Market Matters Blog

On Thursday, the Pacific Northwest Grain Handlers decided to extend negotiating time with the International Longshore and Warehouse Union and the Army Corp of Engineers recognized concerns about the Mississippi River's water levels by agreeing to expedite demolition of the rock formations near Thebes, Ill., that are already complicating barge traffic.

The threats that low water and labor disputes pose to agricultural exports is substantial. On Thursday, Ag Secretary Tom Vilsack announced that USDA increased its forecast for ag exports in 2013 by $1.5 billion to $145 billion. What I found interesting about this press release was the reasons Vilsack cites for the success of agriculture exports.

"Since 2009, more than 1,000 U.S. companies and organizations -- mainly small and medium sized businesses -- participated in 110 USDA-endorsed trade shows in 24 countries, racking up 12-month projected sales estimated at more than $4.2 billion. We've led nearly 150 U.S. businesses on trade missions to China, Colombia, Georgia, Indonesia, Iraq, Panama, Peru, the Philippines Vietnam and Russia. And we're keeping good-paying jobs here at home by resolving issues and removing barriers to trade that have freed up billions of dollars in American-grown products."

The U.S. isn't a powerhouse on the export market because we can produce corn, soybeans and wheat cheaper than anyone else. It's because our transportation system outperforms the rest of the world. And right now, two key branches of that system are facing critical issues at a key time. Soybean exports are expected to be front-loaded this year, with the majority of sales and shipments happening before South American harvest comes online in March and April.

In the PNW, a labor strike could cripple the pace of loading ships for export. The fear is this could cause a ripple effect through farm country, however the potential for this strike isn't new and the grain terminals and railroads have long had contingency plans in place.

The grain handlers and union have been playing this game of chicken for a while, and it looks like it will continue. The grain handlers extended the deadline for a union response to its offer until 5 p.m. on Dec. 8 and at the same time blasted the union for misrepresenting the terms of the contract. Even though the deadline has been extended, the union workers could go on strike or the grain terminals could lock them out at any time. For more on the PNW, http://bit.ly/…

And on the Mississippi, the Army Corp agreed to study the impacts of increasing the water release from Gavin's Point Dam on upstream reservoirs. They will also expedited demotion of dangerous rock formations between St. Louis and Cairo. But after Senators met with Army Corp leaders yesterday, many emerged saying the core issues, navigability of the Mississippi River was still unresolved.

"I called this meeting with the Army Corps to make certain we are doing all we can to keep traffic on the Mississippi River moving safely for as long as possible," said Senator Dick Durbin, D.-Ill., in a press release. "Everyone agreed today on the urgency of the situation. The first step is to fast-track removal of the rocks that are a barrier to traffic on the river. Second, at our request, the Army Corps agreed to report back in one week with an analysis of the impact that releasing water would have on both the Missouri River and the Mississippi -- information which has yet to be provided. And finally, severe weather is becoming more frequent and more devastating to people's lives and our economy. Congress needs to take a hard look at how we plan for these disasters."

http://www.kirk.senate.gov

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