Chuck Grassley signals support for averting rail strike that would be ‘devastating’ to Iowa agriculture

Source: By Donnelle Eller, Des Moines Register • Posted: Wednesday, November 30, 2022

U.S. Sen. Chuck Grassley of Iowa said Tuesday he’s ready to take action to avert a possible national railroad strike that could idle dozens of Iowa ethanol plants, cut prices for Iowa farmers’ corn and soybeans, and potentially raise food and gas prices for U.S. consumers.

On Monday, President Joe Biden asked Congress to quickly adopt a tentative agreement that eight of 12 labor unions have accepted to “avert a potentially crippling national rail shutdown” that could begin as soon as Dec. 9. Four unions have rejected the deal, negotiated in September to avoid a strike.

In a call with reporters, Grassley, a Republican recently reelected to his eighth term, said a strike “would be devastating to agriculture” given farming’s reliance on railroads to move products.

Railroads carry 6,300 carloads of food and farm products daily, the U.S. Chamber of Commerce said in a letter to congressional leaders this week, urging action. Last year, U.S. farm products were valued at nearly $486 billion. After California, Iowa has the nation’s second-largest farm economy, with $38 billion in crops and livestock.

Monte Shaw, the Iowa Renewable Fuel Association’s executive director, said about 80% of all ethanol is moved by rail, adding that a strike would force plants to shut down after all available storage is filled. A strike “would just be a nightmare,” he said.

At 4.4 billion gallons annually, Iowa, the nation’s largest ethanol producer, supplies about 30% of the nation’s renewable fuel. Most U.S. gasoline contains at least 10% ethanol.

Prices at the pump would likely climb, Shaw said, since ethanol is typically cheaper than gas.

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Chad Hart, an Iowa State University agricultural economist, said the inability to move grain during a strike would depress corn and soybean prices in the Corn Belt. Iowa is the nation’s largest producer of corn and second-largest producer of soybeans. “And it would raise prices everywhere else,” Hart said.

While about half of Iowa’s corn crop is used to produce ethanol, the distilling process results in a high-protein byproduct that’s fed to cattle, pigs and other livestock across the nation and world.

“Any disruption of corn movement means a disruption in feed supply to our livestock industry,” Hart said. “And let’s face it, that becomes critical almost immediately.”

A strike is likely to disrupt grain exports as well, said Mike Steenhoek, the Soy Transportation Coalition’s executive director. Rail moves 29% of U.S. soybeans and 33% of corn to export terminals. Most U.S. grain is exported between September and February, Steenhoek said.

The agriculture industry already has struggled with restricted movement of grain via the Mississippi River, where drought this fall has lowered water levels, slowing and stalling barge traffic.

“Given the well-documented low water conditions along the inland waterway system, having this big question mark regarding rail service could not come at a worse time,” Steenhoek said.

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Even with a drought hitting most of Iowa, the state’s farmers harvested a better-than-expected crop, their fifth-largest corn and second-largest soybean harvests, based on U.S. Department of Agriculture forecast released in November.

And the looming shutdown comes as Americans gear up for the holidays. They’re expected to spend as much as $960 billion in November and December, according to the National Retail Federation.

“A nationwide rail strike during the peak holiday season will be devastating for American businesses, consumers and the U.S. economy,” the trade group, whose members include Walmart, Target and Kohl’s, said in November.

The Association of American Railroads says a strike would cost the U.S. economy $2 billion daily.

To avoid sensitive cargo like ammonia and other fertilizers sitting for extended periods in idled rail cars, hazardous cargos will be pulled from rails Sunday absent an agreement, hampering production and adding “uncertainty to an already tight global market,” The Fertilizer Institute, a Washington, D.C., industry advocacy group, warned Tuesday.

Hart said fertilizer companies are building up supplies that Iowa and other Midwest farmers will use next spring during planting. Any disruption in production sparks concern about supplies and could boost fertilizer prices that this year were two to four times higher than before the COVID-19 pandemic.

As with other products, panic buying sets in, Hart said, with farmers wanting to be sure they’re “first in line for those supplies, not last.” That rush of demand pushes prices higher, he said.

A railroad labor agreement has been elusive. The National Carriers’ Conference Committee — representing the nation’s leading railroads — and the 12 unions representing 140,000 railroad workers struggled for three years to reach a pact.

Biden appointed a three-member board to develop contract recommendations and helped broker the deal between that unions and carriers’ committee that narrowly averted a Sept. 15 strike. It provides members with a 24% pay raise over five years and improved health care benefits.

But a continued sticking point is railroad companies’ sick leave and attendance policies. There are no paid sick days under the tentative deal. Unions asked for 15 and the railroads settled on one personal day.

Unions officials say the companies have cut the number of workers to improve profits and oppose offering sick leave because it would require additional employees.

“Passing legislation to adopt tentative agreements that exclude paid sick leave for railroad workers will not address rail service issues,” Brotherhood of Maintenance of Way Employees Division said in a statement. The union is one of four that rejected the tentative agreement. “Rather, it will worsen supply chain issues and further sicken, infuriate and disenfranchise railroad workers as they continue shouldering the burdens of the railroads’ mismanagement.”

According to Department of Labor filings, about 1,700 railroad union workers are based in Iowa: 1,000 with the Brotherhood of Locomotive Engineers and Trainmen and 700 with the Sheet Metal, Air, Rail and Transportation Workers.

On Tuesday, Amtrak also warned that a strike would disrupt service. In September, Amtrak temporarily suspended service, including the California Zephyr line, which runs from Chicago to Emeryville, California. The line typically stops in the Iowa cities of Burlington, Mount Pleasant, Ottumwa, Osceola and Creston.

Donnelle Eller covers agriculture, the environment and energy for the Register. Reach her at deller@registermedia.com or 515-284-8457. 

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