American farmers are facing another supply-chain headache just as the harvest season moves into high gear: Not enough barges on a shrinking Mississippi River.
Drought is drying up the crucial US water artery. That means less room for vessels shipping corn and soybeans, the biggest US crops. Barge rates reached $49.88 per ton on Tuesday, the highest on record and up nearly 50% from a year ago, according to a government report released Thursday.
The Mississippi River is the largest US export channel for corn and soybeans, accounting for more than half of the shipments bound for the world market. The barge woes are hitting harvest time when supplies will be the biggest, and follow a harrowing season of weather setbacks and soaring inflation for farm necessities like fuel and fertilizer.
Mike Steenhoek, executive director of the Soy Transportation Coalition, said it was time for the game. We need our supply chain to be operational on all cylinders. US farmers are under intense scrutiny this year as the world is counting on their harvests to help restock food reserves that have been drained by Russia's war in Ukraine. Farmers tend to see less for their crops because grain companies are willing to pay less for crops when it costs more to ship them.
The US Department of Agriculture said that the tight barge supply is problematic for grain shippers heading into harvest. There will likely be more upward pressure on barge rates as a result of increased demand. At a time when food inflation is worse, the US grain industry is at risk of new price surges for crop nutrients like nitrogen.
There were freight railroad disruptions earlier this month and ongoing challenges in securing trucks that resulted in limited vessel capacity. The nationwide labor crunch is a problem, as the barge industry is having difficulty hiring and retaining workers, according to USDA.
Cargo from barges is unloaded and then reloaded onto larger bulk vessels for the world market. According to the Iowa Department of Transportation data, one barge can hold the same amount of 16 rail cars or 70 large semi trucks.
The water route in Cairo, Illinois, where the Ohio River flows into the Mississippi, has been severely affected by lack of rain. According to US government data, it is predicted that it will drop even more in October.
Steenhoek said that a single shipment of soybeans, the second-biggest US crop export after corn, has been cut in size by as much as 38%.
The Mississippi River is the main source of corn, which is responsible for 65% of its exports. Matt Ziegler, the public policy manager at the National Corn Growers Association, said it was the most efficient and cost effective way for the corn belt to receive inputs.
Ziegler said that while barge scarcity and rate spikes could be detrimental to growers, I'm not sure there's much we can do about it.