Looming Railroad, Port Strikes Could Bring Additional Blow For Ag In Already Difficult Fall

MARY HIGHTOWER

JONESBORO, ARKANSAS

Potential labor strikes against Canadian railways and at ports in the United States could intensify an already difficult fall for agriculture.

A strike could hit both the Canadian National Railway and Canadian Pacific Kansas City as soon as Thursday. Nutrien, the world’s largest producer of potash, told Reuters that a strike would “impact the ability to move our products, which consequently may negatively impact farmers and food security around the globe.”

Seventy-five percent of all fertilizer produced and used in Canada moves by rail, according to Fertilizer Canada, which also said that “90 per cent of Canadian-produced fertilizer destined for the U.S. market is delivered by rail, underscoring the importance of a reliable rail network for North American agriculture.”

The 85,000-member International Longshoremen’s Association has said it would go on strike on Oct. 1 if a new contract is not reached. A strike would bring to a halt any cargo-handling operations at ports along the U.S. East and Gulf coasts, including the Port of New Orleans.

The potential port strike would not affect operations on the west coast, where port workers are represented by a different union, which reached a contract last year.

The Mississippi River and the Port of New Orleans are vital to agriculture. The U.S. Department of Agriculture’s Federal Grain Inspection Services said 57 percent of U.S. soybean exports and 47 percent of corn exports have been shipped out of New Orleans in the current marketing year. The Mississippi River is also important for the movement of fertilizer. Industry sources estimate about 33 percent of urea and diammonium phosphate moves up the Mississippi River from the Gulf of Mexico. 

Continued lower water levels in the Mississippi threaten to halt shipments just as harvest is getting under way.

These labor actions loom against an already distressed background. The Federal Reserve Bank of Kansas City, in its second quarter survey of agricultural lenders, found that  more than 60 percent of agricultural lenders reported that farm income was lower than a year ago and that prices for crops have declined faster than production expenses.

“Year to date, corn prices have fallen 24 percent or roughly $1.16 per bushel,” said Scott Stiles, an extension economics program associate for the University of Arkansas System Division of Agriculture. “Soybean prices have fallen 20 percent year to date or $2.41 per bushel.  

“A strike could wreak havoc on the cotton industry,” he said. “The U.S. exports 80 percent of its cotton production.

Stiles said about 15 percent  of cotton exports leave Houston, about 22 percent leaves Savannah, Georgia, and another 6 percent leaves Charleston, South Carolina, and Norfolk, Virginia. 

“Most of the cotton from these ports is headed to Turkey—our No. 4 export market,” he said. “The U.S. also ships a large volume of cotton to El Salvador, Guatemala and Honduras.”

“The U.S. imports 85 percent of potash from Canada,” he said, adding that “Canada is the United States’ No. 1 export market for ethanol, No. 4 market for soymeal and rice, and No. 5 market for corn and distillers grain.

“The ag economy doesn’t need to add a supply chain disruption to the challenges it already faces,” Stiles said. “Let’s get this resolved.”   ∆

MARY HIGHTOWER: University of Arkansas