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NGFA/NAEGA Statement on Recovery from Hurricanes Katrina and Rita - Monday, Sept. 26

Texas Gulf: Preliminary reports received thus far today (Sept. 26) by the NGFA and NAEGA continue to indicate that export grain elevators located at the Texas Gulf generally escaped physical or structural damage from Hurricane Rita . . .

May 20, 2011

by Randy Gordon, vice president, communications and government relations, National Grain and Feed Association.

 

Texas Gulf:  Preliminary reports received thus far today (Sept. 26) by the NGFA and NAEGA continue to indicate that export grain elevators located at the Texas Gulf generally escaped physical or structural damage from Hurricane Rita.  Indications are that most facilities will resume full operations shortly after power is restored and personnel return to the region following the mandatory evacuation order issued for several areas prior to the advancing storm.  It is our understanding that currently, inhabitants generally are being allowed to return to each of the areas where export grain elevators are located.  The one exception is Beaumont, Texas, which was in the path of the hurricane.  In addition, it is our understanding that those returning to Galveston are being told that they do so at their own risk because of a lack of power and basic services.

 

There are seven export grain elevators located in the Texas Gulf region, with a combined storage capacity of approximately 33 million bushels.  Most of the elevators in the region had suspended operations on late on Wednesday afternoon, Sept. 21, in response to evacuation orders issued in advance of the approaching storm.  The U.S. Department of Agriculture’s Federal Grain Inspection Service, whose personnel inspect and weigh U.S. export grain, also closed its offices in the region.  Resumption of operations will depend upon the restoration of power, the lifting of mandatory evacuation orders and the availability of gasoline to enable inhabitants to return to the region.

 

The condition of rail lines and bridges used to transport most grain into the region still is being assessed.¬† Preliminary indications are that rail yards and infrastructure were not damaged.¬† But downed trees and power lines are present in sections of rail lines east and north of Houston. ¬†Rail carriers are clearing debris from tracks and placing generators at locations where electrical service has been disrupted.¬† Railroads suspended service to the region in advance of the storm.¬† Prior to that ‚Äď for the week ending Wednesday, Sept. 14 ‚Äď rail grain shipments to Texas Gulf ports had increased significantly from the prior week ‚Äď to about 3,000 cars from 2,000 cars.¬† USDA data showed that the volume of rail traffic to the region for the week ending Sept. 14 was 77 percent higher than a year ago, and up 20 percent from the three-year average.

 

A situational report follows:

 

  • Two of the export grain elevators ‚Äď with a combined storage capacity of 11.3 million bushels ‚Äď are located in Corpus Christi, Texas, which was well south and west of the main path of Hurricane Rita and experienced only high winds and tides.¬† But reports are those tides did not exceed the banks and there was no flooding.¬† The Corpus Christi ship channel is open to unrestricted navigation to 45-foot drafts.

 

  • Three of the export grain elevators ‚Äď with a combined storage capacity of 15.2 million bushels ‚Äď are in the Houston/Galveston, Texas, port region, which received heavy rains and periodic high wind gusts.¬† Early reports are that only minimal damage was sustained.¬† But there generally is insufficient electrical power and a shortage of personnel to resume full operations at these facilities.¬† The U.S. Coast Guard advises that it has received 96-hour advanced notice of arrival dispatches from 143 vessels calling at the ports of Houston and Galveston.¬† Currently, there are no delays associated with the arrival of these vessels as a result of Hurricane Rita, but whether that continues will be dependent upon the availability of power and personnel. ¬†Meanwhile, the U.S. Coast Guard reopened the Houston Ship Channel this afternoon to one-way vessel traffic with a draft limitation of 35-feet.¬† A portion of the ship channel also has been opened to 24-hour navigation to expedite commerce, and it was projected that this would enable movement of approximately 45 vessels back into the Port of Houston today.¬† Officials are hopeful that by daybreak on Sept. 27, the U.S. Army Corps of Engineers and Coast Guard will have completed the survey of the outer navigation bar and permit the port to reopen to two-way traffic to drafts of 45 feet.¬† Preliminary plans are being made to stage vessel pilots at the Galveston end of the port to be ready to move crude-oil ships into port at daybreak, if such permission is granted.¬† Vessel pilots report that many of the aids-to-navigation (such as signal buoys) in the port are missing or damaged, but that they are comfortable moving deeper ships using portable navigation systems.

 

Initial assessments are that a sixth export grain elevator at Beaumont, Texas ‚Äď which was in the path of Hurricane Rita and has a storage capacity of approximately 3.5 million bushels ‚Äď sustained little physical damage, although the office housing elevator personnel was damaged.¬† Meanwhile, the U.S. Army Corps of Engineers reports that the Sabine-Neches Waterway ‚Äď which services the Beaumont, Texas-Lake Charles, La., area ‚Äď has numerous pleasure craft, shrimp boats and a floating casino aground by the channel.¬† Five small vessels sunk between the jetties in this waterway.¬† Most aids-to-navigation are missing within the ship channel.¬† In addition, in the Galveston Intercoastal Waterway from Sabine-Neches to Galveston Bay, two partially submerged boats have been found, but they are not impeding navigation.

 

  • A seventh export elevator located at Brownsville, Texas, is on the Mexican border and was well south of the hurricane‚Äôs path.¬† This facility has a storage capacity of approximately 3 million bushels.

 

In calendar year 2004, USDA data show that 8.1 million metric tons of grain were exported from the Texas Gulf.¬† Of that quantity, the vast majority ‚Äď 7.936 million metric tons (98 percent) consisted of wheat (predominantly hard red winter wheat).

 

1.     Mississippi/Center Gulf:  The 10 export grain elevators in the New Orleans, La., region received heavy rains, but sustained no physical or structural damage.  These facilities suspended operations on or about Sept. 21 in preparation for Hurricane Rita.  But most were able to resume operations by today (Sept. 26) after the U.S. Coast Guard and the Captain of the Port of New Orleans lifted navigation restrictions that had been imposed prior to Hurricane Rita. 

 

Prior to the latest disruption, considerable progress had been made in restoring U.S. export grain elevators and related infrastructure to operation in the region following Hurricane Katrina.¬† Electrical power had been restored to all 10 facilities, although one still did not have telephone service.¬† The condition of one facility, which sustained mainly wind damage, still was being assessed.¬† The other nine facilities ‚Äď including one that had been undergoing scheduled renovation prior to the hurricane ‚Äďhad resumed operations, with most reporting 24-hour-a-day operations.¬† These facilities have a combined storage capacity of approximately 46.1 million bushels of the approximate 52.6 million bushel total capacity in the New Orleans region.¬†

 

Three floating rigs, which previously had been restored to full operation, temporarily suspended operation because of the approach of Hurricane Rita.  The loading capacity of these rigs ranges from 30,000 to 60,000 bushels each.

 

Here’s a status report on the condition of infrastructure needed to support the operation of export grain elevators and other facilities operating in the Mississippi River/Center Gulf region:

 

  • Mississippi River Navigation: ¬†The Mississippi River today was reopened to the same navigation parameters as existed prior to Hurricane Rita.¬† The river is open without restrictions (including full 47-foot drafts) except at the Southwest Pass, where a safety zone remains in place where navigation is restricted to daylight/one-direction only until aids to navigation (signal buoys) are repaired/replaced and adequate living quarters are available for vessel pilot crews. ¬†However, vessel drafts through the Southwest Pass also have been increased to 47 feet, which is more than sufficient to accommodate fully loaded Panamax-sized vessels used to transport U.S. grains and oilseeds.¬† North of the Southwest Pass safety zone, two-way, day-and-night traffic has been permitted since Sept. 11, which continues to assist the process of barge and vessel unloading and loading. ¬†In addition, at the request of the U.S. Coast Guard, a dredge vessel observed depths and the status of aids-to-navigation in the Southwest Pass between its entrance and Venice, La., and found that depths on the centerline were acceptable but most of the aids-to-navigation either were not lit or were missing.¬† The Southwest Pass is the channel used by ocean-going vessels to load and unload products, including U.S. grains and oilseeds.

In addition, the inner harbor navigation channel in New Orleans now is open to barge traffic, although tows are being advised to use extreme caution when transiting the channel.  While the channel does not handle agricultural products, it is used by service vessels to access the New Orleans region.

 

  • Securing Adequate Housing and Living Accommodations at Several Facility Locations to Support Employees, Their Families and Support Personnel:¬† There continues to be a challenge at several grain export elevators in the region to secure adequate approved housing facilities and the appropriate infrastructure (such as electricity, food and water, and wastewater services) needed to support living conditions for employees and other support personnel necessary for these facilities to operate.¬† Several companies also still are in the process of locating some of their employees, who have not been accounted for yet.¬† As noted previously, one of the contingencies for reopening the Southwest Pass to full navigation is securing adequate living quarters for a full complement of vessel pilots needed for 24-hour-a-day operations.¬†

  • Securing Needed Funds for U.S. Army Corps of Engineers:¬† The U.S. Army Corps of Engineers, which has performed admirably in restoring navigation, dredging channels, repairing levees and pumping flood waters out of the New Orleans region, has received only $400 million in additional funds for its mission area ‚Äď out of the more than $62 billion earmarked in the two post-Katrina supplemental spending bills approved thus far by Congress.¬† The shortfall currently is being absorbed through other Corps‚Äô programs, and there is concern that Corps-related activities could suffer if new funding is not approved soon.¬†

  • Other Infrastructure Needs:¬† While basic utilities, including telephone service, have been restored in most areas, high-speed Internet and communications service still is lacking at some export elevator locations.¬† Businesses like the grain export industry rely heavily on electronic data transfer for executing transactions and required export documentation.

2.¬†¬†¬†¬† The NGFA and NAEGA continue to encourage contributions to the ‚ÄúAgriculture River Recovery Fund.‚Ä̬† This is a philanthropic effort with a goal of raising $500,000 from businesses and individuals across a wide spectrum of agriculture to provide financial assistance to¬†those who work or provide services to U.S. agriculture and its grain industry, and who have been displaced and had their lives and livelihoods disrupted by Hurricane Katrina.¬† The Agriculture River Recovery Fund is designed to serve as a vehicle through which tax-deductible charitable contributions can be made to help supplement the financial resources of personnel from grain elevators and supporting service industries in the region who have suffered personal loss or injury, been displaced, and/or suffered economic loss.¬† A website has been established ‚Äď www.ARRFund.org ‚Äď where more information can be obtained.¬† In addition, a press release announcing the fund is available by clicking here.

 

3.¬†¬†¬†¬† The NGFA and NAEGA continue to commend U.S. government agencies, as well as state and local authorities, for their tireless efforts to address infrastructure challenges that are critical to restoring efficient operations at grain export elevators.¬† The two organizations also reiterate the importance of recovery of the Mississippi/Center Gulf region to the competitiveness of U.S. grain exports ‚Äď particularly corn, soybeans and soft red winter wheat ‚Äď and to the industry‚Äôs ability to serve global markets.¬† There simply is insufficient ‚Äúsurge‚ÄĚ capacity to enable significant quantities of grains and oilseeds to be repositioned to different export ports, such as the Texas Gulf, Great Lakes and Pacific Northwest.¬†¬†These alternative ports are supplied to a significant degree from different transportation, bulk grain and oilseed origination, and distribution¬†points than those that supply the Mississippi/Center Gulf.¬† Further, the cost structure, as well as the¬†storage/loading capacity and flexibility of these alternative ports are significantly different and in¬†some cases are somewhat more constrained¬†than what¬†exists¬†through¬†the Mississippi River/Center Gulf system.¬† And indications are that some of these ports, as well as rail and truck movements, already are running at or near full capacity.¬† For these reasons, the NGFA and NAEGA continue to urge that U.S. government prioritize the investment of¬†human and financial resources¬†on recovery and restoration of operations at the Mississippi/Center Gulf port.

 

4.¬†¬†¬†¬† The Mississippi/Center Gulf region typically is responsible for about 55 to 70 percent of U.S. raw grain (corn, soybean and wheat) exports ‚Äď largely a variable of vessel freight rates.¬† According to USDA data, of the approximately 54.5 million metric tons exported from U.S. ports thus far in 2005 (as of Sept. 15, the latest data available), 31.4 million metric tons ‚Äď or 58 percent ‚Äď has been exported from the Mississippi Gulf.¬† The preponderance of Mississippi River/Center Gulf exports is corn and soybeans; of this year‚Äôs total exports from that region, 89 percent (27.9 million metric tons) is corn and soybeans.¬† The breakdown, by commodity, is 18.8 million metric tons of corn; 9.1 million metric tons of soybeans; and 3.5 million metric tons of wheat.¬†

 

Export elevators in the Mississippi/Center Gulf region range in storage capacity from 2 million to nearly 8 million bushels each.  There are 10 commercially operated grain elevators in the New Orleans area, with a combined storage capacity of approximately 52.6 million bushels.  These facilities have a rated vessel-loading capacity generally ranging from 60,000 to 100,000 bushels per hour. 

 

There also are several floating rigs in the region that are registered to operate as barge-unload/vessel-loading facilities, some of which have resumed limited operations.  These rigs have no storage capacity, but operate as transloading facilities with a rated vessel-loading capacity ranging from 30,000 to 60,000 bushels per hour.

 

5.     NAEGA and the NGFA reiterate the importance to U.S. agriculture of continued perseverance in placing a priority on recovery operations of the grain export infrastructure in the Mississippi River/Center Gulf region.

 

About the NGFA and NAEGA

 

The NGFA, established in 1896, consists of 900 grain, feed, processing, exporting and other grain-related companies that operate about 5,000 facilities that handle approximately 70 percent of the U.S. grain and oilseed crop.  Members encompass all sectors of the industry, including country, terminal and export elevators; feed manufacturers; grain and oilseed processors; livestock and poultry integrators; and related industries.  The NGFA also has 35 affiliated state and regional grain and feed associations, as well as two international affiliated associations.  It is co-located and has a strategic alliance with the North American Export Grain Association (NAEGA), as well as strategic alliances with the Grain Elevator and Processing Society and Pet Food Institute.

 

NAEGA, established in 1912, is a not-for-profit trade association comprised of private and publicly owned companies and farmer-owned cooperatives involved in and providing services to the bulk grain and oilseed exporting industry.  NAEGA-member companies ship virtually all of the bulk grains and oilseeds exported each year from the United States. 

 

The NGFA and NAEGA are headquartered in Washington, D.C.  

 

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