Cashing in on drought
by Ted Carter
Published: August 19,2012
The rains of early June and in the days that followed the Fourth of July appear to have ensured a highly prosperous year for Mississippi’s corn and soybean growers.
August rains have helped, as well, said John Michael Riley, an agriculture economist with Mississippi State University.
That the rains came as drought stunted or killed crops in parts of neighboring Arkansas and Tennessee and across the Midwest Corn Belt means Mississippi growers will provide commodities in a period of high demand and low supply. “I think this is a year where Mississippi producers of all commodities are going to see some benefits,” Riley said, though he emphasized that knowing the misfortune of others allowed the windfall lessens any gratification.
Unlike last year’s harsh drought that brought misery to farmers and ranchers in the Southern Plains and Southwest, this year’s drought “is creeping all over the United States,” Riley said.
And 2012’s severe dry spell has hit higher value cropland, he said. “This year is new territory.”
With the Midwest corn harvest still a weeks away, it’s too early to fully assess the damage in that region, according to Erick Larson, Mississippi State University Extension Service specialist in corn, grain sorghum and wheat.
“Estimates could get higher. They are not even close to harvest yet in the Corn Belt.”
In Mississippi, harvesting of early corn has been underway for a couple of weeks. Overall, Larson said, “We expect (an average of)150 bushels an acre. We may have some that average less than 50 and others over 250 an acre.”
Yields will be higher in the Delta where irrigation is common than in the northern Mississippi hill country, where a lack of irrigation leaves cornfields more susceptible to drought, Larson said.
Yields in the state’s northern portion will be further limited by a dearth of rainfall from mid-June until the week of July 4th, he said. That dry stretch came during the crucial pollination period for corn grown in the portion of the state from Tupelo north to the state line, Larson noted.
“It will hurt their crop a lot more,” the corn specialist said of the northern growers.
While the drought has not severely damaged Mississippi’s corn or soybean crops, it has posed a new challenge in getting the commodities to market. Growers in the Magnolia State mostly barge their crops to grain elevators to the south. Barge traffic is limited more each day by low water levels on the Mississippi River.
“They are highly reliant on barge traffic to handle the grain crops, because we don’t have storage capabilities to handle an entire crop” Larson said
Many growers take their grain crops to the Farmers Grain Terminal in Greenville, a co-op operation that has nine locations in the Delta, Southeast Arkansas and northeast Louisiana.
Steve Nail, president and CEO of the cooperative, expects grain volume to be 20 percent to 30 percent over last year. “And last year was a good year,” he said.
He has more business than he can handle at a time he is limited in the loads his barges can carry. At the moment, river barges are restricted to a nine-foot draft, So a barge with a 12-foot draft can only load to nine feet, Nail explained.
As a result, he has lost 10 percent to 25 percent capacity on each barge, he said.
“So we must load more barges to ship those same level of bushels.”
The shallow river has also forced Farmers Grain Terminal to reduce the length of its barge tows from the usual linking of 36 to 42 barges to 20 to 25 barges. “So it’s more expensive for the boats” with more diesel fuel used and more crews employed, Nail said.
One plus to arise from the drought is that fewer barges are needed upriver and are available for use in Greenville, according to Nail.
The required use of more barges will cause the cost of freight to climb. The increase should be tempered, though, by a system that charges the grower a per-ton rate. With the all the barges fully filled, the grower is not paying for “dead freight,” Nail noted.
Higher shipping costs should have only a “marginal impact” on what Nail said are “unprecedented” prices.
He acknowledged some concern over whether the river may go too low for continued barge shipping. “I don’t think you’ll know that until it happens,” he said.
Nail said he expects the river to remain open for now. “I haven’t heard anything from the Corps of Engineers to make us think” otherwise.
The drought has brought a slight change to shipping patterns for growers by the Greenville terminal. Most of the grain crops are shipped south to large grain elevators that load the commodities onto ocean vessels bound for overseas, mostly China and Japan. This year, however, some of the barges are heading north to supply ethanol-processing plants, Nail said.
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