Barge supply low, costs rising and commodity prices dropping

David Glidewell, ADM Grain general manager in Memphis, said that within the last week the price to charter a barge between Memphis and New Orleans has risen as much as 400 percent because of the lack of empty barges.

“Some terminals upstream will have to shut down as they wait for barges,” Glidewell said.

As a result, the delay is already affecting prices. Memphis commodity prices in general have fallen roughly 50 cents per bushel since Katrina struck the Gulf Coast about two weeks ago, said Cargill AgHorizons spokesman Joe Sparks.

“Our operations are nowhere near normal,” he said. “We’re seeing very few empty barges.”

Small farmers are feeling the pinch as elevators subtract more from their purchase prices to cover their costs.

For example, instead of getting $6 a bushel, farmers may be getting $5.50. A 1,200-acre soybean farm in Mississippi produces about 40,000 bushels of beans, so that extra 50 cents means a loss of $20,000.

“Used to be producers could dump their crops with the elevators and wait longer on the market, but now they’re having to decide what to sell for in 24 hours,” said Darryl Waller, executive director of the Farm Service Agency in DeSoto County, Miss. “If they’re having to transport grain by trucks instead of boats or railroad cars that’s going to be more expensive.”

More than 60 percent of U.S. farm exports pass through the Port of New Orleans on their way to world markets, according to officials.

Terry Francl, senior economist at the American Farm Bureau Federation in Washington, estimates Katrina did $1 billion in damage to crops and livestock. He expects the aftermath of river slowdowns and rising fuel costs will cost U.S. agribusiness another $1 billion.

“Unfortunately, crop, livestock and poultry losses in the Delta may be the tip of the iceberg,” Francl said.

Last week, Congress postponed action to cut more than $3 billion in agriculture spending it was expected to complete by the middle of the month.

U.S. Agriculture Secretary Mike Johanns said USDA would offer more than $170 million in emergency farm assistance, including changes in the marketing assistance loan program so farmers can get loans for on-farm grain storage.

“We’re at a point right now where I don’t think many congressmen or women want to do anything that will be viewed as economically harmful to farmers, particularly southern farms,” said Doug Harper, editor, director and vice president of the Brock Report.