Drought Hurts U.S. Grain Exporters, Market Share

In the coming year, the USDA predicts that American corn exports will be at a 40-year low. That's because the U.S. drought has led to a corn shortage and high domestic corn prices. To adapt, grain exporters have had to change their business models.

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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 won't 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 VIDEO, "MIRACLES FROM AGRICULTURE")

UNIDENTIFIED ANNOUNCER: 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 1 billion bushels a year.

(SOUNDBITE OF ICE BREAKING)

UNIDENTIFIED MAN: ...clear it out.

TYLER BANICKI: Just step around that altogether, so you don't...

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: Then, 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 Inc.

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 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 a global reach. While The Scoular Company is able to buy some corn from other countries Bob Ludington says it's hurting the company's bottom line.

BOB LUDINGTON: 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: Ludington 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.

LUDINGTON: Yeah, next year, our problem will be where we're going to put it all. That's what 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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