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Tue November 20, 2012
Drought Hurts U.S. Grain Exporters, Market Share
RENEE MONTAGNE, HOST:
And now for today's business bottom line. Last summer's drought has brought bad news this fall - low crop yields, especially of corn, plus higher prices. And a prediction from the Department of Agriculture that corn exports will be at a 40-year low. The U.S. still is the world's biggest supplier of corn, but this year American exporters will be quite as dominant as usual in the global corn market.
From Missouri, Abbie Fentress Swanson reports on the impact this is having.
(SOUNDBITE OF MUSIC)
(SOUNDBITE OF THE VIDEO, "MIRACLES FROM AGRICULTURE")
UNIDENTIFIED MAN: Each American farm worker feeds more people than any other farmer on Earth.
ABBIE FENTRESS SWANSON, BYLINE: That's a clip from a 1960s USDA video called "Miracles from Agriculture," which touts the success of the American farmer. Even back then before the combine, American farmers were producing more corn than any country in the world - 275 million bushels a year. Now U.S. exports top more than one billion bushels a year.
(SOUNDBITE OF ICE RATTLING)
TYLER BANICKI: Clear it out, this stuff around that altogether. See just put...
SWANSON: Just south of St. Louis on the Mississippi River, Tyler Banicki, the burly first mate of a towboat called the R. Clayton McWhorter, is clearing ice off the top of a 200-foot long steel container covered with a white fiberglass top. It's a grain barge and one of 20 barges that his crew will push down to the Gulf of Mexico. There it will be loaded onto a ship that sets sail for Asia. Banicki opens the barge's hatch.
(SOUNDBITE OF OPENING OF BARGE'S HATCH)
BANICKI: We'll open this one up here.
SWANSON: Whoa. That's corn.
BANICKI: It's about even to the top of the combing rails on this barge so you figure it's at least 13 feet of product straight down from the surface here. Give you kind of an idea. And then it's about 30 feet wide, so....
SWANSON: But there are many fewer barges making the trip this year. The Upper Mississippi usually transports more than half of the country's grain exports and in normal years has grain barge traffic jams. Farmers with corn to sell are getting more than $7 a bushel domestically so they don't need corn exporters like Rick Dusek who works for the big grain exporter CHS Incorporated.
RICK DUSEK: Well, normally, we'd originate all the corn that needs to be loaded at the center Gulf along the river system, meaning the Mississippi, the Illinois, the Ohio, all the way down to the Gulf. And this year there just simply isn't enough corn to supply the export pipeline out of those areas, so we've got to bring corn from the outside.
SWANSON: CHS isn't the only exporter buying corn from foreign countries like Brazil, Argentina and the Ukraine.
MARK KLEIN: In South America, you know, we have a presence where we can buy and store grain as well as process it - in Europe, in Eastern Europe, in Australia.
SWANSON: Mark Klein works for Ag giant Cargill. But most U.S. exporters don't have such a global reach. While the Scoular Company is able to buy some corn from other countries Bob Luddington says it's hurting the company's bottom line.
BOB LUDDINGTON: Our forecast is to be down slightly from the past several years and that's really due to our elevators, where we will handle less grain due to the drought.
SWANSON: Luddington says they'll eventually find the corn they need to fill their orders but it will be more expensive and take them more time and effort. The company is now hoping for a bumper domestic crop next year.
LUDDINGTON: Yeah, next year we'll probably be: where we going to put it all? That's where we hope. Where we're going to pull it all? We'll be scraping off dirt, be able to pile grain on the ground - that's what we're all hoping for.
SWANSON: Pat Westhoff, with the Food and Agricultural Policy Research Institute, says even with a good crop next year customers could get used to buying corn elsewhere. Until this year, the U.S. was the only exporter China went to. Now it's doing business with Argentina and Ukraine.
PAT WESTHOFF: When we see these shifts in export patterns occurring, it means that we've lost some market share in the near term. If that creates new habits of users around the world it could mean lower market shares for the U.S. in the future.
SWANSON: In the meantime though, there's not much American exporters can do other than pay close attention to corn harvest yields in South America early next year.
For NPR News, I'm Abbie Fentress Swanson in Columbia, Missouri.
MONTAGNE: And that story came to us from Harvest Public Media, a public radio reporting project that focuses on agriculture and food production.
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MONTAGNE: You're listening to MORNING EDITION from NPR News. Transcript provided by NPR, Copyright National Public Radio.