Farm prices blamed for barge business drifting off course

Wednesday, April 10, 2002

SLOW GOING TO MARKET

By Scott Moyers ~ Southeast Missourian

Like the quiet Mississippi River that carries them, barges tend to move slowly as they follow their sinuous course back and forth past Cape Girardeau. But lately, some are complaining that the local barge industry itself has been sluggish, too.

"I can't tell you why, exactly," said Rob Erlbacher, president of Cape Girardeau-based Missouri Barge Line and Missouri Dry Dock and Repair. "But we're not doing very well."

Erlbacher said he's seen business drop approximately 15 percent over this time last year. While his company mostly transports cement, he also carries agricultural commodities, which is where he suspects the problem lies.

"The agricultural side of the industry seems to be doing poorer," he said. "Business hasn't been great for the past few years, but this year it seems worse. There are quite a few boats that would be moving ag products that are not moving."

Outside barge companies that transport on the Mississippi also have seen business slide.

"Things are slower right now than they have been," said Larry Daily, president of Alter Barge Line in Bettendorf, Iowa. "There's a general slowdown all up and down the river."

Bob Smith, manager of American River Transportation in Decatur, Ill., said they have seen a reduction in business this year, too. He agrees that farm prices are part of the problem.

"The reduction in demand for agricultural products is a factor, no question," Smith said. "But it's the economy, too. It's in delay and hasn't rebounded for us like it has in other industries."

But the decline in river business is more than anecdotal. The numbers bear it out.

At the Southeast Missouri Regional Port Authority in Scott City, Mo., which provides ready access from various industries to the river, the transported tonnage has dropped 11 percent in the first quarter of 2002, said executive director Dan Overbey.

Since January there has been 238,000 tons moved compared to last year at this time, when there was 266,000 tons. Annual totals for 2000 and 2001 were close to 900,000 tons.

Overbey agrees that the drop probably is related to farm prices.

"From what I'm hearing, there's still a lot of products sitting on the farms that haven't moved out yet," Overbey said. "It seems they're waiting for better prices."

Strong dollar

The strong U.S. dollar is one factor that is driving down export prices, said Paul Bertles, director of production at the National Corngrowers Association in St. Louis.

The dollar value, when matched against other major world currencies, has risen to its highest level since the 1980s, and that's hurting exporters, Bertles said.

"The strength of our dollar makes our commodities more expensive," Bertles said. "So even if we do have a slight quality advantage, that doesn't matter when compared to the cost."

Bertles also pointed to the weakness of the world economy, which means that many countries are looking for the best deal for everything they import, including vegetables.

All of that has an impact on river transportation, he said.

"It's a cause-and-effect relationship," he said. "It's just logic."

Charles Kruse, the executive director of the Missouri Farm Bureau, is also a farmer in Dexter, Mo. He agreed with Bertles' explanation.

"Prices have just stayed in a very narrow range since harvest," Kruse said. "Every farmer is hoping to see an upturn in the prices, so I'm sure that is part of the problem with the barge industry."

Kruse had other theories, too. He said that right now the United States has large supplies, thanks to four years of good crops. That means many countries that buy U.S. agricultural goods know they can buy as needed.

"People who buy grain, corn, soybeans or cotton or rice know we've got a big supply," he said. "But if we were to have some kind of weather concern this spring or summer, I think we'd see an upturn. Those countries would see that maybe the supply isn't unending and would want to buy up what we have."

Kruse said that locks and dams are antiquated and need updating. He also said that China, a new member to the World Trade Organization, is exporting but not importing goods as well as it should be yet.

But Kruse remains optimistic about the rest of the year. He said domestic use of corn, rice, cotton and soybeans is still strong and there's a chance that by the end of the year exports will pick up.

"I think a farmer has to be an optimist," he said. "I think there's at least some reasons for cautious optimism that we can break out of this slump. I hope so, anyway."

smoyers@semissourian.com

335-6611, extension 137

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