California farmers feel impact of Midwest flooding


Issue Date: April 3, 2019
By Ching Lee
Floodwater caused the corn inside this collapsed grain bin near Forest City, Missouri, to expand, bursting the containment structure. Record flooding in parts of the Midwest, including in Missouri, Nebraska and Iowa, has led to shortages and delays in shipments of certain feed commodities, affecting California dairy farmers and livestock producers.
Photo/Jo Horn, Missouri Farm Bureau

As he watched his feed barns become empty in recent weeks, Tulare County dairy farmer Frank Mendonsa said he had one question on his mind: When is the train getting here?

Heavy snow in Canada and record flooding in parts of the Midwest have caused shortages and delays in shipments of certain feed commodities, with California dairy farmers scrambling to find substitutes—often at much higher prices.

Mendonsa described his frustration calling different feed companies week after week to find out when their next shipment is due to arrive.

"It's been nerve-racking, hoping the trains will get here," he said. "That's my livelihood; these cows have to be taken care of."

Dairy cows are not going hungry, said Mark Krebsbach, a commodity trader for Western Milling in Goshen. They're given a special diet designed to maximize their milk production, and certain ingredients have been hard to come by recently. He noted the company had to tell some customers it couldn't mix feed for them because it didn't have enough supplies.

"It's not like the animals are going without feed," he said. "It's just that they might be missing a certain element of their ration, or it might not be as much as they want."

The concern for dairy farmers is that changing the feed formulation, especially the protein portion, affects milk production, Mendonsa said, and if it's done for an extended period, it could affect the cow's reproduction.

Dairy farmers say they first encountered problems about a month ago when canola meal—a major protein source in the dairy ration and much of which comes from Canada—became unavailable, even for those who held contracts with their feed suppliers. Dairies began feeding more soybean meal, which they could get from the Midwest. But severe weather and flooding in states such as Nebraska, Iowa and Missouri crippled rail lines and roadways, hampering deliveries to the West.

"Some plants got hung up and stopped producing. That tightened the market on protein," said Ron Seley, a commodity trader for Seley & Co. in South Pasadena.

Mendonsa said he's been able to make do by feeding more cottonseed meal, a local product, but noted it's limited in supply, especially now with more dairies using it as their protein source.

"(Prices) are through the roof, if you could even beg somebody to sell you a load," he said.

With canola meal, at least, the situation is starting to improve, with shipments finally arriving, though it's far from being back to normal, Seley said. Prices climbed about 37 percent during the height of the shortage several weeks ago but have moderated in recent days, he noted.

Dairies may begin to build up their own inventory, he said, which could drive prices up again, "because there's not enough canola behind it to give us a long-term solution."

With areas of the Midwest still working to reroute traffic or restore train service, Seley said deliveries of feed corn have now slowed, but added there should be enough coming in to supply dairies. Corn byproducts such as dry distiller's grains and corn gluten feed also have seen price hikes due to production problems and movement, he added. Mendonsa said one feed company told him it plans to start rationing the amount of corn it delivers to its customers.

Besides cottonseed meal, Seley said other local products such as almond hulls and millrun have jumped in price due to higher demand.

With a relative who's a railroad engineer in Nebraska for BNSF, Stanislaus County dairy farmer Pete Verburg said he received warning that trains weren't moving, so he bought extra loads of almond hulls and whole cottonseed to last him for 30 days, with hopes that trains will run again by then.

Verburg said if current shortages continue, dairies will be forced to feed more forages such as silage and alfalfa hay, adding that the latter is more difficult to find this time of year—except perhaps in the Imperial Valley—until farmers begin cutting their new crop. Forages, however, are not adequate sources of protein, he said, which means dairies could begin to see their milk production drop.

For James Enns, a senior broker for San Luis Obispo County-based E.B. Wakeman Co., which supplies feed, organic fertilizer and biofuels, the biggest impact has been price increases on a number of products due to supply and demand, and higher freight costs.

The price of bloodmeal—a high protein source used primarily by dairies and as a fertilizer—has risen by more than 14 percent, he said. Most of it is produced in the Midwest, including Nebraska, Iowa and Colorado. Weather and other logistical problems have reduced the number of cattle being processed at affected plants, so less of the byproduct is being made, Enns said.

Some of that product is moved by rail, but most of it is trucked, and with many trucks in the Midwest now being used to transport sand and other flood-relief materials, Enns said moving agricultural commodities to California has become lower priority and "incredibly expensive." Trying to buy the product from regions farther away also drives up freight costs, he added.

In terms of organic fertilizer, Enns said many of the operations the company works with are based in California and use materials produced in the state, so he doesn't anticipate a significant impact on that market.

Krebsbach of Western Milling said the biggest impact will be on producers who did not forward-contract on affected commodities, leaving them exposed to higher prices on the spot market. Feed companies also tend to serve those who hold contracts first, he added.

Though supplies may be tight now, leading to higher prices, he said he doesn't think there will be any significant long-term impacts on the feed market. Despite the wet spring, he said it's too early to know how much it will affect planting, noting Midwestern farmers could seed ground as late as early June.

"Once we get to the end of May, then I think we'll be dealing with normal market forces as far as pricing is concerned," Krebsbach said.

Midwestern flood relief 

(Ching Lee is an assistant editor of Ag Alert. She may be contacted at clee@cfbf.com.)

Permission for use is granted, however, credit must be made to the California Farm Bureau Federation when reprinting this item.