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  • From: "TradingPostPaul" <tradingpost@riseup.net>
  • To: livingontheland@lists.ibiblio.org
  • Subject: [Livingontheland] Katrina brings windfall to big businesses
  • Date: Tue, 15 Aug 2006 21:08:13 -0600

Katrina brings windfall to big businesses
By: Alan Guebert
Peoria Journal Star 8/8/06

While American taxpayers await an accounting on the billions sent to the
Gulf Coast to clean up Katrina's devastation, the U.S. Department of
Agriculture already knows the tab for four emergency programs designed "to
further reduce stress on the grain transportation system" caused by the
storm.
The amount was $22.7 million. And, according to published data (at
http://www.fsa.usda.gov/DACO/Katrina.htm), USDA also knows where most of
the loot went.
A cool $19.7 million of the federal aid, or 87 percent, to assist grain
merchandisers and farmers along Katrina-slowed Midwestern waterways slipped
into the deep pockets of Cargill, Archer Daniels Midland and Louis Dreyfus,
three of the world's largest grain merchandisers.
The program, announced by Secretary of Agriculture Mike Johanns last Sept.
20, had four components to address the Katrina-crunched grain market. All
were tied to slowing or reversing the flow of grain along an already
backed-up, drought-pinched Mississippi River system.
The first was a "temporary incentive" - known elsewhere as cash - "to
assist immediate movement of some 140 barges of damaged corn out of New
Orleans to up-river locations." Once there, the barges would be unloaded to
then "continue up the river to load and begin moving new-crop commodities."

Under this part of the program, Cargill, the giant multi-national that
earned $2.1 billion on 2005 sales of $71.1 billion, was paid $7.2 million
to move 92 barges back upriver.
Louis Dreyfus, another $20 billion-a-year global grain player, received
$2.03 million to, as Johanns hopefully noted Sept. 20, "relieve pressure on
farmers and related businesses" by moving 28 barges back whence they came.
The second part of the Katrina program, "barge unloading of damaged
commodities," delivered a second helping of cash to Cargill - another
$960,985.92, according to the USDA.
The emergency plan also included a "freight differential" - again, cash -
"to reduce stress on the Central Gulf transportation and handling system
... to cover the costs of moving grain to other river transportation modes
and handling and locations."
ADM picked up $1.03 million in freight costs to divert shipments to other
ports. Dreyfus, which also diverted grain away from New Orleans, collected
$436,261.
Part four of the USDA plan sought to keep grain off Midwestern rivers by
paying upstream merchandisers, cooperatives and elevators to temporarily
store it - mostly on the ground - until the Mississippi system could again
absorb it.
The temporary storage approach, at least theoretically, would also keep
local grain prices from collapsing due to the river backlog.
Nineteen grain handlers, ranging from tiny Western Illinois Grain in
Colchester to massive ADM, bid 32 million bushels of grain into the
temporary storage program at a total cost of $7.85 million, or an average
24.5 cents per bushel.
The industry's lions, again, received the lion's share of the money. ADM
pocketed $4.6 million to store 16.4 million bushels; Cargill grabbed $1.3
million on 5.2 million bushels; and Japanese-owned Consolidated Grain and
Barge, now renamed CGB Enterprises, garnered $826,864 to hold 3.65 million
bushels.
That's not a bad chunk of change for what most were going to have to do
anyway.
Given the millions the Grain Gang got from the short-lived program, did any
aspect of the Katrina-inspired action actually hit its intended target,
farmers who witnessed cash grain prices slump after the hurricane slammed
the Gulf?
"The theory was right," notes Richard Sauder, general manager of Tremont
Cooperative Grain, "but it mostly put money in the pockets of big
agribusiness." (Tremont Grain received $25,000 in USDA cash to temporarily
store 200,000 bushels of corn under the program.)
"Did it help farmers directly?" Sauder continues. "No. Did it help them
indirectly? Well, it could have."
Then, after a long pause, he adds, "You can get a lot of money in
Washington by just saying 'this will help farmers.'"
True, yet it's very doubtful the program helped farmers.
It is clear, however, USDA's quickly implemented
"help-your-local-transnational-grain-company" program fattened the bottom
lines of the Big Boys.
Hey, disaster has always been a good business to be in.
ALAN GUEBERT's column appears on this page each Tuesday. His e-mail address
is agcomm@sbcglobal.net.






  • [Livingontheland] Katrina brings windfall to big businesses, TradingPostPaul, 08/15/2006

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