A study funded in part by Illinois corn checkoff dollars illustrates that due to the drought-induced low water levels on the Mississippi River last year, cash corn prices experienced by farmers decreased by $0.45 on average.
The goal of the research study, performed by Informa Economics, was to document an actual event that simulates a prolonged river interruption as compared to strictly using an economic model. The low water event on the Mississippi River between St. Louis and Cairo, Illinois, was an opportunity to monitor and document such a “real world” event.
“This study is really about making lemonade out of lemons,” said newly elected Chairman of the Illinois Corn Marketing Board (ICMB) Larry Hasheider, a family farmer from Okawville, IL. “Unfortunately we had some drastically low water on the Mississippi River, and with that we had shipping interruptions and demand destruction to our export markets. That was the lemon.”
“The lemonade came in when the situation, however difficult, allowed us to design a study that would demonstrate the consequences of a similar interruption due to a failure on the inland waterways system, such as a failure of a lock and dam,” Hasheider continued.
The Informa study revealed that as a consequence of river shipping being unavailable, diversion to rail was at a 45 cent per bushel premium to barge rates. The 45 cent per bushel premium to barge rates encouraged grain to be stored until the river market stabilized, or to be used elsewhere in the marketing chain.
“When you see a 45 cent hit on seven dollar corn that’s one thing, but at four dollar corn we’re in a different world,” Hasheider added.
It’s these concerns that prompted Illinois corn farmers, through the Illinois Corn Growers Association, to reach out to members of the Illinois Congressional delegation. Under the leadership of U.S. Senator Dick Durbin, bi-cameral, bi-partisan legislation was created to further study river transportation related issues.
“Illinois corn farmers are incredibly grateful for the work of Senator Durbin, Congressman Rodney Davis, and Congresswoman Cheri Bustos to create legislation that would address such severe economic impacts in the future,” Hasheider added.
The Informa study was presented during a public hearing held by the Mississippi River Commission on August 16 at Alton City Riverfront in Alton, Ill., aboard the Motor Vessel MISSISSIPPI.
As part of their annual low-water inspection trip, the Commission holds public hearings to gain insight into local, state and regional concerns and allow the public a greater voice in shaping federal policy in the Mississippi River Watershed. The Commission’s hearings continue through August 23.
A summary of the Informa Economics study can be found on the Illinois Corn Marketing Board website at www.ilcorn.org.
Additional funding for the study was provided through the corn checkoff programs in Iowa, Indiana, and Missouri; and also from the Iowa Farm Bureau and Indiana Soybean Checkoff.