Transportation Infrastructure Hurt By Hurricane

David: Welcome to the Agribusiness Report, I'm David Geiger. With me is executive director for the Soy Transportation Coalition, Mike Steenhoek, Mike thanks so much for being here.

 

Mike: Always good to be with you.

 

David: Now, Mike, first thing I want to get off to is we have a hurricane that is down south, how is that affecting the infrastructure there?

 

Mike: Well, Hurricane Harvey has really imposed its fury on the Texas Gulf and the consequences are felt in a host of areas including our infrastructure. The Texas Gulf is very important to agriculture. It accounts for 24 percent of wheat exports and of course it's also important for other commodities that are grown in that area like cotton, like sorghum, to a lesser extent, corn and soybeans. When you look further to the east, that's really the launching point for U.S. corn and soybean exports. The Mississippi Gulf Region, which is the area near around New Orleans, that accounts for 60 percent of U.S. soybean exports, 59 percent of corn exports. So, thus far, Hurricane Harvey hasn't really significantly damaged that area."

 

David: Now, when we have big weather events like this that really damage transportation, it's not just delays, it's also infrastructure that we're dealing with. What are some of the long lasting impacts of this that you see?

 

Mike: Certainly, with a storm like this, with high winds it can really damage the actual export terminals themselves. You can have these large bins, storage bins, get punctured then all of a sudden moisture gets in and contaminates the crop. With storm surges, it can result in the need to dredge the shipping channel with prolonged rainfall, it can really wash out rail track, we've seen a lot of examples with that in Texas, Burlington, Northern Santa Fe, Union Pacific, Kansas City Southern, all of these railroads have reported significant damage to their networks, and certainly, prolonged rainfall can have an impact on rural roads and bridges. Having that kind of water levels, having that kind of current can really impair the structural integrity of some of these bridges. I think as we assess the damage from Hurricane Harvey, unfortunately, we're not going to like what we see.

 

David: Moving forward, what does storms like this, and ones we've had in the past, teach us about having fallbacks, ways to continue to transport things?

 

Mike: Well, a vivid example for us within the soybean and corn industry was Hurricane Katrina in 2005 and all of a sudden, you saw an event that happen in the New Orleans area have dramatic impact on the profitability of farmers in Iowa and other parts of the Midwest. And essentially the farmer delivers to the elevator, and the elevator in turn delivers to the export terminal in a very simplistic manner, and what occurred with Hurricane Katrina is because the elevators located in the Midwest couldn't move product out their back door due to their export terminals being down, they could not receive grain via their front door. And so what they did is they would drop the price they were offering to farmers. And so all of a sudden, farmer profitability was compromised not due to anything bad that they did, or not due to demand changing, but simply due to the fact that we had a choke point in our logistics system. So, it really is a lesson for farmers that we have to make sure that we care about our transportation system and we have to make sure that there's resiliency to it and redundancy to it so we can't put all of our eggs in one basket.

 

David: Definitely, Mike thank you so much for joining and speaking to me.

 

Mike: Always good to be with you. Thank you.