Chairman Frank Lucas today released the following statement on Scott O'Malia's last day as Commissioner of the Commodity Futures Trading Commission (CFTC). Last month, O’Malia announced he would resign to pursue other opportunities.
Chairman Reviews Mississippi River Transportation
WASHINGTON, D.C. – House Committee on Agriculture Chairman Bob Goodlatte today chaired a hearing to examine the impact that transportation on the Mississippi River is having on agricultural markets. The Mississippi River is a vital part of the U.S. agricultural infrastructure. Roughly 1 billion bushels of grain, or 60 percent of U.S. grain exports, traverse its waters annually. Damage caused by Hurricane Katrina temporarily disrupted shipping and export operations along the Mississippi and several ports in the Gulf region.
Hurricane Katrina disrupted barge operations and port facilities and contaminated barges with rain and storm water, leaving the transportation system out of sync. The effects of the temporary shipping disruptions were not limited to the Gulf states. 33 states rely on the Mississippi River and its tributaries to move goods to the port facilities for export.
“Ten days ago, I led a delegation of Committee members to New Orleans and Southwest Louisiana to see the impact of Katrina firsthand. At the port facility we visited, I was told that export facilities are operating at about 2/3 capacity due to difficulties with the barge logistics system and the difficulty of dealing with nearly 500 barges containing damaged grain. Here is a sample of grain from that facility showing the damage done to corn when it gets wet and then cooks in a barge under the hot Gulf Coast sun,” said Chairman Goodlatte. The Chairman held up a bag of damaged corn he collected on his visit to the Gulf Coast.
Chairman Goodlatte urged Deputy Under Secretary Gaibler and the U.S. Department of Agriculture (USDA) to make additional resources available to clear the barges of storm damaged corn and get the barges back in circulation as quickly as possible. The backlog of barges containing the water logged corn has raised freight rates contributing to a decrease in grain prices for farmers and an increase in loan deficiency payments, the Chairman noted. He encouraged the USDA to increase efforts to move and dispose of the damaged grain to prevent further strain on U.S. grain producers.
In addition to the damages resulting from recent hurricanes, transportation along the Mississippi has also been affected by severe drought conditions in the upper Midwest. Reduced water levels in the Illinois and Upper Mississippi Rivers led to navigation advisories in St. Louis earlier this year.
Low water levels coupled with high fuel prices and limited transportation options in the wake of the hurricane have contributed to higher barge rates according to Deputy Under Secretary Gaibler. “Although barge rates had already begun to rise in July and August, the hurricanes simply added to both barge and rail freight rates. After the hurricanes, with the increases in fuel costs, it appears that no mode has a cost advantage over any other mode of transportation,” Gaibler said in his testimony.
While the transportation along the Mississippi is gradually returning to normal, it will be some time before the entire shipping infrastructure is operating at full capacity. The Committee will continue to monitor the progress along the Mississippi and the port facilities.
Mr. John Paul Woodley Jr., Assistant Secretary of the Army (Civil Works), Office of the Assistant Secretary of the Army, Washington, D.C.
Major General Don T. Riley, Director of Civil Works, United States Army Corps of Engineers, Washington, D.C.
Mr. Floyd Gaibler, Deputy Under Secretary, Farm and Foreign Agricultural Services, United States Department of Agriculture, Washington, D.C.
Mr. Robert L. Dickey, Producer, National Corn Growers Association, Laurel, Nebraska
Mr. Timothy J. Gallagher, Senior Vice-President and General Manager, Grain Division, Bunge North America, Inc., St. Louis, Missouri, on behalf of the North American Export Grain Association
Mr. Royce C. Wilken, President, American River Transportation Company, Decatur, Illinois, on behalf of the National Grain and Feed Association
Mr. Robert W. Kohlmeyer, President Emeritus, World Perspectives Inc., Fairfax Station, Virginia