Some Iowa Farmers Now Cut Off from Liquid Propane Supplies
The pain to find liquid propane is growing in states such as Iowa. The issue isn’t supply nationwide-it’s supply in the upper Midwest. One propane retailer said he is sending trucks from Iowa, down to Kansas. Even then, drivers are sitting in lines 30 trucks deep, waiting give hours to fill a single truck.
Nebraska is the latest state to make an emergency declaration to help ease propane transportation. Nebraska joined states like Iowa and Minnesota, where officials had already made a declaration, an important step in helping trucks forced to drive hundreds of miles just to try to find pipeline terminals with propane supply.
“I talked to Iowa Secretary of Agriculture Mike Naig yesterday and he told me that would include waiting in line at propane terminals,” said ProFarmer's Inputs Monitor’s Davis Michaelsen “He said some trucks are traveling as far as Kansas and could be looking at trips as far as Texas to get supply and bring back, and that’s where those hours of service waivers will really help out.”
Longer drive times mean added costs, with some propane retailers saying it's adding 30 to 50 cents per gallon of propane. The added cost will ultimately be passed on to buyers, like farmers. That's not a good sign for balance sheets, as farmers are experiencing a wetter than normal harvest hitting all at once, pinching the supply stream and now farmers’ bottom line.
“This becomes a very significant cost on a per bushel sense for producers, when they either have to pay that extra cost for the propane or they even can't get access to it,” said Seth Meyer of University of Missouri’s FAPRI. “You're talking about issues of quality of grain that could be substantial. Lots of things can go wrong when you when you try and skirt around not being able to dry your crop.”
While states like Iowa are short on supply, Meyer confirmed there is enough supply of liquid propane nationwide. The issue is the pipeline system can’t redirect product easily, making it hard to get propane from states like Texas up to Midwest.
“There is propane to be had,” said Meyer. “There's an unusually large amount of propane stocks down in the Gulf. So, what you'll have to see is you'll actually have to see trucking regulations being loosened. You have to figure out how to get that propane from the Gulf back up to the Midwest. The system isn't necessarily designed to do that.”
Some farmers are already having to halt harvest waiting on propane and drying capacity, and that issue could get worse as a colder than normal November means propane needs from not only livestock producers, but homes, could come earlier than normal, as well.
“I just heard from Northeast Iowa, and we're told that some of the propane marketers in Northeast Iowa have literally stopped hauling LP to dry corn, they know that they only have a certain allocation that they're going to receive at this year, and so they have to save that for home heating and for the livestock confinement facilities,” said Dawn Carlson, CAE is the President and Chief Executive Officer of FUELIowa.
Some producers are now debating whether to store their wet corn, take that quality risk, and wait to dry it until spring or at a time when they can get adequate propane supply at a more reasonable cost.
Sources say the Iowa Governor’s office is meeting with the Federal Energy Regulatory Commission (FERC) Thursday. A possible outcome of that meeting could be another emergency declaration, one that would force the pipeline to temporarily prioritize shipments of propane over products like butane. That move could help get propane shipments moving north in the pipeline, providing some relief.
