Why Midwest crop farmers are having a logistics problem

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0:11election day election day I know, I know. It's always a conundrum for business reporters like us. It is obviously the most important day of the year for the future of the world. Everything, really. And yet here we are like everyone else. Nothing to do but wait. We have explained all the stakes. We've broken down the economic plans of the candidates. And now we should just go to our happy place and see how it plays out. The happy place? You mean the Beige Book? The Beige Book! Our favorite government document that details the current economic conditions. At least as of late October. Soon to be a little out of date.

0:49Sure, but its lessons will live on in our hearts. That's why we make it into an awards show.

0:58It's the Beige Awards! Our eight times a year salute to the art and science of telling stories about the economy. I'm Robert Smith. And I'm Waylon Wong. The Beige Book cannot predict the future of this country. But the stories in it tell us about some other big, powerful forces, like Mississippi River Bank. Ooh, we'll roll on after the break. This message comes from NPR sponsor, HP. Easily search through personal files, gain valuable insights, and make smarter, more informed business decisions. Unlock the future of work today with the HP AI PC. With the right tools, work doesn't have to feel like work.

1:38To learn more, go to hp.com slash AIPC. This message comes from LinkedIn ads. One of the hardest parts about B2B marketing is reaching the right audience. That's why you need LinkedIn ads. You can target your buyers by job title, company, role, seniority, and skills. All the professionals you need to reach in one place. Get a$250 credit on your next campaign so you can try it yourself. Just go to linkedin.com slash nprpod. That's linkedin.com slash NPRPOD. Terms and conditions apply. Only on LinkedIn ads. This message comes from Amazon Business. How can you grow your business from idea to industry leader?

2:21Bring your vision to life with smart business buying tools and technology from Amazon Business. Simplify how you stock up to get ahead. Go to amazonbusiness.com for support. We always like to remind everyone how this award show works. There are 12 regional banks in the Federal Reserve System. Each one carefully studies their local economy and brings back these little stories of what they see. Publishes them in a document known as the Beige Book. We give awards to the best stories. And you know, it never hurts to have a few runners-up in any beauty contest. So why don't we start with third place?

2:56This one goes to the Minneapolis Fed for the surprises happening in the labor market. I shall read it. A source at a Minnesota supply company said that it received 12 applications for a high-skilled driving position that it had previously struggled to fill and noted, That's a big statement for a Midwesterner, but this is a surprising snippet of data. We used to see businesses that had to offer all sorts of perks and bonuses just to get people to apply. And now businesses have more power. Speaking of the changing labor markets. The second place Beji goes to the San Francisco Fed for this anecdote.

3:38There were some reports of continued investment in automation solutions and generative artificial intelligence, Gen. AI technologies, to improve labor productivity. For example, one restaurateur reported successfully using Gen. AI software at drive-thru stations in some urban and suburban locations. Would you like fries with that, Robert? I saw a couple of videos of these AI drive-thru clerks, and I swear, Waylon, AI mostly just says, I didn't quite understand that. Could you please repeat? So can you just yell representative at the drive-thru until someone human comes to the phone? I'm pressing one repeatedly.

4:18But honestly, this is not a bad way to start AI in the job market. It's just like teenagers. Build your skills at the drive-thru. Then and only then can you take all the good paying jobs. We're doing a good job ourselves, Waylon, avoiding hot-button election topics. So let's finish it out with our first-place winner. The Beigie Award goes to... No way! My hometown Federal Reserve Bank, the Chicago Fed. Coming to the stage is David Opidal, a policy advisor and agricultural specialist for the Chicago Fed. We spoke to him on October 24th. Congratulations, David. Thank you so much. It's a real honor to be here.

4:59So when I think of Chicago, I'm so sorry I live in New York, but I think of tall buildings, hot dogs. How does the Fed need an agricultural specialist there? The five-state region around Chicago that our Federal Reserve District includes really is the heart of the Corn Belt. We have the most corn and soybean production in the United States. And so we're just a big powerhouse agriculture region. Yeah, Robert, have you ever gotten lost in a corn maze? I have no idea what you're talking about. Have you ever heard the phrase, knee high by the 4th of July? That's what we say about corn here in the Midwest.

5:34Okay, okay, I will go with this. Let's go rural today. The winning entry in the Beige Book is about a problem in the farms of the Midwest. It's not about what the farmers are growing. The corn and the soybeans are apparently doing just fine, but it's about how those products get to market around the world. I shall read the winning entry. Quote, Agricultural transportation faced several logistical disruptions, including constrained rail traffic to Mexico and barge slowdowns from low water levels on the Mississippi River. OK, here's the part where I Chicago-splain for those of you on the coasts.

6:10So you'll probably know that the Midwest is good at growing corn and soybeans. But the way we're competitive with the rest of the world is our transportation of those commodities. It's pretty cheap and efficient to get the stuff out to ports, either by train or by floating barges down the Mississippi. And right now, both of those particular systems are having their own troubles. So let's start, David, with the railroad problem, congestion. Well, we've been exporting more products to Mexico than we have in previous years. So that's kind of caused some congestion in the system and getting things across the border.

6:45So you need more cars, you need longer trains, and the system just It wasn't designed to be that accommodating of the level of exporting that's going on. And normally, a train slowdown wouldn't have been that much of a big deal, except for the other part of Chicago's Beige Book entry, the mighty Mississippi. The Mississippi. To talk about that challenge, we reached out to Mike Steenhook, executive director of the Soy Transportation Coalition. I'm in Ankeny, Iowa, which is a suburb of Des Moines, Iowa. Soybean Central. A soybean is about the size of a pea, and it has a little kind of notch on it.

7:26And even though they are small, they are starting to pile up there in the Midwest. The fall was so dry this year that the harvest was faster than normal. Now, usually the soybeans would get moved out quickly to the barges on the Mississippi. Which, to be honest, I always thought were moved like a few barges at a time, but no. Well, you can see easily 40 barges all attached together. 40 barges? Sure, yeah. All being pushed by one towboat? Correct. Particularly if you're going with the current, that makes it easier. But the same drought that speeded up the harvest has also lowered the levels of the Mississippi.

8:02You can't fully load up each barge because it would scrape the bottom. And apparently you can't push 40 barges because you'd get stuck on the corners. It's like going from a four-lane highway on the Mississippi to a two-lane road. Mike says that means it's harder to get the harvest down the river, and it costs more to do it. What normally happens is that farmers get paid less. You see, it's a world market for soybeans. If farmers in Iowa try to raise the prices, you know, to pay for the barges, then China will just buy from Brazil. And so this year, farmers are having to suck it up. Mike Steinhok says there isn't much farmers can do this year.

8:39Maybe store more of their soybeans a little longer, try to truck the soybeans to nearby farms, or even send it by rail to the West Coast and avoid the Mississippi and the Mexico border. So it's always a good day to try to diversify your supply chain. It's particularly a good day when you've got a myriad of challenges. In the long run, though, Mike says the U.S. just has to start planning better for this kind of situation. So that means dredging the river more, essentially deepening the Mississippian spots before a drought happens. Whoa. Are you talking national transportation policy, Robert? This is getting dangerously close to politics.

9:16We're supposed to be in an election-free zone. True. Let's just say congratulations then to the winner of the Beji this time, the Chicago Fed, and their ag specialist, David Opadal. David, if I were to travel to Chicago to see Whalen and we were to go feast on your agricultural bounty, what would you recommend? Well, you got to have pizza, you know, that's the Chicago style pizza, right? I feel like you picked pizza just to get under my skin as a New Yorker. This was basically a slap in the face of the great city of New York City. There's a lot of people in Chicago that like New York style, too.

9:50So I think it's a debate about, you know, which style is best and they're all good. There's no debate. Chicago is the best. No, New York City is obviously the best. It's so thin. Oh, it's crispy. No, no, no. The best Chicago pizza is the thin crust pizza, not the stuffed deep dish pizza that most people associate with Chicago. And the key with the Chicago style is the tavern cut, where you cut it into squares instead of into wedges. Look who's bringing the country together now. It's my pizza platform. This episode was produced by Andrew Carreras with engineering by Kweisi Lee. It was fact-checked by Cooper Katz McKim and edited by Patty Hirsch.

10:32Kicking Cannon is our show's editor and the indicator is a production of NPR. This message comes from The Economist. Introducing The Economist Insider, a new video offering with twice-weekly shows featuring in-depth analysis and expertise to make sense of an increasingly complex and dangerous world. More at economist.com slash insider. This message comes from Vanguard. Capturing value in the bond market is not easy. That's why Vanguard offers a suite of over 80 institutional quality bond funds, actively managed by a 200 person global team of sector specialists, analysts, and traders. They're designed for financial advisors looking to give their clients consistent results year in and year out.

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