/8k7DYyCLmu
— Josh Linville (@JLinvilleFert) March 18, 2022

Russia’s decision to stop exporting fertilizer for the remainder of 2022 is yet another chapter in the fertilizer frenzy ag retailers and farmers face. Josh Linville of StoneX Group says Russia is a major player in global fertilizer production.

“Russia is a major, major exporter across all of the major fertilizers,” says Linville. “Urea, they account for 14% of the global export total. UAN has been anywhere from 25% to 31% the last couple of years. Phosphate 10%. They are almost 20% of the global operating potash capacity of the entire world. They’re a big deal. Losing Russian exports is a very big deal. I don’t care where you are in the earth, it matters to you.”

Will The USDA Pop-Up Site Solve The Clogged Ports Issue?

Wed, 02 Feb 2022 20:52:54 GMT

Clogged ports amassed with shipping container vessels have captured news headlines since COVID-19 slammed the global supply chain.

Earlier this week, USDA announced a partnership with the Port of Oakland to ease congested ports and supply chain issues through a 25-acre pop-up site dedicated to agricultural companies for container filling purposes.

Following the pop-up announcement, various politicians have debated whether it will add further headache or relief.

Empty Opportunities

Rep. John Garamendi (D-Calif.) says the USDA partnership with the Port of Oakland “isn’t going to solve the problem” because shippers deliver product to the U.S. and leave ports with empty containers. He says ocean carriers currently have an exemption from antitrust laws that will continue to allow them to leave ports with empty containers “until there is a law in place that says you can’t do it.”

USDA Secretary Tom Vilsack responded saying his department’s efforts in the partnership are “not the only solution, but an important first step.” He says his work in communicating with ocean carriers has brought three major shipping companies back to the Port of Oakland, and he plans the same for the Ports of L.A. and Long Beach.

Pete Buttigieg, U.S. transportation secretary says the partnership will help American farmers and agricultural producers move their product to market “while also making better use of empty containers that are causing congestion at the ports.”

Ownership

According to White House Ports Czar John Porcari, only 2% of the global shipping market is U.S. flagged vessels. The three largest shipping companies running through California ports hail from China, Taiwan and Korea.

Garamendi sees the congested ports as international trade issue that requires the U.S. to put pressure on foreign countries. He says the U.S. Department of State has been in contact with these foreign countries, yet the port congestion has only expanded from 40% congestion to 70%.

Vilsack says his administration wants to do more for the port but hasn’t received a budget from the government to carry out further action. Regarding the pop-up, his team plans to use $5 million in funds from the Commodity Credit Corporation to:

• Pay 60% of the startup cost
• Provide pre-cool refrigerated shipping containers for perishables
• Offer $125 subsidy to offset logistic costs of moving containers to the pop-up

Weighing the Cost

Adjustments to truck-carrying capacity has been heavily debated as a solution to ports. Truck size and weight are established at the state level, with federal oversight.

Porcari says he has an ongoing discussion with the Federal Motor Carrier Safety Administration about increasing truck carrying capacity.

“This is not just a short-term issue related to the difficulties in exporting right now,” says Porcari. “This is a perennial issue that has be tackled in our infrastructure to accommodate those larger weights.”

Vilsack echoed Porcari saying ports and truck capacity are an “interesting” issue when considering the bipartisan infrastructure bill. He says as bridges and roads are repaired across the U.S., they can be strengthened to handle more weight and offer “greater resilience and efficiency in the long term.”

Read more:

Kentucky Farmers Endure Epic Ruin And Worst Storm Damage In State History As Agriculture Rushes To Rebuild

Mon, 24 Jan 2022 19:32:56 GMT

On Dec. 10, 2021, a tornado charged across the Midsouth demolishing towns and farms in its path.

“You could not have charted a path with more destruction throughout rural Kentucky than what happened in mid-December,” says Ryan Quarles, Kentucky Commissioner of Agriculture.

The EF4 tornado was the deadliest tornado in the state’s history, resulting in 58 fatalities.

“When I got there, there were still people who were injured and walking around. It was just terrible,” says Keith Lowry, a farmer just 10 miles south of Mayfield, Ken. “There’s nothing left in downtown Mayfield for 10 to 12 city blocks. There won’t be anything left on in downtown Mayfield.”

(Farm Journal)

200 Miles of Devastation

Along its 200-mile path, the tornado also destroyed a research farm vital to the state’s ag industry.

“Our agriculture industry got hit more than any other industry in our state. Literally we have a path of destruction from the Bootheel of Missouri to just south of Louisville, Kentucky,” Quarles says. “We have deceased livestock just south of Louisville. If you work your way back toward western Kentucky, we have collapsed grain centers, grain silos and the poultry industry got pummeled with close to 30 poultry barns completely collapsed or damaged beyond repair.”

(Farm Journal)

Mayfield, Ken., is considered ground zero for the devastation caused by the December tornado. As Lowry detailed, block after block of the town was crushed by the storm.

“I made a call to the mayor and to the judge executive. They said just come on up, we’ve got big problems,” he says.

That call happened at 2:30 a.m., and a few hours later Lowry, who also owns heavy machinery and operates a trucking company, headed for Mayfield.

“When I got there, they had three or four medical emergencies they could not get to. So we took our heavy equipment and cleaned up some streets. I’ve never seen anything like it — it’s just like a bomb went off.”

While there’s been a steady stream of cleanup efforts blanketing the rural town, the work has only started.

“We’ve been at it for six weeks, and you can hardly tell we’ve done anything. It’s just that much devastation,” Lowry says.

Losses Continue to Mount

As the cleanup continues, the price tag of the devastation is still unknown.

“We don’t know how expensive this tornado storm system will be toward Kentucky agriculture. But what we do know is it will be the most expensive storm damage for ag that our state has ever seen,” he adds. “There’s no question about it.”

(Farm Journal)

As residents work to rebuild, the costs of materials have climbed, and some materials are now in short supply.

“Another big issue in our state right now is the lack of fencing,” Quarles says. “There are literally areas where you don’t know where the property lines are anymore. Plus, you have debris, nails or other items that can be harmful to livestock. So we’re still dealing with sorting livestock properly, beef cattle, and also animal welfare issues.”

(Farm Journal)

Grain bins were also crushed, raising questions about where the 2022 harvest will be stored.

“One of our local granaries had close to 6 million bushels of grain destroyed, and I don’t think it’s going to be salvageable for the chicken industry, which is very big for Graves County, and as of today, were still hauling it out,” says Lowry.

That feed mill is a main artery for poultry feed, as it supplies close to 200 farms.

“The local granary — we’re hoping and praying somebody will come in there and rebuild because we need that grain. The chicken industry needs the grain,” Lowry adds.

Agriculture Rallies to Help

While some business might never rebuild, what’s happened in the days and weeks after the tornado is something Quarles says is nothing short of remarkable.

“What’s interesting is that agriculture is taking care of agriculture. A Pilgrim’s Pride hatchery got hit — 8 million chicks gone, females out, but Tyson’s helping supply the feed right now. So we’re trying to help out each other,” Quarles says.

“I have to brag on my fellow farmers. They were called into duty, and we showed up,” Lowry says. “If you know the farming community well enough, we don’t have to be asked, we just get there, we get the job done. We will get the job done eventually, but it seems like it’s a never-ending process.”

While the support has been local, relief has also been pouring in from miles away.

“I’m just humbled to see the random acts of kindness from Americans I have never met,” Quarles says. “We had donations of feed troughs, we’ve had 1,800 pairs of gloves. We have feed and hay coming in from all corners of the United States. And, of course, there’s the monetary donations, as well.”

Quarles says the Kentucky Department of Agriculture and the Kentucky Farm Bureau set up a GoFundMe page called the Kentucky Agriculture Relief Fund. Last week, the relief fund eclipsed over $1 million to help Kentucky rebuild.

“I don’t know if we’ll ever see it back like it was, we probably won’t, but it’s time for us to rebuild. We will rebuild and we will come back stronger,” Lowry says.

How to Help

The Kentucky Department of Agriculture and the Kentucky Farm Bureau Federation are joining forces to create Kentucky Agriculture Relief Fund. The groups have created a GoFundMe page to help provide resources for agricultural-related recovery efforts for farmers affected by the widespread and devastating storms on Dec. 10-11, 2021.

(Farm Journal)

Supply Chain

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On the Water

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Impact on Farmers

U.S., China Container Shipping Rates Plummet 50%, Backlog of Unfilled Orders Grows

The U.S. is Now 30 Days Away From a Possible Railroad Labor Strike

Congress Holds the Power to Intervene

Trouble Shipping Grain And Feed Via Rail Far From Over, Concerns Now Growing About Possible Worker Strike At Harvest

Tense Labor Negotiations

BNSF Train Derails This Week

Trouble Shipping Grain And Feed Via Rail Far From Over, Concerns Now Growing About Possible Worker Strike At Harvest

Read More: U.S. Rail Strike Averted For Now As Biden Steps In Before Sunday’s Deadline

What’s Driving the Issues Shipping Via Rail?

Read More: Livestock Producers Report Being Just Days Away From Running Out of Feed Due to Shipping Rail Issues

Hearing Hints at Complexity of Issue

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Tense Labor Negotiations?

Congress Urges STB to Take Action

Wait Times Cause Economic Pain

Livestock Producers Report Being Just Days Away From Running Out of Feed Due to Shipping Rail Issues

Fears of Running Out of Feed

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Are Surprisingly Strong Cash Grain Bids Exposing Reality of U.S. Corn Supplies?

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Issues Sourcing Feed Farther West

The Price Risk in Both Directions

Farmers Are Now Paying Above $5 For Off-Road Diesel, And It's More Than Just Russia to Blame

Why Are Diesel Prices So High?

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Searching for Solutions

How Long Could the Diesel Price Pain Last?

Vilsack Announces $2B in Funding to Transform U.S. Food System

Filling A Tractor Tank Daily Now Costs Some Farmers $1,000, Double What It Did a Year Ago

Read more: Diesel Prices Just Hit a New Record High, Here’s Why a Diesel Shortage May Be Next

Diesel Prices Just Hit a New Record High, Here's Why a Diesel Shortage May Be Next

So, what’s causing the historic run-up in prices?

Diesel Export Ban Looming?

Walmart Will Now Pay Starting Truck Drivers $110,000, Could It Backfire and Make the Nationwide Trucker Shortage Even Worse?

Inflation Already Costing Consumers, USDA Makes Large Upward Revisions in Food Price Forecast

Seattle Selected for Port Pop-Up to Ease Ag Supply Chain

If You Think Fertilizer Prices are Bad Now, Here's Why China Could Make the Situation Even Worse

Read More: The 4Rs can Help Reduce the Sting of Fertilizer Supply Logistics

Will The USDA Pop-Up Site Solve The Clogged Ports Issue?

Kentucky Farmers Endure Epic Ruin And Worst Storm Damage In State History As Agriculture Rushes To Rebuild

200 Miles of Devastation

Losses Continue to Mount

Agriculture Rallies to Help

How to Help