Grain Exports

I just got back a couple of days ago from the U.S. Grains Council annual meeting in New Orleans, LA.  The Council is an organization composed of stakeholders of the export industry doing business in barley, sorghum and primarily corn.  Several hundred smart folks were there (most unpaid volunteers) doing their part to promote the export of the corn I, and so many farmers just like me, produce every year.

It is an exciting time in agricultural exports.  Currently farmers export about 2 billion bushels of corn every year -- that's about 15% of our annual production.  United States farmers produce almost 40% of the global supply of corn every year.  Our exported corn goes all over the world, but mostly to destinations in Asia.  Important trading partners include Japan, Korea and increasingly China.  There is growing talk about the prospects of increased exports to India too.  The basic idea is this -- as people in third-world countries experience increasing economic success one of the first things they spend their rising incomes on is improving their diet.  Usually this results in a rapid increase in the amount of animal protein consumed.  In other words, meat becomes more of a staple food rather than a rare treat.  It takes grain (such as corn) to feed these animals (like chicken, pork and beef) and many of these countries do not have the ability to produce this grain in sufficient quantities internally.  Hence the need to import.

This shift to the "middle class" in countries like China and India are HUGE!  That's a market with over 2 billion people!  This shift is the basic cause of much of the increase in food prices around the world -- more so than ethanol, inflation, energy prices etc.  It is the basic law of supply and demand.

While in New Orleans I also had the ability to visit the Zen-Noh Grain Exporting Terminal.  This is the largest single grain export terminal in the United States.  Typically they unload barges and trains from the interior U.S. filled with grain and then load ocean going vessels with that grain for destination primarily to Japan and SE Asia.  They can unload around 30 barges and load a 2 million bushel ship simultaneously in roughly a 24 hour period.  They move almost 400 million bushels through their facilty annually, 24 hrs./day, 364 days/year.  Below is a video of their barge unloading and logistics center.