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Troubles Travel Upstream
Farmers in the Heartland Aren't Sure Their Crops Will Make It Through for Export

By Caroline E. Mayer and Amy Joyce
Washington Post Staff Writers
Monday, September 5, 2005

ELWOOD, Ill. -- Frank Walsh bends over to examine his soybean crop. He shouldn't have to; in good years, the beans would be up to his chest, about 42 inches high. This year, as the result of a drought, they are just at his knees.

Drought may be the least of the Walsh family's worries these days, as farmers start to feel the impact of Hurricane Katrina. Just two weeks before harvest begins, Illinois farmers who rely on the Mississippi River to carry their soybeans and corn down river for export cannot be sure their crops can get through and whether higher transportation prices will drive down earnings. On Friday, the price for corn at the river grain elevator that the Walsh family uses was more than 20 percent lower than it was 10 days earlier.

"The river is saying, 'We don't want your corn,' " said Pat Dumoulin, who runs a 700-acre farm with her husband and two sons in Hampshire, Ill., about 50 miles north of Elwood.

The Mississippi is a river of commerce, an artery through which about 500 million tons of cargo each year, including tons of coal, timber, iron, steel and chemicals. About 60 percent of the nation's grain exports move down the river. The ports in Louisiana make up the largest port complex in the nation and are major terminals for oil and other petroleum products.

The extent of the damage upriver will depend on how soon and how completely the Mississippi and shipping facilities return to service.

On the Waterway

On Saturday, the river was reopened to traffic, but only to ships that extend no more than 35 feet below the waterline. Typically, ships are allowed to reach 45 feet below the water's surface. Areas that were hardest hit, like the Port of New Orleans, were turned into one-way channels, where ships have to wait for another to pass before they can go. They also have to run through one at a time at a dangerous turn at Algiers Point, in the heart of New Orleans.

From 30 to 40 percent of vessels are expected to be rerouted away from the Mississippi, said Michael Titone, president of the Mississippi River Maritime Association. While some are finding their ways to ports upriver that escaped Katrina's wrath, river buoys are gone and the channels are not clear, making it even more difficult to navigate.

Seven vessels were making their way out of the Mississippi yesterday, while 15 were making their way in. Despite traffic returning to nearly normal levels yesterday, some cargo-handling facilities are still in disarray, longshoremen may need backups as more ships are routed to cleared ports, and debris still rests below the surface.

Late Saturday, Tim Osborn, the National Oceanic and Atmospheric Administration's manager of regional operations, received an urgent call at his home in Lafayette, La. The pilots of a tanker full of about 100,000 tons of crude oil, or about 600,000 barrels, were blocked from entering Shell Oil Co.'s Motiva Enterprises LLC refinery dock on the Mississippi River at the town of Convent because of obstructions that might be lurking under the water.

The pilots and the Coast Guard needed the NOAA to navigate the waters and make sure the area was clear of obstruction. Meanwhile, the crude sat at anchor.

Osborn and others have spent the past few days on watercraft, mapping what underwater perils might exist for ships like the 850-foot-long tanker. Hurricane-deposited silt could cause a tanker to run aground. A collision with a sunk barge could do even more damage.

"Hundreds and hundreds of barges disappeared," said Edward W. Peterson, executive director of the Louisiana River Pilots Association. The barges carry an average of 1,600 tons of cargo, he said. "Nobody knows where they are."

Until they do, vessels sit, keeping shipments of crude at bay. Tankers will get priority to move down the river when they are ready.

The river pilots steer the vessels through the waters and have been gathering to figure out ways to keep their river running. They are staying in temporary quarters on the water on the Boax, a crane barge docked up from the mouth of the river. Pilottown in Plaquemines Parish, where they used to live, was demolished. Ten pilots are stationed for two weeks a time on the barge. Others are flying in and out on helicopters.

In the Port of Greater Baton Rouge yesterday, a 25,000-ton cargo vessel half filled with a rubber shipment sat at the dock being unloaded. Towering 45-ton cranes lifted pallets onto forklifts that carried them into a warehouse.

Baton Rouge was Plan B. When Katrina hit, the Pac Alkaid had unloaded half of its shipment at New Orleans, and the ship and its crew had to wait out the storm.

Soon after the Mississippi waterways reopened Saturday, the ship took off for the Baton Rouge port, which survived with little damage and is expected to be the port for many ships that would have been headed to New Orleans.

"We didn't want to waste any time," said Terry Gros, manager of P&O Ports, a company that loads and unloads ships at Baton Rouge. The ship traveled 130 miles, making the trip from New Orleans in about 10 hours.

The ship that brought the rubber came from Phuket, Thailand, the scene of last year's tsunami.

Perched several stories above the rubber being unloaded, ship captain Manuel Furio pointed to a red digital recorder on a bank of controls. On it, he had recorded the wind gusts as he rode out Katrina, and he proudly showed it to a visitor: 110 knots. That's 126 mph.

The river outside was calm now.

From the Farm

The river "is the most important pipeline for grain exports we have in this country," said Dale Durchholz, senior market analyst for the Illinois Farm Bureau. "From a transportation standpoint, it's the most developed and also the cheapest way for us to get grain from the interior of the country to the Gulf." To carry one barge worth of grain would take 15 rail cars and about 60 trucks.

"It takes a long time for water to run down the river, but price signals to farmers conducted up the river are made almost instantly," said Dennis Vercler, spokesman for the Illinois Farm Bureau. That is particularly troublesome this year because the Illinois farmers who rely most heavily on the river were also the hardest hit by this summer's drought.

The Walsh family and others acknowledged that they are far from desperate, especially compared with the homeless victims of the hurricane. They remain optimistic that the Mississippi will be cleared when the harvest rolls around in two weeks and will return to near-normal levels by the time they need it, driving crop prices back up. In the meantime, they worry about the impact of the hurricane on the cost of fuel and fertilizer.

The hurricane happened "at a pretty bad time for the grain market," said Kevin McNew, president of Cash Grain Bids Inc., a commodity intelligence firm. Last year, McNew said, was a record for corn and soybeans, which drove per-bushel prices down; many farmers held on to a large portion of their crop, hoping prices would rally. As a result, many farmers and grain elevators find themselves with last year's crop still sitting in their bins. Now they need to sell to make room for this year's harvest.

"It's a logistic nightmare," said Patrick Mino, grain division manager for Access Ag Inc., which has five grain elevators in northern Illinois. Mino said he had to make room in his elevator last week by shipping out two trainloads of corn, or 840,000 bushels. "It was a fire sale," Mino said, because he would have gotten about 10 cents more a bushel, or $84,000 total, if he had been able to use barges.

Each week, about 35 million bushels of corn are exported from the United States, most from the Gulf of Mexico, said Darrel L. Good, an agricultural economist at the University of Illinois at Urbana-Champaign. "Grain is going to have to start moving through that export facility really soon or there will be a big problem."

Putting downward pressure on price are higher barge costs. Freight prices have climbed to a record $25 a ton from $15.20 a ton two weeks ago, according to a barge company executive who spoke on condition of anonymity because of his company's policy. About 400 barges have been damaged or stranded or remain unaccounted for, the executive said. Others are in use, waiting to be loaded or unloaded at facilities that are not open.

Farming is always a gamble, and the Walsh family knows that well. Last year, Frank, his two brothers and father harvested record crops and received an average $2.25 per bushel for the corn they sold. They still have about 30,000 bushels, or 20 percent of the crop, in storage. In July, the family sold some of it for about $2.40 a bushel but held a lot back, betting prices would rise as the drought worsened. But even before Katrina, prices had dropped to $2 a bushel. "We wish we sold in July," brother Matthew Walsh said, grimly and softly.

His demeanor quickly changed, however, when he talked about the business bet the family made on diesel fuel for this harvest. Last February, they signed a contract for diesel fuel at $1.73 per gallon. At 10 cents above diesel's selling price at the time, that was considered a bold move. But today, with diesel selling for about $2.90 per gallon, it was the right one, he said, his face breaking into a wide smile.

"We know first hand that Mother Nature is our partner and there's nothing we can do that can change what she gives us," said Walsh's father, Larry. "For the last two years, she's been an excellent partner. This year, she's dealt us a challenging hand. We have to work the best we can with it."

Mayer reported from Illinois. Joyce reported from Baton Rouge.

© 2005 The Washington Post Company