Feature

Critical care

Written by Nancy Jorgensen on .

Health care coverage is a considerable concern these days—especially if you’re self-employed. Farming remains one of the nation’s most dangerous occupations, and finding the right coverage can be critical. This tale of two farmers gives different perspectives on how they handle health insurance.

When row-crop farmer Kyle Marcum of Centralia, Mo., learned his family’s annual health premium would reach $15,000 for 2017, he dropped coverage for himself, his wife, Tina, and their daughter Megan, 15.

“I’m not working my tail to the bone to make money for doctors and insurance companies,” Marcum said. “We just hope and pray nothing major happens with our health.”

Marcum is not alone. Of 330 million Americans, approximately 28 million remained uninsured in 2016, according to the U.S. Centers for Disease Control and Prevention. That compares to about 48 million who were uninsured when the Affordable Care Act (ACA), also called Obamacare, was first adopted in 2010. Initially, individuals were required to have insurance or pay a penalty, but that mandate will be repealed in 2019. The scrapping of the requirement was part of a new tax law President Trump signed last December.

Fellow Centralia farmer Randy Ridgway, on the other hand, unfortunately knows firsthand the value of having health insurance. His wife, Angie, died in 2014 after a battle with breast cancer. She had health coverage through her job as a school teacher.

“My wife’s experience showed me it’s important to have health insurance,” Ridgway said. “If we didn’t have Angie’s insurance, it would have broke us. She fought cancer for nine years, and the medical bills would have totaled $3 to $4 million without insurance.”

Ridgway, a full-time farmer, was never on his wife’s plan—he purchased his insurance separately. At first, the ACA lowered his insurance costs compared to his previous plan but kept increasing in price until it became unaffordable. When his annual policy skyrocketed to $18,000 a few years ago, he sought alternatives. He now has a private short-term plan that lowers his family’s premium to $4,428. The plan covers Ridgway and his 23-year-old son, Grant, who farms with him.

“I’m now paying $369 per month for both of us,” Ridgway said. “It’s affordable.”

The ACA remains controversial, and it continues to shape insurance markets. Here’s how it works. You can go through a broker or obtain ACA coverage online at marketplace.gov. The federal government doesn’t provide the insurance—private insurance companies such as Blue Cross Blue Shield offer the coverage. The government makes the platform and the rules that insurers must follow.

Depending on income, you may be eligible for federal subsidies or tax credits that lower costs.

“Farmers are often described as being land rich but cash poor,” said Shoshanah Inwood, a rural sociologist with Ohio State University who conducted a 2017 study of farmers and health insurance. “The ACA benefited some farmers because subsidies were based on income rather than assets like land. A lot of farmers got health insurance for the first time through the ACA.”

However, commercial farmers often generate too much income to qualify for subsidies, and without them, the insurance can be expensive. Also, the ACA requires you to predict next year’s income to determine your eligibility for a subsidy, and it’s difficult to forecast income that varies with weather and commodity prices.

“2018 might have been a good year to sign up,” Marcum said. “We’re in a disaster area due to a drought. We were already feeding hay to our cattle in August, when our pasture dried up. Our corn yield will probably drop in half over last year. And tariff threats have lowered the price of soybean futures by $2 a bushel.”  

Another problem farmers find with the ACA Marketplace is that often only one insurance provider offers coverage in rural counties. That includes Audrain County, where Marcum and Ridgway live. Long distances to health care providers can present further problems for rural residents, and doctors and hospitals are becoming more selective about plans they’ll accept.

That’s why many people, including farmers, are seeking private insurance coverage outside the ACA Marketplace. However, it’s often difficult to obtain coverage without belonging to a group. Most farmers are self-employed and don’t qualify for group coverage offered by employers.

Ridgway purchased his short-term health plan from Stan Cuba of Cuba Insurance Agency in Liberty, Mo. Cuba specializes in insurance for rural people in six states, including about 600 farmers.

“There’s a huge market for short-term health coverage in Nebraska, Iowa and Missouri,” Cuba said. “This is a great option for people who don’t qualify for ACA subsidies and are in good health.”

As Cuba explains, a federal law passed during the Obama administration allows for short-term health insurance lasting 90 days. Missouri now allows short-term insurance to renew automatically for a year. Cuba said that the Trump administration is working toward allowing coverage to extend up to a year as in Missouri. However, after the year is up, policy-holders must answer questions about their health, and if they report a problem, the company may refuse coverage.

Ridgway’s National General Accident Health policy comes with an annual deductible of $5,000, which means generally, after that level is met, insurance covers some remaining expenses.   

Not everyone loves short-term plans. Sidney Watson, a St. Louis University law professor and health care expert, expresses caution.

“I worry that we’ll see a return to what happened before the Affordable Care Act,” she told the St. Louis Post Dispatch in an Aug. 2 article. “People will buy a short-term plan thinking it offers good quality coverage, and then be on the hook for tens of thousands of dollars in medical bills when they get pregnant or sick and find out their short-term plan doesn’t cover the care they need.”

Cuba, a broker for the ACA Marketplace, offers hope for ACA improvements in 2019.

“Overall, states in the Midwest will see much lower increases than in previous years,” he said. “In Missouri, companies like Anthem Blue Cross Blue Shield and AmBetter are requesting significantly lower increases. In some cases, customers will see decreases. The market is stabilizing, and that works in favor of farmers and small business owners. There has never been a better time to explore health care options in the ACA.”

One of the benefits of the ACA, Cuba pointed out, is that coverage is guaranteed even if you have a pre-existing condition.

That’s one reason the Marcums said they took the risk of dropping their health insurance.

“I don’t know what I’ll do if I have a heart attack or if one of us gets cancer,” Marcum said. “But since the ACA can’t refuse coverage to anyone, I figure we can sign up during the year-end enrollment period if we need coverage.”

So far, going without health insurance has worked out, he said.

“When we tell doctors we don’t have health insurance, they drop the price of a visit from say $150 to $75,” Marcum said. On the other hand, he pointed out, Tina’s thyroid medication went from $45 a month to $75.

There are other options, Cuba said. Instead of insurance, some of his customers are enrolled in health care cost-sharing ministries.

“People are hearing about these Christian plans from friends and neighbors, and they’re flocking to it,” Cuba said. “Christian Medishare is huge in Missouri—I have 70 customers on it. The plans I work with pay well, and the administrators are friendly, knowledgeable and patient. I’ve heard no complaints.”

These plans are not insurance, Cuba explained. Participants don’t pay premiums—they pay a standard monthly share into a pool. For example, one of Cuba’s customers pays $560 a month in a monthly family share. Administrators provide funds to pay medical bills after they arise.

Still, some farmers delay purchasing health insurance until they turn 65, when they become eligible for federal Medicare coverage. With Medicare, you must continue to pay premiums and deductibles, but plans are generally more affordable than what is available to those under 65.  

In the health care debate, Americans disagree on solutions, and farm organizations reflect that divide.

“We hope to see America’s health care laws changed to provide more competition and bring costs down,” said Eric Bohl, director of public affairs and advocacy for the Missouri Farm Bureau. “Allowing farmers to band together and form their own insurance pools would go a long way toward sharing the risks inherent in farming. Top-down governmental control hasn’t brought down costs. We need more transparency and more options, not more restrictions and mandates.”

Missouri Farm Bureau recently began offering a member-only group health plan for small businesses, including farms, but you need at least two employees to qualify. Cuba Insurance Agency offers similar group health plans for small businesses. However, Inwood said forming farmer pools may prove difficult.

“The average age of farmers at 58.9 makes them subject to higher-cost ratings,” Inwood said. “This, along with farmers’ high risk of injury, will likely make insurance rates high in a farmer-only pool.”

No one can predict what will happen with health coverage—whether the ACA Marketplace will continue, or whether new options will arise for those who can’t find affordable solutions. Congress is considering options to include health coverage in the Farm Bill that expires at year-end 2018. Led by Texas, 20 states are launching legal challenges to the ACA.

In the meantime, Kyle Marcum said he isn’t optimistic about the future of health care for his family and fellow farmers.

“We may look at health coverage again for 2019,” he said, “but we’re waiting for the industry and the politics to settle down.”

For more information, visit the ACA Marketplace at healthcare.gov, or get Medicare info at Medicare.gov. Keep in mind that many health plans require you to make a decision by Dec. 15 for 2019 coverage.

Birds of a feather

Written by Kerri Lotven on .

On a county road, just before the town of  Loose Creek, Mo., the hills of the surrounding landscape give way to deep valleys only to rise again into another sloping arch. It’s a familiar hallmark of this region of the state.

“On the right, you’ll pass a road called Turkey Hollow Lane,” directed John Stegeman, owner of Stegeman Farms. “That takes you down into the homestead.”

Continue past the lane, and turkey houses start to come into view. John pulls a tractor into a shed across from one of the houses. He’s in the midst of readying equipment for harvest on this October afternoon.  

John bought the farm in 1999 and his son, Chris, began working with his father full time in 2015. Though they also raise row crops and cattle, turkey production is their main source of income. They just finished cleaning one of the houses—tilling the existing pine shavings used for bedding and adding new.

“Our family has been raising turkeys on this farm since probably the late ’30s or early ’40s,” John said. “When my uncles decided to retire, I thought I’d give it a try.”

John is the third generation to “give it a try.” Chris will be the fourth. In the early decades of the farm, the family raised range birds. Now, several large turkey houses dot the landscape.

“Back when my grandfather raised turkeys, they raised 300 birds a year,” John said. “That was enough. Now we raise 90,000 a year when we’re in full production. It’s what it takes now to make a living.”

John and Chris raise toms. While hens are typically raised for roasting, like the kind you might find on your Thanksgiving table, toms typically go to facilities where food items such as deli meat and frozen meals are processed and packaged.

A typical day for Chris starts around 7 a.m., while John takes care of phone calls and paperwork. John will join him shortly thereafter.

The turkeys have to be checked three times a day, seven days a week. At any given time, the Stegemans will have between 30,000 and 45,000 birds on their farm.

“We check for all the basics—mortality, water leaks and feed,” John explained. “As we walk through the barns, we also check to make sure the equipment is working.”

Like other poultry, turkeys thrive in different temperatures at different stages of their lives. The temperature is mild on this day in mid-October, brisk even, one of the first cool days of fall. A thermometer inside the building detects temperature changes, and a computer controls automatic curtains on the outside of the house, raising and lowering them to let in air for cross ventilation. When the curtains are fully closed, exhaust fans turn on, bringing in fresh air.

“There’s an optimum temperature for the turkeys, and it varies throughout their lives,” Chris said. “There’s a guideline we go by. When we get them, they are a day or less old, and they start out at 92 degrees. They will finish out at 19 weeks around 55 degrees. As the birds get older, they like to be cooler.”

Because of this, weather is one of the greatest adversaries for turkey producers, just like other farmers.

“Summertime can be pretty hard,” John said. “The heat and humidity is rough on them. Someone is here all the time in the summer. If we had a power outage or a well fail, we have to be on top of that right away. Disease can also be a challenge, but that’s something most producers have to watch for, no matter what kind of livestock you raise.”

Chris and John are independent turkey growers. In Missouri, there are six independent growers who raise birds for West Liberty Foods in West Liberty, Iowa, a meat-processing company owned by the Iowa Turkey Growers Cooperative. Five of those growers are located in Osage County. As independent producers, John said he and Chris have more control over their farm and management practices than vertically integrated operations that produce birds for a larger corporation.

“We get to choose what breed we raise, and we get to try different and new things that come on the market,” John said. “We get to work with our own nutritionist to develop our own feed. That’s probably the biggest thing about being an independent grower—we have more choice.”

The MFA feed mill in Gerald, Mo., delivers feed to the farm two to three times per week. Over the course of its life, a turkey will eat about 100 to 110 pounds of feed, John said. The Stegemans worked with their feed nutritionist to formulate the turkey ration, which starts as a crumble and transitions to a pellet as the birds grow.

“By the time a turkey is 19 weeks old, we expect him to weigh around 42 to 43 pounds,” Chris said. “That fluctuates a little bit seasonally. In the summer, they tend to weigh 1 to 2 pounds less, whereas in the winter they may weigh a little more.”

At 19 weeks, the birds are loaded onto a truck for shipment to West Liberty Foods. The facility mainly produces food items for customers to sell under their own brand names. When they reach the plant, the turkeys are extensively tested for food safety requirements.

“Everything is checked and double-checked before that bird ever goes to market,” John said. “Blood is tested two weeks before slaughter, and fat is tested seven days prior. All meat is antibiotic-
free, even if it doesn’t say it on the label, and we as farmers have done a poor job of promoting that to consumers.”

Currently, Missouri stands as the fifth-largest producer of turkeys in the U.S., behind Minnesota, North Carolina, Arkansas and Indiana. In 2017, Missouri produced 624 million pounds of turkey, according to The Poultry Federation. Nationally, turkey production has remained relatively flat since 2012, typically somewhere between 5.5 billion and 6 billion pounds, according to the USDA. However, there’s more meat being produced overall, John pointed out.

“Right now the markets are a little depressed,” he said. “There’s a lot of meat out there, whether it’s cattle, hogs or poultry. The market is saturated, but it’s showing signs of getting better.

In 2017, the U.S. exported an estimated 611 million pounds of turkey meat. That’s up from 569 million pounds in 2016, but down from 797 million pounds in 2012. However, USDA reports that domestic consumption has seen steady increases, from 5.03 billion pounds in 2012 to an estimated 5.39 billion in 2017.

Like other sectors of agriculture, the turkey industry is cyclical, John said.

“About every eight to 10 years, it seems to cycle,” he said. “We’ll have one or two bad years, then it works itself out of it and gets good again.”

And like other sectors, John and Chris have experienced a lot of changes over the last 20 years—namely in technology. Feeding and watering systems are more advanced. Temperature regulation is now computerized. Ventilation structures are better and more efficient. Even the litter is sold as fertilizer to organic farmers. There’s little room for waste.

“One of the biggest changes I’ve seen is in starting turkeys,” John said. “We used to have round brood stoves with a cardboard ring around each one. Now we have infrared ceiling heat that provides nice even heat. It cuts down on a lot of labor. That’s one of the top improvements I’ve seen in my career.”

In other ways, however, turkey production is timeless. In one of the Stegemans’ barns, 7-week-old birds form a kind of runway. They huddle together on one side of the barn and take off one by one at a full sprint toward the other side, wings flapping.

“That’s how they play,” Chris said as he watched.

In another barn, 15-week-old toms strut around fanning their feathers to make themselves appear large and boastful. And in three more weeks, the Stegemans will have new poults, beginning the cycle again.

“I’ve always had a love for this, a love for farming of all types,” Chris said. “I was by Dad’s side as soon as I could be. I wouldn’t want to do anything else.”

Chris now has two children of his own, 4-year-old daughter Cora, and a 2-year-old son, also named John. Already, they follow their dad around the farm as he did with his own father.

“If my kids want to go into farming, that’s great,” Chris said. “If they don’t, that’s okay, too, but I hope I get the chance to work with them like I’ve had the chance to with my dad.” 

In This Issue

Written by webadmin on .

River, rail & road (Cover Story)
Click to see un-printed photos
How MFA manages the mechanics of moving grain
by Kerri Lotven

Season of extremes
Record heat, widespread drought spell trouble for farmers
by Allison Jenkins

Consider these steps to ‘drought-proof’ your farm
Proactive moves can help producers prepare for future weather challenges
by Matt Hill

Supplemental solution
New MFA Performance First tubs are first to include Shield Technology
by Allison Jenkins

MFA’s stewardship spectrum
Responsible use of resources spans all aspects of agriculture
by Allison Jenkins

Feed to fuel your hunt
Working dogs need proper nutrition for peak performance
by Brandon White

Intake matters when maximizing feed efficiency
Monitoring consumption helps assure accurate nutrition, optimum production
by Dr. Jim White

Do you know your soil?
Understanding variability in your fields leads to better management decisions
by Jason Worthington, Thad Becker, D.J. Vollrath

Country Corner
Want to believe in something? Try agriculture
by Allison Jenkins

UpFront
Farmers lead the way in fighting food insecurity
MFA Project Premium Program is a win-win for livestock exhibitors
Gala upsets the apple cart

Markets
Corn: October report should estimate final crop size
Soybeans: Trade negotiations continue to cause uncertainty
Cattle: Cattle inventory is largest since 2008
Wheat: Decreased stocks support potential price strength

Recipes
Marsh Madness

Marketplace
BUY, sell, trade

Viewpoint
To manage change, lead it
by Ernie Verslues

 

Click to view magazine as printed in a flipbook.

 Click Here for mobile-only version

MFA's stewardship spectrum

Written by Allison Jenkins on .

Ask 100 different people the definition of “stewardship,” and there will probably be 100 different answers.

For MFA, however, stewardship is clearly defined in the cooperative’s core values:

“We take pride in applying business practices that respect the land, air, water and other resources. Our employees strive to protect the environment.”

Emphasizing stewardship helps to ensure that the responsible use of resources weighs in on decisions and recommendations made by MFA employees, said Matt Hill, MFA natural resources conservation specialist.

“Stewardship is a complete spectrum for MFA,” Hill said. “Putting it on paper as a core value is one thing, but it’s much more than that. The company, its employees and its customers live out stewardship every day.”

Spotlighting stewardship is appropriate for October, National Co-op Month. This year’s theme, “Co-ops see the future,” is what stewardship is all about, said MFA Chief Executive Officer Ernie Verslues.

“Stewardship is a long-term commitment to farmers and the land they farm,” Verslues said. “It’s thinking about the resources you inherited from previous generations and how you’ll manage them until it’s time for the next generation to take over. Both at our facilities and individual farms we visit, MFA has stewardship in mind. It’s big-picture thinking.”

The following examples are among the many ways stewardship is at work for MFA.

Application assurance

With today’s high-tech application equipment and highly regulated crop protection products, training sprayer and spreader operators has never been more important. And it’s a responsibility that MFA takes seriously.

“Stewardship is vital to the life of our business,” said Dave Boughton, operations supervisor at Emma Agri Services. “For us to prosper, we have to show that we are, indeed, good stewards—that we care about the product we apply, the land we apply it to and the customers we serve. They’re trying to leave their farms in as good or better shape as it was when they started farming. Our job is to see to it that we don’t do anything to damage their livelihood.”

MFA’s proactive approach to dealing with dicamba over the past couple of years is a prime example of stewardship. In 2018, MFA trained more than 1,200 applicators, chemical handlers and retail staff on regulations and application requirements for dicamba and proper use of the Roundup Ready Xtend crop system. The training focused on critical factors such as awareness of surroundings, placement of Xtend soybeans, weather conditions, boom height and best use practices.

Lessons learned from the 2017 spraying season allowed MFA to develop a better protocol, said Dr. Jason Weirich, MFA director of agronomy. A network of “sentinel plots” was established and scouted every Monday throughout the summer. MFA applicators were alerted to stop spraying when the majority of soybeans in their area reached the R1 reproductive stage, when dicamba injury can do the most harm to non-target plants.
Weirich said he considers the system to be a success.

“In 2018, we didn’t have nearly as many complaints as we had in 2017 and actually sprayed more acres of Xtend soybeans this year,” Weirich said. “We may have lost business to competitors who weren’t being as restrictive, but we didn’t want to take the risk. Based on our company’s core values, it’s important that we keep our customer-owners in mind.”

Input efficiency

Precision agronomy is another stewardship-focused service for MFA. Leading the way is MFA’s Nutri-Track program, which provides location-specific fertilizer recommendations through grid soil sampling and variable-rate fertilizer applications. This keeps growers from applying more fertilizer than can be used by the crop and keeping excess nutrients from washing into streams and rivers or leaching into groundwater.

“Nutri-Track is all about providing best recommendation we can, tailoring plant nutrients to every single acre in that field,” said Thad Becker, MFA precision agronomy manager. “We’ve been grid sampling since the mid-1990s, and it never ceases to amaze me how much variability is in our fields. Nutri-Track focuses on putting nutrients where they are needed and avoiding over-application in areas that won’t perform.”

Nutri-Track follows the 4Rs of nutrient stewardship—the right product at the right rate at the right time in the right place—and only if necessary. The same goes for MFA’s Crop-Trak program, which allows scouts to identify issues early with the crop for more efficient use of pesticides only when and where they are needed.

“I’ve been using Crop-Trak for several years now, and it’s a great help to me in managing and knowing what’s out there in the field,” said David Durham of Norborne, Mo., who farms 2,300 acres in Carroll and Ray counties. “There are years I don’t spray fungicides just from those recommendations. By making field-by-field decisions, I’m applying what I need, when I need it, rather than a scattershot program.”

Feed to succeed

When it comes to animal agriculture, stewardship means using environmentally sound practices in pasture and forage management as well as nutritionally sound feeding programs. MFA gives producers the tools, products, resources and expertise to do just that.

MFA Shield Technology fits well with a stewardship mindset. This all-natural, proprietary product helps prevent sickness and promote performance in livestock without antibiotics.

“Now that we’ve brought Shield Technology to our customers, we’re feeding about 95 percent of the hogs in our area,” said Paul Brune, manager of MFA Cooperative Association No. 2 in Washington, Mo. “One of our largest producers is getting more pigs per litter and sending an additional trailerload to market with the same number of sows but only using about 5 percent of the antibiotics they used to.”

That approach is important for today’s challenging agricultural environment in which farms are increasingly regulated, medicated feeds are being restricted and more consumers want to know what’s in their food. At the same time, global demand for meat is growing as the population continues to climb.

“In livestock production we have stepped into the technology era,” said Mike Spidle, MFA director of sales, livestock products and feed marketing. “That’s the only thing that’s going to feed people in the future. With Shield, we’re taking care of livestock and helping our farmers raise healthier animals. We’re going to have to produce more with less, and Shield is an avenue to help get us there.”

This commitment to nutritional stewardship extends to all MFA Feed Division manufacturing facilities, which are certified by the Safe Feed/Safe Food program administered by the American Feed Industry Association. The certification is only given to facilities that demonstrate best-in-class manufacturing practices that protect workers from harm and produce safe food for animals in compliance with current regulations.

“We have an obligation to produce a safe, nutritious product for farmers and consumers,” said MFA Feed Division Vice President Dr. Alan Wessler. “The Safe Feed/Safe Food certification shows that we’ve gone the extra steps to put processes in place and pay attention to detail. It helps to ensure the integrity of what leaves our feed mills and keep our workers safe while producing it.”

Conservation in action

MFA strengthened its commitment to stewardship last year by hiring Matt Hill as natural resource conservation specialist in partnership with the Missouri Department of Conservation and NRCS. In this one-of-a-kind position, Hill works with the partnering organizations and other groups to identify conservation methods and funding opportunities that will improve nutrient management, soil, water and wildlife.

The main goal, Hill explained, is to help farmers meet their stewardship goals by fostering collaboration among conservationists and their MFA counterparts.

“In both directions, there is great knowledge to be shared,” he said. “I want a wildlife biologist, for example, to feel comfortable picking up the phone and calling an MFA agronomist or location manager and vice versa. We’ve sent out contact lists of MFA staff to folks at the Fish and Wildlife Service, Quail Forever, MDC private lands conservation and so forth. Building better relationships could benefit everybody, and it certainly would benefit stewardship.”

For example, Hill is coordinating efforts to train and certify MFA employees as NRCS technical service providers. The designation will allow them to write nutrient management plans and integrated pest management plans for producers. It’s an intensive process, involving 30 hours of online training and a two-day, in-person classroom session in mid-October. To become a technical service provider, individuals must also have some combination of college degree, experience and professional certification such as being a Certified Crop Adviser.

“By the end of the year, we’ll have 30 of our agronomy employees certified as technical service providers and ready to write,” Hill said. “These plans will help farmers identify areas where they could be better stewards, and then we can work with them to find ways to mitigate those issues while keeping their operation efficient and productive.”

Stewardship naturally correlates to conservation practices on the farm, such as planting cover crops, using no-till methods, establishing wildlife buffers and putting in pollinator plots. While there is still work to be done in expanding these practices to more farms, Hill said producers and landowners should be commended for the progress they’ve made.

“We really need to give producers credit for the things they’re doing,” Hill said. “We don’t talk about contour farming or no-till or crop rotation because today those things are the norm. Twenty years ago, those were the conservation farming practices we were asking for, and producers have been doing all these things voluntarily because they know it’s the right thing to do. It’s not just about protecting the environment but also making sure their land is productive today and for future generations.” 

River, rail & road

Written by Kerri Lotven on .

 

On a stormy day in early September, Andrew Belza mans the wheelhouse of the Mary Lynn with five grain barges in tow—some of the first of the harvest season— down the Missouri River from AgriServices of Brunswick to St. Louis.

“This river is like no other out there,” Belza said. “All rivers are unique and present their own challenges, but this one changes more.”

Lightning flashes to the left as he steers the boat through a narrow bend. Belza and his crew can feasibly run nine barges up and down this river if conditions are right. Thirteen is the most they’ve ever done, but even nine barges make for a narrow channel on a river with tight s-bends and limited depth control.

Though usually the cheapest method when it comes to moving large volumes, the river is only one link in a logistics chain that must be multi-modal to get grain to export.

Managing that mechanism is no easy feat. Deciding when, how and where grain needs to go on any given day is a calculation that takes careful consideration.

“Grain marketing is nothing more than being the most efficient at transport,” said Tyler Francis, MFA grain merchandiser. “We have a unique position where we can have truck, rail or barge. There aren’t many other companies in Missouri that can do that.”

By having access to multiple modes of transportation, MFA spreads out risk. It can leverage the cost of one against another.

“Freight is just another commodity,” Mitch Dawson, MFA director of grain operations, said. “We trade freight logistics just like we trade grain. The cost of freight overall is probably the largest component that changes on an ongoing basis for us.”
Freight is subject to the same fluctuations in price governed by supply and demand, he added. Those fluctuations must be factored in on a daily basis.  

“We try to look at where the market is,” Dawson said. “We figure what we’re willing to pay minus our freight cost. Once we have that spread evaluated, we can determine the best avenue to ship grain from a certain point on the map to maximize the return to MFA and our customers.”

When farmers sell their grain to their local elevators, it will then be either sold domestically to facilities such as crush plants, feed mills and biorefineries, or it can go to export. In either case, that grain must travel by river, rail or road to the end user, whether that’s the poultry market in Arkansas, soy oil refineries in Mexico or Chinese swine feed manufacturers.

Because market prices and freight costs rise and fall with the market, there are many factors in getting grain there profitably. One shipment may change hands multiple times, and every barge company, towing company, rail company, trucking company, local elevator and farmer needs to profit.

“This is the beauty of the grain market,” Eric Williams, MFA manager of grain trading, said. “When prices rally, farmers can get a competitive price. As prices fall, they’ll decide to store their supply rather than sell. So that difference between what the cash price the farmer is getting and the relationship to the board starts to narrow. That’s where I come in. I buy it wide, and sell it narrow, which is how we can make money as a company and support our members.”

By River

Situated on the northernmost part of the Missouri River between Kansas City and St. Louis, AgriServices of Brunswick (ASB), which MFA partially owns, relies on barge transportation to move hundreds of thousands of tons of fertilizer in addition to grain.

In the late ’90s and early 2000s, however, drought conditions made the Missouri River unreliable for transport. Nearing retirement anyway, the two towing operators on the river at the time decided to get out of the business.

“At that point, we did a couple of different things,” Doug Bonderer, ASB operations manager, said. “ASB leased a boat and then had a couple of companies out of Paducah and Cincinnati crew it. We just gave them work. That kept us active on the river when nobody else was.”

About eight years ago, Bill Jackson, recently retired co-owner of ASB, took matters into his own hands and bought the Mary Lynn towboat. At first, ASB piloted the vessel and later leased it to Steve Engemann, who owns Hermann Sand and Gravel and Missouri River Towing. In 2016, Engemann purchased the Mary Lynn from Jackson.

“That was really Bill’s goal the entire time, to find someone who was dedicated to the river,” Bonderer said. “And the last several years we’ve also had great water conditions.”

Service on the Missouri River is a niche market, and there still are very few operators. However, more have entered the space slowly, said Engemann, whose family started in the gravel business in 1978.

“We’re a stakeholder on the Missouri River,” said Engemann, who serves as co-chair of the Missouri River Action Committee. “And it’s our focus to grow the business on the Missouri River.”

Inland waterways transport more than 60 percent of U.S. grain exports. One 15-barge tow can carry 787,500 bushels, the equivalent of 200 rail cars and 870 large semis. MFA began using the river again in 2014 after a 10-year hiatus due to the same factors that forced ASB to buy a boat.

There are benefits of moving grain or fertilizer by barge, said Dawson. Typically, it’s cheaper. Plus, it reduces truck congestion, uses less overall fuel and emits less carbon dioxide, according to a study by the National Waterways Foundation.

“One big advantage is you’re selling to the world out of your local area,” Engemann said. “The Missouri River is a world highway, and farmers are competing in the world market. It gives them the opportunity to ship or sell their grain globally.”

The decision to move by barge is typically an easy one to a certain degree, Williams explained. When storage is full, MFA locations near the river need to move grain in large volumes. It becomes more complicated when it’s time to calculate freight costs.

“Barge freight is very liquid,” he said. “It’s constantly trading. For instance, if there aren’t any buyers, the price reflects that almost immediately. Whereas, if no one is moving rail cars on a specific line, the price is infinitely slower to react.”

Even loads with direct routes via train may still end up on a barge because the liquidity of the market may make it cheaper and more efficient to do so, Williams added.

“Right now, barge rates are traded in St. Louis as percent of tariff,” he said. “These tariffs were published over 100 years ago and haven’t changed. So, for example, right now if you’re trading in St. Louis, the tariff is $3.99 per ton for every 100 percent. So if something is trading at 375 percent of tariff, you take 3.75 multiplied by that number. So 3.75 times $3.99 means that barge freight is going for about $15 a ton in St. Louis.”

Most barges can hold around 2,100 tons of grain. Multiply that by $15 a ton, and barges were going for $31,500 on that given day. Those 2,100 tons equate to a roughly a 12-foot draft, which corresponds to the depth of the river. Thus lies one major issue with Missouri River transport. Some years, the river is shallow.

“The Corps of Engineers is required to keep a navigable channel at 8 foot, 6 inches,” Williams said. “Six inches in a barge is a difference of 110 tons. That barge is $31,500 whether we fill it or not. That’s 110 tons we either pay dead freight on or don’t. On something like a rake barge, which fills to a 12-foot draft, that could be more like 500 or 600 tons of dead freight if water levels are low. If we load 200 barges a year, that’s 100,000 tons of dead freight. In years when the river is shallow, it can become pretty inefficient.”

And efficiency and speed are the driving forces changing the industry, Bonderer said. “Grain handlers have put a lot into their facilities, and we are all getting more grain in from farmers. It’s forced us to deal with it faster. Through that process, we also have to make it more efficient.”

Last year, partially with the help of a Missouri Department of Transportation grant, ASB improved its river facility to increase both speed and efficiency. A new loading spout, conveyors and operations room were installed. Over the last couple of years, ASB has been utilizing more winches and installed new bins next to the river for additional working storage. It took a year of careful planning to determine optimal times to complete the work.

“Yearly, we probably bring in 100-120 barges of fertilizer,” Bonderer said. “We’ll clean them out and ship out about the same number. It previously took us seven or eight hours and several employees to load a barge with grain. Now we can do it in two and a half hours with a couple of people.”

It’s an interesting perspective rolling down the river, pushing barges through hilly terrain of rural Missouri on this winding, ancient waterway that bisects the state. Belza, who began working on the Mary Lynn in 2010, has roughly 30 years of experience, including running big tows on the lower Mississippi from Cairo, Ill., to New Orleans. He said the Missouri is similar to the lower Mississippi, but on a smaller scale—free-flowing, free of any locks or dams, and free of man’s control.

“Everything is kind of in slow motion here,” Belza said. “There’s a lot of weight on there, especially with nine barges. But look at where my office is. We’ve basically got this whole river to ourselves. People pay money for this kind of view.”

By Rail

When dealing with the efficiencies of volume, rail is the next best bet to the river, which is subject to seasons and weather events and limited to a few of MFA’s facilities.

“Rail is becoming fewer and fewer shippers with 25 cars and under,” Dawson said. “Not many destinations are set up to handle those anymore. The end users have realized that to be cost-effective, the best structure is these big 100-car shuttles like we handle at Hamilton.”

Despite that trend, MFA still uses entities such as the Kansas City Southern, the Norfolk Southern, the Canadian Pacific, and the Missouri and Northern Arkansas railroads that serve more local destinations. The poultry industry in southwest Missouri, northwest Arkansas and eastern Oklahoma is one such market. Other short-run lines may service MFA’s own feed mills.

“No one year is the same as the next,” Dawson said. “There have been times when some of our facilities on the Missouri and Northern Arkansas line, which has an agreement with Union Pacific, will send wheat all the way into Mexico on these smaller trains. So, there’s a lot of different ways on a yearly basis where the cost of freight or abnormal demand may allow us to ship in smaller volumes.”

MFA owns or partially owns 15 rail facilities in total, most of which handle 25 cars or less. The lion’s share was acquired through acquisitions over time. Prior to the large, shuttle-loaders that opened over the last couple of years in Hamilton, Mo., and Central Missouri AGRIService in Marshall, Mo., the last rail facility MFA built was in Vandalia, Mo., in the early 2000s.

“At the time when these older facilities were built, 25 cars was the largest capacity you were going to use,” Dawson said. “But the market has expanded and changed to these larger shippers, and we recognized that we had to get into that game.”

By Road

Trucking is the most known form of transportation, Dawson said. “You can always put something on a truck and haul it, and in a lot of ways, it fills in the gaps. It’s how MFA is able to move grain from location to location or to nearby rail and barge facilities.”

But in some ways, Dawson admitted, whether to choose truck transportation becomes a much harder question.

“You have to consider the balance of owning your own trucks versus going out and finding private entities to haul your grain,” he said. “If you own your own fleet, it’s typically not just for grain, but also for hauling fertilizer. It doesn’t make sense solely from the grain side to take on the front-end cost exposure of buying the equipment, amortizing it over time and hiring full-time drivers.”  

Currently, MFA uses private operators for a majority of its grain trucking, explained Todd Rauch, MFA manager of dry fertilizer and grain trucking logistics.

“We have 786 contracted carriers that we can work with,” Rauch said. “Some are brokers, some are individuals, some have five or six trucks. We also have 88 hoppers owned by our locations that are used for both hauling fertilizer and grain.”

Though there are still primary seasons for moving grain and fertilizer, those seasons seem to be expanding. Typically, when an MFA location needs to move some of its grain, the staff will call MFA’s Grain Division to check rates. Dawson, Francis or Williams will give them a breakdown of freight rates based on access. If they need to move something by truck, Rauch will post those loads on a website where truck drivers can then call in and pick up those jobs. Like barges, if a truck goes to a location with fertilizer, it may be cleaned out and loaded with grain to avoid “deadheading,” or driving with an empty trailer.

“What managers need to know from us is the value of their grain, when their best sales are, and what they need to move based on their facility’s capacity,” Dawson said. “Then they can determine when and how they balance that with the demand to sell. It’s a three-way interaction. The freight department, grain department and location all share information and work together to make sure everybody stays on the same path.”

Looking ahead

While trucking is a perennial staple in MFA’s transportation lineup, rail and river routes both require investments for the future, Dawson said.

“The Hamilton shuttle facility was a long-term play in logistics,” he said. “That gave us an opportunity by rail to hit markets we typically couldn’t get. We had to plan forward for what we believe is going to be the marketplace in the future.

Whether it’s Mexico, Arizona or California, those are all markets we wanted to reach in the long term. The only way to get there is to be cost-efficient with these large shuttle facilities.”

MFA’s barge facilities may be next on the list for improvement. With some facilities nearing 40-plus years old, MFA is looking to increase efficiency in many of the same ways ASB did.

“At some point, we would like to upgrade our river facilities,” Dawson said. “We feel the river is a long-term marketplace we need to be in.”

The MFA river terminal at Glasgow Agri Services, for example, typically loads 16 barges annually, but General Manager Mike Watring believes that number can be more than doubled if improvements are made. Proposed upgrades such as electric-powered winches, new mooring dolphins and conveyor upgrades will help give the Glasgow facility a competitive advantage in price and speed, Watring said.

“We anticipate improvements here could reduce our load time by one hour to an hour and a half,” he said. “In the middle of harvest season, that will make a big difference.”

With harvest coming to a close after a drought-challenged growing season, many farmers in MFA territory are facing low prices combined with low yields and uncertainty in the export market. In light of trade disputes such as recent increased tariffs on exports to China, it becomes particularly important to know what’s happening in the worldwide logistics chain. Williams said he thinks it’s likely some U.S. beans will still make their way into China. The question is just what route they will take.

With this perfect storm of unfavorable factors, price potential and decisions to sell or store are even more important.

“It’s uncertain times like these when we have to make decisions on the fly,” Dawson said. “But grain is always logistics. Are we 100 percent right all the time? No, but we hope we’re better than 50 or 60 percent. Those are just some of the opportunities and risks that we have to take so we can profitably move grain for our customers and make more space, because the more grain we can take, the more efficient we can become at running it through our facilities.”

Magazine

  • Subscriptions
  • Advertising
  • This email address is being protected from spambots. You need JavaScript enabled to view it.

Support

  • This email address is being protected from spambots. You need JavaScript enabled to view it.
  • FAQ
  • Copyright Notice