Border rail closure a cause for concern among local farmers

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SIDNEY — U.S. Customs and Border Protection closed two railroad crossings at the southern border for four days before Christmas.

For many Illinois corn farmers, this was a wake-up call.

"Everything will correct itself at one point, but it would be a huge mess if they were shut down very long," said Sidney area farmer Sarah Hastings.

That "mess" would spread quickly; agriculture is a major driving force in Illinois.

"It seems kind of strange that what happens on the Texas/Mexico border for a brief shutdown would back up all the way to the middle of East Central Illinois, but it could affect everyone in one way or another," Hastings said. "Just about everybody would feel it, and everybody's kind of already feeling the financial pinch right now."

Illinois corn ships all over the world, but Mexico is the top export destination for the U.S. and receives most of the grain by rail.

In 2023, 40 percent of corn shipped by rail to Mexico came from Illinois farms.

The shutdowns beginning on Dec. 18 in El Paso and Eagle Pass, Texas, two of the three most significant border crossings for export, led to calls from both the rail and grain industries for immediate reopening.

CBP said the temporary shutdown was part of an effort to "to safely process migrants in response to increased levels of migrant encounters at the Southwest Border, fueled by smugglers peddling disinformation to prey on vulnerable individuals."

Collin Watters, the director of exports and logistics at IL Corn, said this drew so much attention because the North American freight network is typically so reliable.

"So when something like this happens, it's a real kind of shock to the system, and that's not a good thing in business," Watters said.

While it appears this shock was too short to make a major impact, a stop in the supply chain even as far away as the southern border can affect local farmers very quickly.

Corn doesn't go straight from the farm to a train to Mexico, of course; first, farmers sell it to local grain elevators.

Elevators typically look to the Chicago Board of Trade for the current going price for grain, then work their offer down by how much they're currently willing to buy.

"So if for some reason, corn is selling at $4.50 at the Chicago Board of Trade, but my elevator doesn't want it because they're full — they're stocked up, they don't know where to put it — they'll say, 'Our bid is is 50 cents under Chicago Board of Trade,'" Hastings said. "So now my corn that was worth $4.50 is worth $4 and then you just play that game all the way down."

'Babysitting' big bucks

If trains are stopped, elevators don't have anywhere to sell grain, and it piles up quickly.

If elevators are full, farmers don't have anywhere to sell corn and it sits in storage on their farms.

"You have to watch it, you have to move it continuously, you're putting heat to it or electricity to run fans on it and keeping it in good condition. You're babysitting a lot of money," Hastings said.

Even assuming all of that grain stays in good condition, the problem isn't over: The farmers expect to use money from each harvest to plant the next year's crop.

Usually, they've planned ahead and saved enough cash that buying one year's worth of seed won't break the bank, but then they'll need storage space for the next crop.

It would take months for storage to become a problem, but price drops can be nearly immediate because corn is shipped at volume on such a steady basis.

South of the border, a stoppage in shipments wouldn't just affect income but also animal welfare.

Steve Fourez, the marketing director for IL Corn District 6 and a Fairmount area farmer, coincidentally visited Mexico a couple of weeks before the rail shutdown.

He was there with the U.S. Grain Council and other members of the IL Corn marketing board to look at progress on the council's project to optimize grain storage in the tropical environment.

"They can't store grain for long periods of time because it goes out of condition. They want it as they can use it," Fourez said. "Once they shut (the railroads) down, it was only going to take a matter of a few weeks before they were needing to come up with some other source for the grain to feed the livestock."

Since it's harder to store corn in humid environments and shipments from the U.S. are so consistent, Mexican feed producers and livestock farmers don't store much grain.

'A silver lining'

Fourez said the U.S. Grain Council was looking to improve that storage so the feed producers would have an easier time creating quality products: The happier buyers are with American corn, the more American corn they'll buy.

They're not quite there yet, though, which has Fourez and Watters concerned that rocking the boat with events like this rail shutdown could lead customers in Mexico to look to other sources for grain.

"If there is a silver lining in all of this, maybe it's a good reminder that these supply chains are — for as robust and redundant and really powerful as they are — they're still fairly fragile. Something going wrong in the system has ripple effects that go all the way back to the farm," Watters said. "That's maybe been a good learning opportunity for a lot of folks, whether they're in Illinois or D.C., about how important this relationship is, this trade relationship."

Hastings, Watters and Fourez are all involved in IL Corn, so they likely spend more time looking at the bigger picture and thinking about things like international trade than your average farmer.

Still, Watters could attest to the fact that the rail closure got everyone's attention.

"Our farmers are absolutely incredible and very, very savvy and knowledgeable, so I think there's lots of folks watching this, and rightfully so," Watters said.

That first day of the closure, Dec. 18, IL Corn started getting phone calls and emails right away as everyone tried to figure out what exactly was going on.

Those cornfields you get tired of seeing on every long drive are supporting everything from the local economy to the well being of livestock in Mexico.

"When you start shutting the border down and not letting my product cross the border, I'm sitting there going, 'OK, where else, how else are we going to take care of what we produce and help feed the world?'" Fourez said.