Scramble for propane marks Mother Nature's latest
challenge for U.S. farmers
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[November 05, 2019] By
CHICAGO (Reuters) - Months after historic
floods ravaged the U.S. Midwest, farmers scrambling to harvest their
crops face a new headache: finding fuel to dry their soaked grains.
Normally, farmers use propane as fuel for grain dryers to reduce
moisture levels in corn crops to ready for sale or to safely store the
But the extraordinarily wet spring delayed planting, and a waterlogged
fall delayed harvesting and produced wet crops. That caused a surge in
propane demand among crop farmers, even as livestock producers are
buying to keep their barns warm and rural homeowners try to heat their
homes - all of which is straining aging infrastructure used to deliver
that fuel. And keeping people and animals warm takes precedence over
It adds to the season of woe for Midwestern farm communities, which are
contending with rising bankruptcy rates, slumping farm incomes and
lackluster exports as the U.S.-China trade war drags on.
"Everyone is trying to harvest all at the same time, and they need more
propane to keep their dryers running," said Dan Smith, owner of Smith
Propane & Lube Inc in Lake Crystal, Minnesota. "I've got two trucks from
farmers parked outside, waiting."
As of Friday, his tanks were dry. His drivers were scattered across the
Midwest, with one as far as Kansas, in search of fuel. He's not alone.
Propane suppliers in Wisconsin, Minnesota and Iowa are experiencing
increased demand from out-of-state fuel sellers, trade groups said.
Propane prices have surged by about 20% in October as sellers scramble
to find enough fuel across the Midwest to satisfy customers. For
example, propane for delivery at the Conway hub in Kansas soared to 51
cents a gallon on Monday from 37.5 cents a month ago.
Much of the U.S. corn belt relies on a fragmented supply network of
pipelines, trains and trucks to keep pace with propane demand. That
infrastructure this year has not been able to keep pace with the
unexpected spike in demand.
By this time of year, three-fourths of the corn crop has typically been
harvested, and the fuel demand would have been staggered. But only 52%
of the corn crop has been harvested as of Sunday, according to federal
data, as farmers are inundated with wet fields.
'EVERYONE IS HARVESTING WET CORN'
The longer these crops sit out in the field, or are stored wet in a
storage bin, the greater the risk of them being damaged and facing steep
discounts from buyers.
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The contents of grain silos which burst from flood damage are shown
in Fremont County Iowa, U.S., March 29, 2019. REUTERS/Tom Polansek/File
"Because the corn is wetter, we have to dry it all night to try to keep up,"
said Shane Goplin, 45, who farms 1,700 acres of corn in Trempealeau County,
Wisconsin. He has been sleeping inside a shed next to his corn dryer to keep an
eye on the machine and make sure not a drop of fuel is wasted.
"The problem is everyone is harvesting wet corn," he said.
The supply crunch prompted the governors of Iowa, Minnesota, North Dakota and
Wisconsin in recent days to sign executive orders temporarily lifting
regulations restricting what hours commercial drivers can transport propane,
gasoline and diesel fuel to retail suppliers, to try to get the fuel to farmers
and farm cooperatives as fast as possible.
The unexpectedly high demand resulted in two propane terminals in Iowa on
ONEOK's <OKE.N> North System to have temporary inventory outages recently,
company spokesman Brad Borror said in a statement. The outages lasted less than
24 hours, Borror said, and the company "is working diligently to timely deliver
propane to the region."
As of last week, overall U.S. propane inventories were 99.8 million barrels, 20%
more than at this time last year. But most of that growth is in the U.S. Gulf
In the Midwest, stocks are 3.3% lower than last year, according to U.S. Energy
Department figures, and pipeline infrastructure is not robust enough to get
those barrels to the corn belt quickly enough.
Deb Grooms, chief executive of the Iowa Propane Gas Association, said supply is
not the problem. It is demand and existing infrastructure.
"We are now in a world where the pipeline, which hasn't been updated, was fine
in the 1960s," Grooms said. "The system hasn't kept up. We're seeing a perfect
(Reporting By P.J. Huffstutter in Chicago; additional reporting by Jessica
Resnick Ault in New York; Editing by Bill Berkrot)
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