by Katie Micik, DTN Markets Editor
By now, farmers are no strangers to labor disputes and disruption they cause in getting goods to the end user. But that doesn't mean it's any less frustrating or annoying.
A prolonged standoff between grain terminals and longshore workers in the Pacific Northwest simmered for years before it got so tense it scared off the grain inspectors. Shortly after and under political pressure, both sides reached a resolution.
Now the issue is with the large container ports on the West Coast, primarily in California. In short: The International Longshore Warehouse Union (represents workers at the ports) and the Pacific Maritime Association (represents 72 companies including terminal operators and cargo carriers) are negotiating a new contract. They've been at it for nine months without reaching a deal and have brought in a federal mediator.
The pace of shipments has slowed, goods are backing up at the ports, congestion is growing and the ramifications are being felt across the supply chain. On Monday, 80 Congressmen sent their third letter to both parties urging them to come to an agreement, but there's really nothing else Congress can do, a recent article in the Journal of Commerce (http://bit.ly/…).
More than 90 agriculture groups have also petitioned the two groups to come to an agreement in a letter of their own.
“This regrettable situation is having a severe impact on our ability to export agricultural and food products to many of our main export markets,” wrote the groups in the letter. “Inevitably, these overseas customers will look to other sources for their supply of these goods. Similar to what we encountered after ill-advised export embargoes in the past, once lost, a foreign customer can be difficult to recapture.”
A University of Missouri Extension economist warned that the slowdown could significantly affect meat exports, particularly to Japan.
“We exported about 21 percent of the pork, 10 percent of the beef and 19 percent of the chicken produced last year,” said Ron Plain, the economist. “In total, over $5 billion worth of meats went out through those ports last year. At the rate we're going, not near that amount is going to get shipped this year.”
Most of U.S. beef exports to Japan ship as the fresh, chilled variety. With the back up at the port, much of that beef will need to be frozen to keep it from spoiling, and Plain said that means a large dockage in its value. And if the U.S. can't meet the needs of Pacific Rim customers quickly enough, they may turn to other sources.
The port situation has also resulted in shortage of rail cars and refrigerated trucks, Plain said. There's also reluctance on the part of meat companies to send meat to the coast for shipping. “It is impacting the revenue that comes to packing plants, and therefore impacting what packing plants are willing to bid on livestock for slaughter.”
Plain noted the port dispute may also affect nut and cotton exports.
“Even once an agreement is reached, it will take quite some time before backlogged product can be moved through those ports and we can get back to the normal shipping time.”
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