A Midwest Drought Is Creating a Supply Chain Crisis on the Mississippi River

Joe Weisenthal (0:10)

Hello, and welcome to another episode of the Odd Lots Podcast. I'm Joe Weisenthal.

Tracy Alloway (0:16)

And I'm Tracy Alloway.

Joe Weisenthal (0:17)

Tracy, you know, we've covered so many different aspects of supply chains and logistics over the last couple of years. I think our first sort of supply chain episode was late 2020, when we first started noticing that the cost of shipping goods from China to the US was like, seems a little high.

Tracy Alloway (0:36)

Yeah, you're right. So, you know, the early days of the pandemic, there was all this shipping related chaos and I guess lucky or unlucky, I don't know.

I had a sort of front row seat to observe some of it in Asia because it became very, very apparent that it was becoming not only more difficult, but also more expensive to ship goods from China to the US.

Joe Weisenthal (0:58)

Right, so it was like, huh, what is going on with that? And then we looked at international shipping and we started pulling on the string and that got us to ports and that got us to trucks and that got us to everything else.

Tracy Alloway (1:07)

We pulled the thread into what, you always think there's gonna be nothing left and then you find something around the corner, right?

Joe Weisenthal (1:14)

But there's one big area that we've talked about doing for a long time that we haven't talked about.

Tracy Alloway (1:19)

Oh yes, yeah. Well, this is my point, there's always something new.

Barges.

Joe Weisenthal (1:23)

Right, so the inland waterways, rivers, the Mississippi River in particular, has always been something we wanted to talk about and talk about its significance in the US economy and how important is inland infrastructure, but we just haven't gotten around to it. However, now we actually have a very good reason to talk about it.

Tracy Alloway (1:43)

It's the barge episode.

Joe Weisenthal (1:44)

The barge episode is finally here.

Tracy Alloway (1:46)

But we do have the perfect peg, which is that at the moment, there is a massive drought in the Midwest and it is affecting water levels on the Mississippi, which is of course the most important inland waterway in the country. And I think, I was reading a Bloomberg article, it said waters in Memphis fell to negative 10.79 feet recently, which is slightly lower than the previous low of 10.7 from 1988

Joe Weisenthal (2:16)

Did you say negative, there was negative water?

Tracy Alloway (2:18)

Yeah, I'm not entirely sure how that works.

Joe Weisenthal (2:22)

It sounds bad, it sounds bad.

Tracy Alloway (2:23)

It's bad, yeah.

Joe Weisenthal (2:24)

Right, so there has been a very severe drought in the Midwest and it seems like a double whammy, right? Because on the one hand, like if you depend on the Mississippi River or any of the inland waterways and the river's tributaries to move your grains or to move your goods, that's a problem and we're gonna get to why, but also it's just bad because it's bad for growing.

Tracy Alloway (2:44)

Yeah, exactly. So if you're a farmer, you probably struggled to actually grow your harvest this year and now you're struggling to get it out to the market where you're actually selling it into. So yeah, a double whammy. And also, we're gonna be speaking a lot about grains on this episode, but there are all types of goods and resources and commodities that actually move up and down these pathways on the water.

Joe Weisenthal (3:09)

Right, so we're gonna do this episode a little bit differently. We're gonna break it up into two different sections.

But first, let's start with someone who works in the grain business and talk about how it's affecting them.

Tracy Alloway (3:20)

Let's do it.

Joe Weisenthal (3:21)

We have the perfect guest to talk about grains and the effects of the drought on the grain industry and on shipping grains. We are gonna be speaking with Ben Scholl. He is the president of Lewis B. Ostebur & Associates, which works with specialty grain companies, organic grains, non-GMO grains, et cetera, to move their goods overseas or to sell their goods, much of it destination overseas. And of course, his clients are highly dependent on the functioning of the Mississippi River and the barges they're on. So Ben, thank you so much for joining us. Ben, why don't you just sort of tell us, what do you do, what's your role within the grain ecosystem?

Ben Scholl (4:01)

I am the president of a specialty grain company called the Ostebur & Associates.

We buy specialty grains, non-GMOs and the like, and export them to Japan throughout the river system in the United States. I also come from a family farm, so I have a little bit of a farm background and we are involved in production agriculture in central Illinois in the production of specialty grains.