June 12, 2024

ICGA eyes exports, transportation issues

BLOOMINGTON, Ill. — A potential rail strike, Mexico’s possible ban on GMO corn imports and the good news/bad news issues with waterway transportation were a few of the issues weighed during the Illinois Corn Growers Association’s annual meeting Nov. 22.

Collin Watters, ICGA director of exports and logistics, is “cautiously optimistic” that an agreement will be made with the unions to avert a national rail strike that could happen as early as Dec. 5.

In a typical year, railroads haul about 1.6 million carloads of grain and other farm products, 1.6 million carloads of food products and several hundred thousand carloads of fertilizers and the raw material that go into making them, according to the Association of American Railroads.

The U.S. economy could lose $2 billion a day if railroad workers strike.

“I am more optimistic about the rail situation getting sorted out. A strike is really not in the best interest of anybody. I’m optimistic that the railroads and the unions come to an agreement,” Watters said.

“I’m optimistic that Congress does not have to step in. As a last resort, Congress can and has in the past stepped in to avert a strike. I think they’ll work it out on their own.”

The SMART Transportation Division union voted down a deal Nov. 21 by 50.9%, and 53.5% of the Brotherhood of Locomotive Engineers and Trainmen members voted to ratify the deal.

“A strike is really not in the best interest of anybody.”

—  Collin Watters, director of exports and logistics, Illinois Corn Growers Association

Seven of the 12 unions already voted to approve their contracts. Three smaller unions rejected their contracts and are back in negotiations, according to the Washington Post.

“The one was rejected by only 0.9%. That’s what gives me hope that they can get back, negotiate and make some tweaks so they can get a majority to approve it,” Watters added.

Mexico

A possible ban on GMO corn exports to Mexico remains up in the air. Mexican President Andrés Manuel López Obrador issued a decree that would halt imports of over 90% of American corn by 2024.

Mexico is currently the top foreign market for U.S. corn, at a value of over $5 billion in marketing year 2021-2022.

In calendar year 2021, direct shipments from Illinois to Mexico were valued at over $750 million.

“This decree was announced a couple years ago, and I think a lot of people just assumed it was some kind of political talking point and there’s no way that this could actually happen because Mexico imports a lot of corn,” Watters noted.

“Our position is that proposed ban would be in violation of the U.S.-Mexico-Canada Agreement. We’re asking the U.S. Trade Representative’s office to take this threat very seriously and enter into some consultations with the Mexican government in some dispute settlement talks.

“It’s big deal for U.S. farmers, but I think the bigger issue is a question about the Mexican economy and basically shutting down imports of that much corn because they won’t be able to find that much non-GMO corn.

“There’s a lot of non-GMO corn that would come out of the Black Sea and that has been shut down. That’s going to be a long-term issue. This can be a protracted issue and the fact they’re even moving any cargo out of the Black Sea right now is kind of a big deal and that could change tomorrow.

“The South Americans don’t produce nearly enough non-GMO corn. We don’t produce nearly enough.”

U.S. farmers could ramp up non-transgenic corn production if they were compensated accordingly.

“It’s a specialty crop. It’ll be more expensive because you’re going to have to segregate all of that grain. You’ll have to identity-preserve it. There’s a yield drag,” Watters said.

“A lot of farmers who I talk to at least in Illinois say the non-GMO or the white corn will tend to have a slight yield drag. Well, you’re going to have to be compensated for that somehow some way, especially in this environment where you’re looking at $6, maybe $7 corn, and then maybe another 10% or 20% is what a farmer might need. That’s just on the farm level, and then there’s the export channel where you’ll have to segregate and identify preserve it. Those are major hurdles.

“It’s potentially a catastrophic policy. It would really end up hurting the poorest of the poor in Mexico because they’re far more exposed to those increases in food costs. Just from an economic perspective, it’s not sound policy, and that’s totally divorcing it from the scientific reality that GMOs have no human health impacts.”

Another component is corn’s historic connection to Mexico.

“There’s a cultural importance to corn in Mexico. The origin of corn was in Mexico. It’s the cradle of its development,” Watters continued.

“In my mind it comes down to the science, it comes down to the economics and, maybe most importantly, the trade agreement. We just signed this agreement and they need to live up to their end of the bargain.”

Water Transportation

Legislation and funding to modernize locks and dams along the Illinois River system and Upper Mississippi River were approved earlier this year, a move ICGA has been advocating for nearly two decades.

However, on the “bad news” side, low water levels are hampering shipments.

“Probably the most pressing thing right now is the low water that’s constricting the export channel to the Gulf, but our export sales have been soft. The strength of the dollar is contributing to the soft export market,” Watters said.

“The domestic market is really driving a lot of this. There’s a really good basis. In the Plains states, whether it’s an ethanol plant, a feedlot, or whatever, they need to get that corn from somewhere because it didn’t grow this year in some of the Plains states.

“So, we have this strong domestic demand that’s kind of offsetting that weakness in the export channel. So, on some level, yes, the low water is a problem and for exporters that’s their lifeblood. If we would have had a huge export program with a lot of sales coming in, this would be even worse.

“On some level, timing is OK, but ultimately the river system will have to be recharged. It’s across pretty much the entire Mississippi River Basin.”

Watters said the commitment to upgrade the antiquated locks and dams is something that corn farmers and ICGA members should be proud of after years of push to make it happen.

“That’s like a generational thing. It is that big and it will be benefiting farmers in Illinois and the Midwest in big way. That’s going to improve basis in this region for a long time,” he said.

“It is hugely important and something that we can be proud of, and this is the kind of stuff in my mind that’s the purpose of checkoff programs and the purpose of associations doing this work on behalf of a large group of people.

“It’s the kind of work that can last decades. It’s a testament to the vision and the tenacity of the organization. A lot of these issues take a long time and a lot of work.”

Tom Doran

Tom C. Doran

Field Editor