Drought-Induced Cut in Barge Transportation Could Mean Smaller Profit Margins for Farmers

Lower Mississippi River barge traffic is still backed up as water levels remain at a record low. The river state at Memphis, Tennessee, was negative 10.79 Monday this week (nearly 11 feet below average), passing a record previously set in 1988.

The narrower and shallower river channel means less cargo per barge and fewer barges per tow, thus increasing shipping costs. Rates have increased by 383% compared to the same time last year. Those shipping costs are usually then passed on to farmers in the form of a more negative basis at sale. Due to the shipping uncertainty, more grain exporters are leaving through the Pacific Northwest instead of the Gulf.

However, unresolved railroad union agreements could hinder inland shipping even further.