Low River Levels are Creating Higher Costs for Farmers

Mississippi River levels have sunk to historic lows for the second consecutive autumn, creating headaches and high costs for farmers, elevators, and barge operators looking to export the 2023 harvest. The river is a critical venue for transporting corn and soybeans to international markets, with the majority of the nation’s export crop relying on river travel.

Inland barge rates in the United States tend to peak in October, when grain harvesting gets underway and traffic improves, though rates in 2022 and 2023 have far exceeded normal seasonality. Although river levels remain low, rates in recent weeks have fallen, reflecting lower export demand for corn and soybeans. Such dynamics interplay with longer-term historical trends: corn tonnage on the Mississippi and Illinois rivers shows general decline during the past decade, while soybean tonnage has held steady or increased. 

A temperate and dry autumn in the Southern-Central United States sent Mississippi River levels plummeting once again. When the river sinks below normal accommodating levels, river transport becomes complicated because barges are unable to operate at full capacity. As the harvest got underway and American farmers brought their crops to market this October, stories of full elevators rejecting new grain behind a barge backstop abound. Some farmers who have been able to offload their harvest have complained of elevators recouping high barge rates by offering lower prices eroding farmers’ profits. 

After a 2022 drought depressed river levels to historic lows, the Army Corp of Engineers has been reported to have spent the past few months dredging the river 24-hours a day with a 35-person crew to maintain a shippable path through the Mississippi. A shallower and narrower river, however, has proved inevitable and many barges are reported to have carried only two-thirds of normal capacity, with fewer barges moving this fall.  

Barge rates are published as a percentage, or multiplier, of local benchmark rates, which are issued in cents per ton. A barge rate of 500% applied to a local benchmark rate of 399 (399 cents per ton), for example, will functionally tariff one ton of grain by $19.95 (or $3.99 * (500/100)), or one bushel of corn by 50.67 cents. The average U.S. inland waterway system barge rate soared above 2,000% in October 2022 as rivers sank to levels unable to accommodate heavy traffic, forcing vessels to travel only partially loaded. The September 2023 spike, reaching an average regional rate of 1,176 cents per bushel on September 26, 2023, marked the second highest rate of the last 20 years.

Rates through Cairo-Memphis, which stretch from the Mississippi-Ohio river confluence in Cairo, Illinois to Memphis, Tennessee tend to exhibit among the lowest barge rates for most of the year. However, rates in this region topped the waterway system with a rate of over 2,800% on October 11, 2022. The historically low water levels in Little Egypt led to barge congestion, driving the sharp price increases. Cairo-Memphis similarly topped the September 2023 rate spike.

Rates tend to peak in late September and early October, as corn and soybeans are harvested, and exports pick up. While September 2023 rates on average exceed those of the year prior, rates in October 2023 were more normal despite persistently low water levels, a tendency potentially attributable to lower export demand. Some farmers have asserted that complicated Mississippi transport has given competing corn-and soybean-producing countries like Brazil an edge in the global market.