US legislators urge rail agency to fix service woes

  • Market: Fertilizers
  • 05/07/22

A bipartisan coalition of federal legislators has asked the US Surface Transportation Board (STB) to address flagging rail service that has curbed deliveries of fertilizer and other agricultural commodities this year.

More than 50 members of Congress signed onto a 29 June letter to STB, asking the railroad regulator to work to improve service for the agricultural sector.

The request comes as farmers gauge input requirements for post-harvest fertilizer applications later this year and pencil in expected volumes for next spring's crops. Prolonged rail service disruptions by major rail carriers could support higher costs for key inputs.

"We must ensure critical commodities reach essential industries and workers, such as America's farmers, who are essential to feeding our nation and the world," the letter said. "Food is a national security issue, and we must treat it as such."

Industry advocacy group The Fertilizer Institute (TFI) applauded the letter, adding that "skeleton crews" and railroad-led initiatives, such as the precision scheduled railroading operating model, have hampered fertilizer shipping and potentially lead to production delays. The model calls for increased efficiency to drive higher volume, creating a reduced need for crews and equipment.

"With the world leaning on US farmers now more than ever before to feed our growing population, we must ensure strong yields and our food security," TFI chief executive Corey Rosenbusch said on 30 June. "Fertilizer must reach farmers in a timely manner and crop harvests also need to get to their destinations, including the kitchen table."

Domestic fertilizer distributors grappled with slowing rail service during the industry's peak demand cycle, which began in the spring when farmers planted key principal row crops and applied fertilizer. Delays have hampered crop production at a time global grain output is threatened by the ongoing war in Ukraine and various US restrictions on imported fertilizers.

US railroad Union Pacific (UP) instructed fertilizer manufacturer CF Industries in mid-April to reduce its shipments by 20pc, which delayed urea and UAN deliveries prior to the key spring application period. CF said in an April statement that customer orders with rail transportation already arranged would likely face delays, and UP would not accept new rail shipments for the foreseeable future.

The four largest US railroad companies subsequently came under immense criticism this year for eroding service, underpinned by inconsistent and unreliable deliveries, which spurred an STB hearing on 26-27 April. Detailed recovery plans from each company point to a potentially slow return to pre-pandemic levels.

The legislators' letters said that if UP "continues down this path and other carriers follow suit, it will reduce crop production at a time when our nation and the world can least afford it."

More than half of US fertilizer is transported by rail, and shipment restrictions can limit supplies and raise farmer costs, according to TFI. US farmers this season already face an estimated 7pc rise in total input expenditures, with fertilizer costs expected to average 12pc higher compared with 2021, according to the US Department of Agriculture.

Fertilizer affordability concerns defined the 2021-22 season, which ended on 30 June, and cost woes will likely extend through the first half of the 2022-23 season if deteriorating rail service leads to higher input costs and food prices.

"By placing onerous restrictions on shippers without customer consultation, Class I carriers may run the risk of jeopardizing family run farms and increasing the cost of food for consumers," the letter said.


Sharelinkedin-sharetwitter-sharefacebook-shareemail-share

Related news posts

Argus illuminates the markets by putting a lens on the areas that matter most to you. The market news and commentary we publish reveals vital insights that enable you to make stronger, well-informed decisions. Explore a selection of news stories related to this one.

News

USDA to invest $83mn in fertilizer projects


23/05/24
News
23/05/24

USDA to invest $83mn in fertilizer projects

Houston, 23 May (Argus) — The US Department of Agriculture (USDA) plans to invest $83mn to build out fertilizer production plants, modernize equipment and adopt new technologies in 12 states. The grants are part of the USDA's Fertilizer Production Expansion Program (FPEP) aimed at boosting domestic fertilizer production, increasing competition and lowering costs for farmers. Around $25mn will be granted to a food waste upcycling facility in Jurupa Valley, California, to produce organic fertilizer. Nearly 90 market participants in the area will be supplied by the 11,400 tons of fertilizer produced annually at this facility. Cog Marketers, in partnership with AgroLiquid, is expected to produce 2mn USG of fertilizer a year at its Lake City facility in Florida with a $4mn grant from the USDA. Around 200 fertilizer retailers in the Mid-South region would receive product from this facility. Return will receive $4mn to expand production at its Northwood facility in Iowa. Other grants were awarded to projects in California, Florida, Hawaii, Iowa, Illinois, Kansas, Kentucky, Minnesota, North Carolina, North Dakota, Oregon and Washington. So far, FPEP has supplied 29 states with $251mn for increased domestic fertilizer production, with the last round of awards announced in March and January . About $649mn are left from the $900mn the administration of President Joe Biden committed to domestic fertilizer funding through FPEP in 2022. The FPEF was started in response to rising fertilizer prices caused by a variety of factors including the war in Ukraine. By Meghan Yoyotte Send comments and request more information at feedback@argusmedia.com Copyright © 2024. Argus Media group . All rights reserved.

News

Alabama Demopolis lock reopens early


22/05/24
News
22/05/24

Alabama Demopolis lock reopens early

Houston, 22 May (Argus) — The failed Demopolis Lock, at the intersection of the Tombigbee Waterway and Black Warrior rivers in Alabama, has reopened two weeks earlier than projected. The lock reopened on 16 May, ahead of the scheduled 30 May opening . Vessels carrying commodities such as asphalt, coal, petcoke, metals and fertilizers have been able to pass through the lock without a long queue since the reopening, according to the US Army Corps of Engineers. The lock had been closed since 16 January when the concrete sill underneath the lock doors failed. The lock was largely rebuilt over the ensuing four months Traffic that would typically pass through the lock was rerouted during the closure. Multiple steel mills in Alabama and Mississippi move some of their feedstock and finished product through the Demopolis lock. Those mills have 8.16mn short tons (st)/yr of flat, long, semifinished and pipe steel production capacity. By Meghan Yoyotte Send comments and request more information at feedback@argusmedia.com Copyright © 2024. Argus Media group . All rights reserved.

News

Brazil's Pelotas port resumes operations


21/05/24
News
21/05/24

Brazil's Pelotas port resumes operations

Sao Paulo, 21 May (Argus) — Brazil's Pelotas port, one of the three main ports in flood-swept southern Rio Grande do Sul state, resumed operations on Tuesday. Cargo handling had been suspended since the beginning of May as heavy rains hit the region in late April and caused the biggest flood in the history of the state. The port of Rio Grande, the largest in the state and one of the most relevant for grains and fertilizers in Brazil, continues to operate normally. Rio Grande did not suspend operations at any time during the floods, but cargo handling slowed in recent weeks. For safety reasons, the port authority reduced the draft to 12.8 meters (42ft) at the Bunge, Bianchini and Termasa/Tergrasa terminals. The port of Porto Alegre has suspended operations because Lake Guaiba's level is at 4m, 1m above its flood level, according to the state's civil defense. There are 77 stretches of on 46 highways in Rio Grande do Sul totally or partially blocked, including roads, bridges and ferries. Since the floods began, 464 cities have been impacted, affecting around 2.4mn people. The floods have left 161 people dead, 85 missing and over 581,600 people displaced. By João Petrini Send comments and request more information at feedback@argusmedia.com Copyright © 2024. Argus Media group . All rights reserved.

News

Japanese bank Mizuho boosts support for H2, ammonia


17/05/24
News
17/05/24

Japanese bank Mizuho boosts support for H2, ammonia

Tokyo, 17 May (Argus) — Japanese bank Mizuho Financial aims to provide ¥2 trillion ($12.8bn) in financial support for domestic and overseas cleaner fuel projects by 2030 to support Japan's plan to build a hydrogen supply chain. Private-sector Mizuho is offering financing to low-carbon hydrogen, ammonia and e-methane projects related to production, import, distribution and development of hydrogen carriers. Mizuho said it has in the past offered project financing for large-scale overseas low-carbon hydrogen and ammonia manufacturing projects, as well as transition loans. Japan is focusing on cleaner fuel use in the power sector and hard-to-abate industries, as part of its drive to reach net zero CO2 emissions by 2050. Japanese firms are getting involved in overseas hydrogen projects because domestic production is bound to be comparatively small and costly. They are looking to co-fire ammonia at coal-fired power generation plants to cut CO2 emissions and examining use of the fuel as a hydrogen carrier . Japanese companies have also partnered with several overseas firms on e-methane. Mizuho has to date offered $1bn for cleaner fuel projects. The bank has set a goal to accelerate the setting up of a clean fuel supply chain by addressing the financial challenge faced by projects requiring large investments. Mizuho has attempted to help Japan's decarbonisation push by tightening biomass and coal financing policies. Mizuho has also stopped investing in new coal-fired power projects, including existing plant expansions. The bank has a plan to reduce the ¥300bn credit available for coal-fired power development projects by half by the April 2030-March 2031 fiscal year and to zero by 2040-41. By Nanami Oki Send comments and request more information at feedback@argusmedia.com Copyright © 2024. Argus Media group . All rights reserved.

Generic Hero Banner

Business intelligence reports

Get concise, trustworthy and unbiased analysis of the latest trends and developments in oil and energy markets. These reports are specially created for decision makers who don’t have time to track markets day-by-day, minute-by-minute.

Learn more