Running Aground?

The amount of grain moving south through the state’s river shipping system as a whole has also been on a steady decline. In 1999, grain shipments of nearly 10.3 million tons—the equivalent of 6,846 barges a season—made up nearly 87 percent of all the various products shipped by barge in Minnesota. By 2002, the number of barges shipping grain slipped to 6,350 a season. Last year, grain shipments fell to about 5.6 million tons, or 3,715 barges.

But while river shipments of grain have been falling, grain production in the state has been rising; the combined, production of corn, wheat, and soybeans grew 8.2 percent from 1999 to 2007.

So why the decline in barge traffic?

Fueling the Decline

Lambert and others point to increased use of corn within Minnesota for ethanol production as a primary cause. In 2007, Minnesota had 17 ethanol plants. While that’s only four more plants than it had in 1999, today’s plants produce a lot more ethanol. Last year, Minnesota’s 17 plants had the capacity to produce 680 million gallons of ethanol from 250 million bushels of corn, according to the Minnesota Department of Agriculture. In 1999, the state’s 14 plants produced 190 million gallons of ethanol from 70 million bushels.

With river shipping declining by roughly that amount over the same period, it’s no wonder fingers point readily toward ethanol. And it could get worse. This year, four new plants are expected to draw another 147 million bushels of corn to produce an additional 400 million gallons of ethanol. CHS’s Gergen says that the increase in demand for corn from ethanol plants is the primary reason why the number of production workers at his terminal has slipped from 28 in the 1980s to 10 now.

Tim Paurus, assistant vice president of terminal operations for CHS’s grain marketing division, says that his company expects that volume at its Savage terminal “will be 20 to 25 percent less” than last year.

“There’s another ethanol plant in Jaynesville”—one of the four new plants coming on line—“that will be a 100-million-gallon plant,” Paurus says. “That will take [nearly] 40 million bushels of corn right from the backyard of where Savage and St. Paul pull corn into the river. As long as the ethanol plants are running, they’ll get corn.”

Ethanol is only part of the story. The decline in the value of the dollar has boosted demand for U.S. grains in recent years, particularly from China. Paurus says that shipping grain by rail to the West Coast and then to China by ship takes about 30 to 35 days. Shipping it from the Twin Cities to the Gulf of Mexico—an 1,800-mile stretch of river—takes about 20 days. It takes another 30 or 35 days to move it through the Panama Canal and on to China.