Low Mississippi River levels could leave farmers in fertilizer crunch
7 years ago Jeremy Bernfeld 0
Southbound barges on the Mississippi River carry grain destined for world markets. Those barges regularly pass northbound tows with thousands of tons of fertilizer heading to Midwestern ports and, later, to farmers’ fields.
But this year’s drought is adding an element of uncertainty to those shipping patterns, as Mississippi River levels reach record lows. Water levels have fertilizer shippers scrambling to get their product to market before low water dries up their most important shipping route.
Midwest Agri-Chemico and its owner Russ Mothershead are caught up in the frenzy.
At a Mississippi River port near Cape Girardeau, Mo., on a recent day, Mothershead watched a backhoe scoop bucket after bucket of fertilizer from a barge, dumping the dry white crystals into a semi-truck. As soon as one truck left, another took its place.
“With the spring planting season coming on, the big demand usually starts around early February,” Mothershead said. “So whatever products we can get in and get in physical hands of the end users, at least it will be available until we see what happens over the next six, eight weeks.”
Tall, silver-haired, and no-nonsense, Mothershead is built like a basketball player. He has been working overtime bringing in extra shipments of fertilizer.
About half the country’s fertilizer comes from domestic plants, many of them near natural gas sources in the Gulf south. The other half comes from overseas and much of it enters the country at New Orleans.
“Canada, Russia, Israel, Egypt. The Middle East supplies a lot of our nitrogen products in the past due to the cheaper gas available to make nitrogen,” Mothershead said.
Once fertilizer leaves ports, it heads to people like Joe Kilgus. He’s the director of plant food sales for Growmark, an ag supply cooperative based in Bloomington, Ill., that sells 3 million tons of fertilizer annually. His company has been dealing with the low-river-level situation since the summer by stocking up.
“We know the demand is there,” Kilgus said. “It’s just, typically, we probably would have waited a little bit longer to bring in some of the supply to be a little more sure of actual demand, where this year, it was, yeah, let’s go ahead and err on the safe side and get it up there.”
Fertilizer is big money. It’s a $15-18 billion industry and the Mississippi River provides the cheapest way to get it where it needs to go. One barge hauls 1,500 tons of fertilizer and each towboat, during normal river conditions, averages 15 barges. That is a lot of fertilizer.
Kathy Mathers, vice president of the Fertilizer Institute, says if fertilizer retailers are unable to transport shipments up the Mississippi, they’ll be in a real bind. Physically, there are options, like trucks or trains. But really at the end of the day, those options don’t work out.
“Trucks are a possibility, though a much more expensive possibility, and the farmer would really feel that in his or her pocketbook,” Mathers said.
Mathers calls rail a non-option because there aren’t enough rail cars available to pick up the slack. And then there’s the cost.It’s about $10 to transport a ton of fertilizer on a barge, compared to $25 on rail and $50 on a truck.
Chad Hart, an economics professor and grain market specialist at Iowa State University, says fertilizer prices haven’t responded to this yet, but he expects they will.
“Last time we really had problems like this would have been (Hurricane) Katrina,” Hart said. “When you look at how Katrina gummed up the system, we saw increases on the fertilizer side of $100-200 a ton. So it was something that producers definitely felt.”
The barge and fertilizer industries want the Army Corps of Engineers to release water from Missouri River reservoirs to help keep tows afloat on the Mississippi. For a variety of reasons, the Corps won’t do that. But they are moving forward with plans to blow up dangerous rock outcrops in southern Illinois that could snare barges. By their own admission, the Corps has little capacity to improve the situation.
If the drought continues into next year, that could leave farmers, and the folks that ship their products, high and dry.