Flooding could impact grain prices

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June 17th, 2011

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Lincoln, NE – Nebraska farmers will feel the force of floods. The Farm Service Agency estimates that 90,000 agricultural acres along the Missouri River alone have the potential to be impacted by flooding. But the effect goes beyond flooded fields, potentially impacting what happens to grain after it leaves the farm.

A 3.3 mile berm was built to hold back the rising Missouri River near the Cargill corn milling facility in Blair. (Photo by Mike Tobias, June 9th)

Cargill’s Corn Milling Facility in Blair is a busy place. Every day, the plant takes in about 300,000 bushels of corn…turning it into corn syrup and other products. It got busier last week.

“There’s a big berm here…” said Cargill facility manager Gavin Atkinson, showing Governor Dave Heineman a map of an earth and sandbag berm that now surrounds the plant. Heineman and other state officials were there as part of a tour of flood threatened areas along the Missouri River. The berm is more than three miles long, up to seven feet high…built last week in just four days by 350 contractors working around the clock. It’s needed because Cargill sits just a few hundred yards away from the rapidly rising Missouri River.

“You can see every day as the river has risen its started to creep closer toward us,” Atkinson said.

“Is that nerve racking?” the Governor asked.

“Well, I can see it from my office, and I feel a lot more confident now that I see this big berm build up around us,”

350 contractors worked around the clock for four days to build the berm near Cargill in Blair. (Photo by Mike Tobias, June 9th)

Atkinson said they hope to keep the plant running full speed through a flood that some predict will last through the summer.

“It is going to make things difficult from some of the farmers in the west of Iowa to get to our facility,” he said. “Our goal, and what we need to do is to keep our reputation with our suppliers and try to be innovative and keep running through this time period so they can get their corn, and we’ll be open for business and get their corn to us.”

This is just one potential flood-related roadblock in the path that Nebraska grain follows once it leaves the field. Closed roads, flooded rail lines, problems for ports, terminals and river barge traffic are all concerns. Right now, there are few bottlenecks in the flow, according to Pat Ptacek, executive vice president of the Nebraska Grain and Feed Association. Looking ahead, Ptacek’s main concern is what he refers to as the I-29 corridor.

“Both major railroads here in Nebraska… both Union Pacific and Burlington Northern, have lines that traverse around the I-29 corridor,” Ptacek said. “And obviously we’ve seen some Interstate issues develop where they’ve had to close portions of I-29 because of the flood.”

Ptacek added, “Quite honestly, I don’t think we’re going to know the full extent of what we’re looking at, especially below the Platte River, until next week some time.”

Matt Stockton is an ag economist at the University of Nebraska’s West Central Research and Extension Center in North Platte. He said disruptions in grain transportation impact producers.

“If it’s a short term impact, they get things back to normal pretty quick,” he said. “It’s not that big of a deal, they can do some alternatives. But if it’s a long term thing, [and it] destroys some permanent type routes and stuff, I mean you could actually create some cost increases in the transportation costs that might stick in the market for some time.”

For now, much of this is still unknown. At the Cargill facility in Blair, Gavin Atkinson said he’s seen first-hand that farmers are worried about the impact of flooding, in the form of a surge of grain trucks bringing grain to the plant.

“I think that it’s natural that folks who’ve got corn in their bins are obviously concerned,” he said. “They don’t know what the flood levels are gonna end up at.”

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