Naig talks derecho aftermath, export markets in FD visit
NEW Co-op looks forward to new Missouri River port
Iowa Secretary of Agriculture Mike Naig said his department is still trying to get its head around the heavy damage that was left in the path of Monday’s derecho storm in the middle third of the state, laterally.
“It’s not that we’re not used to dealing with weather events, but when you look at an event that stretched from South Dakota to Ohio … it’s an all-at-once event,” Naig said to the board of NEW Cooperative in Fort Dodge. “We’ve had droughts and floods over big swathes of the state, but this is big.”
With the most recent event coming in on top of about 80% of the state being in a drought and about one-sixth of the state being in a D2 (severe) or D3 (extreme) drought, along with the market disruptions posed by the pandemic, Naig said farmers have had enough.
While Naig’s department is still in the early stages of assessing damage, he’s hopeful that crop insurance and casualty insurance can help mitigate a substantial part of it. But given the sheer size of the storm all at once, he said Iowa will want Congress to help out at the federal level.
“The scale of the event probably warrants some sort of disaster assistance,” he said.
Gov. Kim Reynolds issued a disaster proclamation for 23 counties following the derecho, including Boone, Greene and Story Counties south of Fort Dodge.
In addition to reckoning with the drought, even farmers who had good crop outlooks now have to deal with downed corn and fewer spaces to store it after grain bins holding tens of millions of bushels of corn were destroyed. That latter made a bad situation worse, as grain storage was already going to be difficult with the promise of a large crop and because markets have been disrupted by the trade war with China.
“When there’s a finite amount of grain storage and a big chunk of it’s taken out, it affects everybody because the corn’s got to flow somewhere,” said Dan Dix, general manager of NEW Co-op.
Dix said the drought may be their biggest challenge ahead, affecting a big chunk of territory.
“We’re going to have a smaller crop, there’s just no doubt about it,” he said as price of corn stood at $2.86 a bushel.
While the derecho may impact their operations, he said most of their territory was far enough north to avoid the worst damage.
Until harvest time, Naig said it’ll be too early to tell just how extensive the damage will be for some. Financial damage estimates could take weeks.
And as summer inches to a close, confidence in China being able to hold up their end of the Phase One trade agreement to purchase $36.5 billion worth of American agriculture products is weakening.
That would be the equivalent of 570 million bushels of American soybeans in addition to other ag products, according to a July estimate from Iowa State University economist Dermot Hayes.
“The reality is they’re going to have to buy a lot of products to make that goal by the end of the year,” Naig said. “It’s certainly possible, but I think given the disruption (from the pandemic), it’s something we’re concerned about.”
But despite difficult circumstances for much of the state, NEW Co-op was optimistic, having escaped much of the damage to the south and holding a new project on the horizon they were excited about: a port on the Missouri River to help them access those markets.
Soon, the Port of Blencoe in western Iowa will be the northernmost port on the river that defines part of Iowa’s western border, giving the co-op an international edge for exporting crops and importing commodities as rail freight prices get unwieldy.
“We hope this will bring the world to western Iowa,” Dix said.
With several barges at a time, NEW Co-op will be able to unload fertilizer and other commodities before filling the barges with corn or soybeans to export to the rest of the world. While unthinkable five to 10 years ago, Dix said rail freight costs have made it cheaper than the alternatives.
“Today, most fertilizer for western Iowa is being trucked in,” he said. “When freight (rail) rates are what they are today, things like this have quite an advantage.”
After cutting through red tape for permits and getting a 9-foot-deep channel guarantee from the U.S. Army Corps of Engineers, NEW Co-op hopes to be loading barges by late fall and bringing products up from the Gulf of Mexico by early spring. Since the Missouri River does not freeze as completely as the Mississippi River, there is a longer window for use each year.
Naig said as concerns linger on China holding up its end of the Phase One pledge after a tit-for-tat escalation in the trade war, the gaze for market opportunities may shift to southeastern Asia, the United Kingdom (now separated from the European Union) and Central America while relationships with Canada, Mexico, Japan and South Korea are strengthened.
“There are lots of opportunities to build markets around the world, we just have to play the offense,” Naig said. “But even that is difficult because you’ve got a global pandemic that’s impacting many countries.”