Exchange zone challenges on inland transportation - Mike Steenhoek

Paul Yeager: Hey, everybody, welcome into the M-t-o-M Show studio here at Iowa PBS. I'm Paul Yeager thanks for joining us. And yes, we are almost their new format, or at least new version of the podcast and where it comes from video format. Anyway, if you're listening to it, give us a look on YouTube, you can subscribe to our Market to Market channel and know every Tuesday when new episodes come out. We've had some episodes that apparently have rang true with many of you. Let's see, we've talked about fertilizer, grain prices, land values, and also the cattle market and the drought in Oklahoma, we're going to stick a little bit in the weather lane today and how a lack of rain or at least water runoff or water that's made it into waterways, has caused a big problem where grain is being shipped Mike Steenhoek is the executive director of the Soy Transportation Coalition, which is based in Iowa. He is going to talk to us about how this barge traffic back up and slow down and both the depth and the width on the Mississippi below St. Louis is causing a problem we'll get into that we'll also talk about if the P and W can be an option. We'll also discuss a nice metaphor for how some of these logistics and things have happened. And we're going to use a track metaphor. That's this installment of podcast if you have feedback for me, hit me up at Paul Yeager that's Y-e-a-g-e-r at IowaPBS.org. Now, here's Mike Steenhoek.

Thank you for your patience and understanding. And also welcome to our new space.

Mike Steenhoek, Soy Transportation Coalition: Oh, it's good to be with you. Thanks for having me.

Paul Yeager: It is a little different. You know, you like the lava lamp, you think that sets a mood or something that.

Mike Steenhoek: That that always stimulates creative thought to and then having the bobbleheads also, you know, it's inspiring as well.

Paul Yeager: Wouldn't it be a nice gift? If I just said anybody who was on the podcast we will make a bobblehead of you? That'd be a big thing.

 

Mike Steenhoek: Well, yeah, that you wouldn't have a hard time finding guests.

 

Paul Yeager: I want to be on that one because I want a bobblehead. So we have a lot of the the Mark Pearson bobbleheads that we had. You knew Mark? Yes, I did. Yeah. What's changed in transportation and agriculture in his 10 years? Since he's been gone? Has it changed?

 

Mike Steenhoek: Well, you know, in some ways, you know, we're still utilizing a lot of just the same modes of transportation. You know, agriculture has always been very heavy on, you know, trucking, on rail, and on and on barge. So in some respects, it hasn't changed a whole lot. But, you know, the world just continues to become more consequential and to the profitability of our industry. So, you know, a lot of times the the temptation was for farmers years ago to think of, well, what is what is something that what happens halfway around the world? What does that have to do with with me and in central Iowa? Well, they don't ask that question so much anymore. So, you know, we're seeing much more of how international markets and geopolitical events impact the local farm, but also how some of these transportation issues have real consequence. And it's not just you know, the days of farmers just delivering their soybeans or corn at the local co-op and then just kind of wiping their hands and saying, you know, any, any kind of subsequent transportation problem? Well, that's XYZ cooperatives problem, that's not my problem, that mentality has really changed. And so we're seeing much more of this global kind of mindset that farmers have adopted.

 

Paul Yeager: I just rode with a farmer on Monday, we'll call him north of 60. To be nice, more like 70. He told me how he does read everything that's out there. And he pays attention because he asked me Hey, so what, how dry is it in South America? Or how dry is it in Europe? I mean, and that that would that was a producer who who paid attention to those things? Does that make your job? Your you specifically make your job easier? When people are paying attention to those global issues?

 

Mike Steenhoek: It's easier to get farmers to be engaged. Okay. And so and that's one of the things that, you know, for that it's really important for our industry, in our industry, being farmer led organizations is that our currency, especially if you want to impress our perspective on on policymakers in Washington, DC, Iowa, Des Moines, Iowa, etc, is the degree to which farmers care the degree to which farmers are engaged, that allows favorable policies to be to be promoted. And so for, for for, you know, in my particular area with with infrastructure, when I talk about some of the issues, the transportation issues that are of consequence to farmers, I don't get the eyes rolling over glazed over the yawn, you know, that, you know, we may have gotten 10 years ago, 15 years ago. Farmers clearly understand that their profitability is inextricably linked to the quality or lack thereof of our multimodal transportation system.

 

Paul Yeager: I reread your note again today that you had sent earlier in the week to several different outlets. And I was, we only and we're going to have a Market to Market show this week with one of the guests who always likes to talk about basis, let's start with basis impacting this issue of not being able to have full barge and tows moving down the Mississippi south of St. Louis, how is that impacting basis? Why is that impacting basis so quickly?

 

Mike Steenhoek: Yeah, and that's one of the things one of the messages that I and others really have been trying to convey over the years. And I think it's really taken more and more route that the price that a farmer receives that point of sale is really strongly connected to how efficient or inefficient that transportation system is not before the delivery, but after the delivery. So when it's under the responsibility of the barge loading facility, or the rail loading facility. And so kind of the the reality is, when you have a transportation system, and let's in this case, let's pick the inland waterway system, if it's not operating as efficiently as it normally does, or even if it's altogether closed. What that means is that barge loading facility is not able to move product out their back door, because barge services has been severely constricted. So what that means is that facility is less able to accept product via their front door. And how they discouraged that delivery. Because they they're saying, we don't know, we no longer have storage, we can't move product. So they have to send a message or a signal to the farmers that we can accept product via our front door. So what do they do is they drop the price, so basis becomes more negative, or it widens. And so, you know, one of the things that was really compelling to me when I first started this, this job is how a lot of these transportation issues, we often think of them as more at the 30,000 foot level, they're more theoretical, hypothetical, what does that really have to do with a local farmer? Well, what it has to do with a local farmer is when when the price when for your soybeans is is say, normally to pick round numbers, maybe it's even with the futures price. Now all of a sudden, it's a negative 50. That has a real impact on a farmer's wallet. Now, sure, a lot of farmers contract and they lock in a price ahead of time. But there's a lot of it that still is sold on the spot market, they look at what the bids are. And then they make decisions based on that. So these big transportation issues have real relevance tangible impact on a farmer's wallet.

 

Paul Yeager: Well, it goes back to the very first thing you said about it used to be that the farmer delivered it to XYZ co-op, and they were there you said I think wash their hands of it. Now they do have to worry about it, because the basis is making them worry about it. It's their bottom line. Because if they can't, yes, you could deliver it, you're gonna take a heck of a loss. And when's the last time you met a farmer that wants to take a loss willingly?

 

Mike Steenhoek: No, it yeah, it certainly doesn't happen. And so and, you know, there was a real big lightbulb moment that I that I, I wasn't in this position at the time. But it occurred within agriculture with Hurricane Katrina in 2005. And there were a lot of farm ills. And because the Gulf of Mexico was shut down for a prolonged period of time, the shipping out of that Mississippi gulf region were 60% of soybean exports, 59% of corn exports leave from. All of a sudden farmers saw this increasingly negative bases. And they said, Wait a second, the quality of my soybeans and corn hasn't diminished. The demand for those crops are still still remains robust. But it's this connectivity between supply and demand has been compromised. And so then that is those costs are then passed on to the farmer. You know, when you have a cost escalation in your transportation system. Those costs could get passed on to the customer. It could get absorbed by the shipper. But what mostly happens within agriculture is it gets passed on to the farmer in the form of a lower price. And that's something that really is, you know, farmers have increasingly had that light bulb moment, you know, over the number of years. So it clearly is something that's important to their profitability.

 

Paul Yeager: I guess I didn't even really set up what the problem is right now with the inland. Let's start with the inland waterways because we have railroad that we have to talk about and we have to talk about other points that have come online here in the last two years. Let's start with a go back to my driving around the countryside this week. The South Skunk River in Iowa - dry creek surrounded by dry. We've had rain here and we've had rain in the Ohio Valley. We've had rain in the Missouri Valley to an extent but for some reason the the lower watershed is pretty dry so you can see this problem coming. How did it get this far so quick?

 

Mike Steenhoek: Yeah, and this something that has been building for a period of time, we were noticing, you know, observing the reports, even in the winter of 2021, to 2022, the scarcity of snowfall that had accumulated in in places like Montana. And the reality is a lot of water that moves along the lower Mississippi River starts as a snowflake in Montana, because then it gets melts and filters into the Missouri River Basin. And then the Missouri obviously connects with the Mississippi at St. Louis. So we're even seeing that earlier this year. And you know, a decrease in the amount of snowfall overall, obviously, that continued into the spring, it continued certainly into the summer. And then, so then we had these dry conditions, well, then we did get some periodic rains, particularly starting in Iowa, starting in August, July was obviously really dry. But then at that point, any precipitation was being fully absorbed into the, into the farm ground, which is good for the farm ground and good for the crops. But there wasn't any opportunity for that water to get expedited and channeled into the inland waterway system. So water levels continue to drop. And then, you know, we saw that really become more pronounced starting in in September, where a lack of precipitation continued was continuing. And then water levels just continue to drop. And then this is the and then once we start hitting September, it's game time for agriculture. It's particularly game time for the soybean industry. 80% of our exports occur between the months of September and February. So that's when we need our infrastructure to really be operating at full throttle, we saw water levels drop. And then noticing some of this, this phenomenon happening starting in the south where the harvest season is earlier. So hearing about these long lines at Mississippi and Louisiana grain export terminals and having to light loads. So you've got this condition of low water on the inland waterway system, particularly the Mississippi River, it impacts two things. Number one, the channel depth number two, the channel width. So because of channel depth restrictions, you can't load as much freight per barge. And for channel width, because the shipping channel is narrower. You can't lash or connect as many barges together to comprise one unit that moves together.

 

Paul Yeager: You might, you may at one time have gone three wide, you're now down to two wide. Is that one of the instances that you're referring to? Because you still have to it's still a street in a way right? You still have to be able to meet. Because yeah, you could have four wide, but you meet somebody you have to. Yeah, it's not that one lane road in the back country where you pull off into the ditch.

 

Mike Steenhoek: Right, exactly. And so that with that channel, you know, obviously the as you get closer to the shore line, that's more the shallower part. Well, that shallower part is encroaching more and more into the middle of the river. So what normally you're shipping channel in the middle of the river would be of a certain width. Now that's become narrower. So you know, when you go south of St. Louis, you don't have locks and dams and the size restrictions those impose. So then you would typically have 30-35, even 40 barges all lashed together, you have you have a power unit, a tow boat in the back that that, that that provides movement. But now there's a size restriction on 25 barges that can all be lashed together, well then that's a big problem. And then with channel depth, you can with every foot of reduced water depth, you're able to load 5,000 fewer bushels of soybeans per barge in a typical barge can easily get 50,000 bushels in excess. So to use round numbers easily 10% reduction just for one foot. We're seeing two feet plus restrictions right now. So that changes the economics of barge transportation. Barge transportation is one of the secrets to our success, because it's well designed to transport heavy commodities like soybeans like like grain long distances in an economical manner. But then all of a sudden, when you start mitigating the economics of it via restricted channel with restricted channel depth channel depth, it really does change the economics of it.

 

Paul Yeager: And is this a certain, are these restrictions is it St Louis below? Memphis below?

 

Mike Steenhoek: That's that's the real acute area. Because we don't St. Louis, St. Louis on on south because we we don't have dams and locks in that stretch of the river. As St. Louis there's usually as enough water flow that because the Missouri catches up with the Mississippi there you have the Illinois a little bit further north and empties into the Mississippi you have enough water to have a adequately wide and adequately deep river that you don't need to have the series of dams every 40-50 miles apart to restrict water flow so you maintain a an adequately deep navigation channel. That's why they have dams, St. Louis on on north, including along the Iowa border. So because you don't have those dams, you can't restrict that water. And so now you're really just susceptible to the dry conditions. So that's where it's most acute, but we are seeing it throughout the system.

 

Paul Yeager: So what is the schedule for traffic year-round? Or are there months that are shut off? Because I can think of pretty much all the locks shut at some point during the winter? I don't know. What does it do below St. Louis?

 

Mike Steenhoek: Yeah, there's there's certain kind of points where you can have a pretty much a guarantee 365 day a year, operating Lock and Dam and that, that that point is usually at Quincy, Illinois, where Lock and Dam 21 is so that's south of it just to give frame of reference Lock and Dam 19 is at Keokuk, Iowa. So the further southeast part of of Iowa, that's 19. So you have to go a little bit further south, that's Lock and Dam 21. You can have a 365 day river, the Illinois River is usually 365 days a year. So anywhere north of that, including all of the 11 locks that are on the Iowa border, those are typically close from December to March due to winter weather, it's a good time to do maintenance. So that normally happens during the year.

 

Paul Yeager: Is it possible for this congestion that I'm picturing in my mind going from Quincy to St. Louis to an area to put some of offload or not even put onto a barge, sent it on a rail, a couple of states south, put it back onto the river where we have some flow that might not but I'm guessing that messes with a schedule. There's things that they're not used to accepting all that grain in November, December, January.

 

Mike Steenhoek: Yeah, you know, there's there's certain industries where you can pivot more easily than others. So if you're a cupcake shop owner, if you all of a sudden, understand that you're going to have no demand for chocolate cupcakes tomorrow, but you're going to have a prolific demand for vanilla cupcakes, you can pivot quite quickly, because it's just a simple matter of going to the grocery store and adjusting your ingredients that you're that you're buying. But if you're a barge loading facility, if you're XYZ cooperative on on the Mississippi River, and you establish that business, because you're located next to the Mississippi River, yes, maybe you can pivot a little bit and have have some movement flow to a, say a rail loading facility 50 miles away, 40 miles away. But this ability to just pivot without real consequence, is more limited with these capital intensive industries like agriculture. So yes, there's a lot of people there, there's a lot of people exploring alternatives, they have to, there's a lot of a lot of demand, a lot of these export facilities down and near them in the New Orleans area, are saying, we're not going to be able to get our flow via barge like we normally would. So they're really bidding aggressively to try to get rail shipments down there. So there's a lot of these kind of one of these questions that farmers and these shippers are asking, Do I do I store I normally deliver this time of the year do I store? Do I have the storage? Do I, I, no longer can drive 20 miles to the river and drop off my soybeans and corn at that location? Do I then drive 100 miles to access a rail loading facility? Do where are the ethanol facilities around in the area? Where are the processors? And so there's a lot of these questions and some will have more viable alternatives and others.

 

Paul Yeager: But, if, you bring up the ethanol, that's kind of where I wanted to go next is because those facilities I use the example of my home area, when the Fairbank plant came on that that made some farmers in Buchanan County go 'well, I guess we're not going to go Cedar Rapids, we're going to go to the northern part of the county' or 'we're not going to go to the Mississippi,' I mean that that basis had already worked itself out a few years ago. Does that, who benefits from a higher price or lower price? In that scenario now for a farmer and say that area that an ethanol plant had come on because now the ethanol plant might bid up? And they might see cheaper grain now as an option?

 

Mike Steenhoek: You know, in in, in, you know, obviously, lower basis. Yeah. And having more options, you know, it clearly shows the power of having, you know, not just not just the river, but also say some local processing, it could be a soybean crush facility, and from the corn side, it could be an ethanol facility. So the more options, the better. But one of the things I was talking to a former person who used to work for a major soybean processing company, he was talking about the conditions along the river, it's really going to provide, it's going to elevate the negotiating position of some of these soybean processors. Because, you know, maybe in the past they had to be more aggressive in competing with the barge loading facility in order to attract the soybeans that they Need for their facility. Now all of a sudden, if the if the river is severely constricted, farmers are going to be saying, well, I guess my if option A the river is closed or severely restricted, option B is the the nearby soybean processing facility, the soybean processing facility is going to be acquainted with that. And so they're they they might offer a less favorable price, because all of a sudden, there's a growing group of farmers that are all asking, Hey, I want I need to deliver to you I need to deliver to you. So I think we're going to see that phenomenon as well.

 

Paul Yeager: I already have a question for this week's Market to Market show about well, what about the PNW in the Pacific Northwest? How does, how, do they see an opportunity now? Mostly via rail or via shipping? Granted nothing in South Dakota, Colorado was coming to the Mississippi anyway. But that certainly is going to change the mind of people in say western Iowa, eastern Nebraska. How does the PNW fit into this discussion?

 

Mike Steenhoek: Yeah, I mean, we'll see that draw area, continue to encroach further eastward, to try to pull more of that there'll be more of this demand to ship to the Pacific Northwest. And we and we'll see, we saw us kind of a similar phenomenon a few years ago, when there was this trade dispute with with with China, that really diminished Pacific Northwest exports, because Pacific Northwest is largely facing Asia naturally. So, So then all of a sudden, you saw a lot of that area that naturally fed into the Pacific Northwest all of a sudden say, 'Well, we are willing to incur more and a more expensive supply chain in order to get to the Gulf?' So you're going to see that kind of dynamic play out where there's gonna be more of this area that will maybe draw on flow to the Pacific Northwest. And so it really just further reinforces the power of having more than one transportation option. And not, you know, the old cardinal rule is don't put all of your eggs in one basket. So if you can have the Pacific Northwest, obviously, the Atlantic coast to a smaller extent, the Great Lakes to a very small extent. But the more you can have these kinds of opportunities, the better. But the concern is, in order to get to the Pacific Northwest, that's a rail journey. And our rail infrastructure right now is not exactly operating on all cylinders. And so that's a real concern.

 

Paul Yeager: We weren't there. Well, in the last two years, everybody seems to be an expert now in supply chain logistics when they can't go to Target, Walmart given any of their they're familiar with the Port of Los Angeles and San Jose and Savannah and New Orleans than they ever used to be before. As we sit here right now and record this Mike, the rail, one of the rail unions rejected the contract that was agreed upon. That doesn't make things any easier for trying to resolve some type of create options for producers.

 

Mike Steenhoek: I mean, this is a time particularly with the backdrop of the problems with the inland waterway system. We need rail service to be improving. We don't need it to be diminishing or taking a step backward. We knew when the, you know, we kind of walked up to this precipice on September 15. With in this this rail strike was averted due to this tentative agreement, we all knew that it wouldn't become finalized until the rank and file membership actually ratified the agreement. And we also knew there was a chance that some of the members wouldn't ratify it. But what kind of the broad understanding was, if the rank and file members voted against ratification, they would return to the negotiating table. So this looming threat of a strike while it was still there wasn't as pronounced, but then what what really kind of changed things was in this particular union, actually voted against ratification, but then they floated this potential date of a potential strike November 19. So they even specified that when Congress returns from the after the midterm elections, which will be Monday, November 14, they will provide five days after that date. So November 19, before a potential strike could occur. And that's what's really agitated a lot of agricultural shippers. Because one of the things that we really are trying to impress is a railroad strike will halt economic activity, but a threat of a strike can also halt economic activity. And so we we cannot have this potential looming on the horizon. Because so many of it within agriculture, it's it's all about planning. You know, they're, you know, every grain elevator every agricultural shipper, they're making decisions today. They didn't wake up this morning and say, Where should I ship those soybeans and those corn in the in this corn today? They're not saying that they're asking the question, What about in middle of November, what about in December? I need to secure transportation today in order to make sure that delivery a month from now occurs. So this this looming potential of a strike is really problematic. And it's something that we're going to be very engaged in moving forward.

 

Paul Yeager: I'm going to go back to the the inland waterway, because normally the river closes, Mississippi usually closes is that I want to say December 1, is that kind of in the general ballpark?

 

Mike Steenhoek: Yeah, it all kind of depends upon when ice accumulation occurs. But yeah, as a rule, December to March, and that's just the areas north of that Quincy, Illinois,

 

Paul Yeager: Right. And so that co-op operator that you refer to that didn't just wake up and say where they know, there is that small window from October, November, things of all, grease has to be everywhere to keep things moving without any friction. And they know when a train doesn't show up, or somebody out bid that train, and it got on hooked. And now it's somewhere else. That didn't that doesn't that didn't happen as much before. Right? Were things that because that, to me sounds like what you're saying about the unknown, used to be processors and producers and movers of grain, they knew they knew a lot of things.

 

Mike Steenhoek: Yeah. And that's that's what you know, particularly over the last, you know, couple years, and it just shows that, that when when when you're talking about what defines an effective supply chain? Well, is it cost effective? Well, that's important, doesn't have capacity. That's important. Was it fast? Well, that's important. The supreme virtue in the supply chain is reliability and predictability, people will be willing to pay more, if I can just have assurance, that train will arrive when I need it to arrive. It's more important than speed, I'd rather I would accept a longer journey from point A to point B. That means I might have to load things earlier than I normally would. But I'm willing to accept that if I can have assurance that a little arrived at my customer on a particular day. And that's what we're really seeing a scarcity of you know, we've always had transportation challenges, you know, you know, agriculture and railroads, you know, they've been, it's kind of a tale as old as time they've been at at they've butted heads for years. But just this real lack of predictability and reliability is really, it's really manifests itself more acutely over these last several years. And it really is having an impact.

 

Paul Yeager: Well, I go back, I guess, the opening discussion when we talked about what's changed since Mark passed, and 2012 2011 was when the Bakken oil range really kind of came on board. And all those North Dakota producers to an extent southern Canada, it changed what was going on the trains, the rail cars. So I mean, I remember covering that story in the sense of, well, gosh, what are, the what's the North Dakota wheat farmer going to do in trying to ship back to the either PNW or to the east of Duluth or wherever they're going to go? So is that when some of that started, or was it before that when you say several years?

 

Mike Steenhoek: Yeah, I mean, it's, it's really, obviously, the pandemic has really, you know, had a had a big, big impact. And, and, you know, that's obviously played a significant role, but then on some of these other geopolitical issues, you know, of these last several years have really, you know, played a role. You know, it's, we kind of take it for granted. But, you know, the last, you know, 15-20 years, has been one of the most, you know, peaceful, stable, periods. You know, in global economics, you could argue, in human history. And so, yes, there were flare ups here and there. But as far as anything that was really seismic that we saw, you know, throughout the 20th century, no. And so there was this kind of global stability that we had. And then we built these supply chains to really service it. And then but, but then, it was kind of an This Just In Time kind of delivery that we all adopted, which there's a there's a very sound economic principle behind just in time it decreases waste, it's, it's very, it's very cost effective. But if you're going to have a just in time delivery model, you have to have a lot of confidence in every step of that supply chain, where the products originate, where they're distributed, where they ultimately are received and consumed. And then what we've seen over the last several years is one big wrench getting thrown into that, you know, particularly for agriculture with China, you know, where there's just the obviously, they're a huge source of our consumer goods. They're also a huge consump, consumer of our agricultural products, while all of a sudden that's really just been significantly agitated over these last few years. And so then all of a sudden, people are saying, well, gosh, we we built this supply chain well with the assumption that there would be stable, there'd be stability, from here to there and all points in between. And that stability is no longer there. So that's why your people are asking themselves, well, maybe there's a different model, maybe this just in time delivery doesn't really work. Maybe we need to have, you know, the term is just in case where you have more we have more storage, or maybe it's brought to other your consumers or different places, or maybe origination is from different places. So it really is causing people to rethink their supply chain.

 

Paul Yeager: Well, in you go, what you were just laying out is kind of what you were just saying about how as long as I have predictability, knowing that that train comes on Monday at 8am, so I'll be ready for it to load on. And when it goes. Surplus has kind of disappeared from our shopping habits. I think of the old, I think of the military. I mean, I think that's where a lot of those stories went back to it's like, you know, we used to post World War Two, post Korean War we, we fought Korea with a lot of surplus from World War Two, we just don't have the surplus. But then I while you were talking, my mind went to the Costco and the Sam's Club, we do have surplus, it just looks different now. Right? Is that? Is that a surplus that we've just bought more? That's where the surplus went to? It's just we just decided to buy more stuff?

 

Mike Steenhoek: Yeah, you know, I, I, I think there's, there's some of that kind of buy in bulk kind of principle and economies of scale, you know, purchases. But, you know, I think a lot of this was pioneered in Japan with you know, the, you know, the the kind of the just-in-time kind of model and let's, let's not, let's, let's make sure there's a almost a seamless transition from manufacturing, to transportation to consumption. And, again, if you have a lot of confidence in these other participants, that works out really well. And I the the metaphor that I use is, I was volunteering as an official at a high school track meet this last spring, and I was monitoring the the the handoff zone, the baton handoff zone. Well, what it works really well if runner number two, and runner number one are really in sync. And they and they know when runner number two knows when to take off. And to make sure that he or she receives the baton before the end of the zone. And then they they're basically at equilibrium speed at the point of the handoff, that's when it works out really well. And that's kind of what our supply chain has been like for a number of years. Well, now what's happened is runner number two, is has his or her hand extended for the baton but just notices that runner number one fell in the middle of the track. And so now runner number two, obviously, that's unfortunate for the for the relay race. But then even to add insult to injury runner number two is still trying to figure out is runner number one going to get up is running number one injured. So as the race actually over, do I need to make alternatives, or is running number one gonna get up and spread to me or just crawl to me. And so there's just all of a sudden this uncertainty, that's what's happened at large within our global supply chain. And it's just really an efficient global supply chain. The enemy of that is uncertainty. And but that's what we've seen in a real large scale

 

Paul Yeager: Took you all this time, Mike, to get a sports reference, and I love it, you should have just done your homework and you knew that that's what I like to start is with a good sports reference. Alright, let's close with this. If it starts raining tomorrow in areas to bring the water levels up, we won't see any relief and this for quite a while and we're not coming into a rainy season. So how long does this inland water problem, linger? What solves it?

 

Mike Steenhoek: Unfortunately, it could be a considerable period of time, because you know, with with any additional precipitation that occurs, a lot of us farm ground is one big dry sponge right now. So a lot of it's going to get soaked into the ground, which is good for the farm ground, and which we certainly hope for that. But how much of that will actually get channeled into the river system that's going to be quite limited. You know, also during the wintertime, you know, we know that when you've got, you know, when it becomes cold, any kind of precipitation that that does occur, will just get frozen into the ground or it'll just be it'll just, you know, pile up in the form of snow. So that's going to be kind of limited. So this is something that, you know, unfortunately is going to be a challenge for us for the for the foreseeable future. And, you know, the good news is that, you know, we still have compared to our competitors in South America, we still have the infrastructure that's the envy of the world and comes in terms of agriculture, but this is a major way our products get to market, you know, 54% of soybean exports are handled to the port via barge, so it's just such an essential part of our of our profitability. So it's clearly a cause of concern.

 

Paul Yeager: When the wrench gets thrown in we all have to duck, otherwise we're gonna get hit or let's see if we miss the exchange on the red flag goes up either one of those metaphors of work right?

 

Mike Steenhoek: It well and you know, it's it's it's really an it's unfortunate, but it's just really showing that, you know, you can get supply right farmers are getting supply right this year, you know, with all the pockets of problems here in their farmers are getting supply, right? We're getting demand, right? But you got to get transportation, right. And if you don't get transportation, right, you're gonna have problems as an industry.

 

Paul Yeager: All right, Mike, thank you. Appreciate the time, Mike Steenhoek everybody. Thank you.

 

Mike Steenhoek: Thank you.

 

Paul Yeager: My thanks to Mike Steenhoek for his insight today for this podcast and thank you for watching. Our director today is Julie Knutson, and technical assistance from both Kevin Rivers and Chad Aubrey here at Iowa PBS along with Shawn Ingrassia. That will do it for this episode, visit our website of Markettomarket.org or give us an email at MarkettoMarket@IowaPBS.org. We'll see you next Tuesday for another installment of the MToM Show podcast.

contact: Paul.Yeager@iowapbs.org