(The Associated Press circulated the following story by Steve Karnowski on September 2.)
MINNEAPOLIS — The grain elevators that take in corn, soybeans and wheat from Midwest farmers and the railroads that move it are waiting to see what impact Hurricane Katrina will have on them.
More than half of U.S. grain exports go through New Orleans, and it remained unknown Thursday when the crippled port and its shipping terminals might reopen.
That means railroads and elevators don’t know whether grain that would normally go down the Mississippi River by barge will need to go elsewhere by rail or truck. Nor do they know how well the rail networks and other seaports would be able to cope with the added load.
“It’s just too early to try to answer those,” said Steve Forsberg, a spokesman for the Fort Worth, Texas-based BNSF Railway Co.
John Huber, a spokesman for the Canadian Pacific Railway Co., agreed: “We’re just going to be watching and monitoring.”
September and October are normally the region’s biggest export months for corn and soybeans, said Jerry Fruin, a professor at the University of Minnesota’s College of Agriculture and an expert on barge shipping.
If Mississippi River barge traffic cannot be restored within about two weeks, Fruin said, significant adjustments will need to be made for the new crop. Alternatives might include Pacific Northwest or East Coast ports, he said. And more grain may need to be stored longer on farms and in elevators.
But Fruin acknowledged there’s only so much additional rail capacity out there.
Mark Davis, a spokesman for the Omaha, Neb.-based Union Pacific Railroad Co., said other ports will be able to handle some of the exports that would pass through New Orleans. But it will tax the system if current forecasts of a bin-busting harvest come true.
The Union Pacific is North America’s largest railroad, and Davis said it has historically shipped most of its grain bound for export through either Mexico or ports in the Pacific Northwest and Texas.
Likewise, Huber said only about 10 percent of the Canadian Pacific’s grain traffic is normally bound for the Gulf of Mexico.
While there was significant damage to Jacksonville, Fla.-based CSX Corp.’s rail line between New Orleans and Pascagoula, Miss., that will take some time to repair, its grain operations aren’t likely to face major disruptions, spokesman Gary Sease said. Most of CSX’s grain business connects farms in the Midwest with feed producers in the Southeast.
The Elbow Lake Coop Grain Elevator in west-central Minnesota ships most of its corn and soybeans to the West Coast and most of its wheat by rail to the East. But manager Allen Mashek is still concerned about the ripple effects of the closure of New Orleans and resulting higher transportation costs and downward pressure on prices.
“Overall this affects everybody,” Mashek said. “It doesn’t matter if it’s the port down there or wherever. It just puts more pressure on ports that are already at capacity.”
Rail cars are typically in short supply in the peak harvest months, and it’s not unusual for elevators to temporarily pile up grain on the ground until the railroads can haul it away. But Mashek said piling grain means handling it twice, and that means higher costs for labor, fuel and equipment, as well as spoilage losses.
Add to that the higher fuel and fertilizer prices resulting from Katrina, then figure in the current low grain prices.
“At these prices on grains today, I don’t know why anyone would want to venture out in the fields next spring,” he said. “Something’s got to give.”