Port strike could impact agri sector
Consumers shouldn’t expect food shortages in the near term because of the national port strike but economists predict there will be shortages if the strike persists, according to the U.S. Department of Agriculture.
Nearly 50,000 members of the International Longshoremen’s Association went on strike Tuesday (Oct. 1) after it and the United States Maritime Alliance failed to reach a settlement by the Sept. 30 deadline.
The strike has shut down 14 ports along the East Coast and the Gulf of Mexico, key to the movement of U.S. cotton, meat and poultry exports. These commodities are important for Arkansas, which ranks third in the U.S. in both broiler and cotton production, and ranks twenty-fourth in cattle and calves, according to the Arkansas Agricultural Profile.
“Our analysis shows we should not expect significant changes to food prices or availability … we do not expect shortages anytime in the near future for most items,” the USDA reported.
Bulk shipping of products such as grains will be unaffected by this strike. Those row crop sectors typically have their own loading facilities typically operate with their own employees or with different labor unions.
“Cotton is entirely dependent on containerized shipment,” said Scott Stiles, an extension economics program associate for the University of Arkansas System Division of Agriculture.
The strike comes right in the heart of the cotton harvest in the Natural State. According to the USDA’s National Agricultural Statistics Service, only 20% of the U.S. cotton crop has been harvested.
About 86% of the U.S. cotton crop is exported.
“Eleven-point-eight million bales of the 2024 crop are projected to be exported,” Stiles said. “I would conservatively estimate that 55% of the 11.8 million bales would be shipped out of ports affected by this strike.”
Stiles said that some shipments bound for Asia can be diverted to the West Coast.
“The East Coast has largely handled cotton shipments to markets such as Turkey,” he said. “If the strike is prolonged like the last one in 1977 that lasted six weeks, will Turkey switch its cotton purchases to Brazil or West Africa?”
U.S. export sales of cotton are already off to the slowest start since 2015, Stiles said, and any “interruption in the U.S. ability to export only makes this situation worse.”
“Producers have watched market prices slide from 85-cents in February to 66-cents in August,” Stiles said. “Prices have recovered recently to the 73- to 74-cent area but have stalled as it became apparent that the port labor dispute would not be resolved by the Sept. 30 deadline.”
December cotton futures closed 52 points lower Tuesday to settle at 73.09-cents per pound.
Should the strike be prolonged, consumers could see changes. The broiler sector could be severely impacted as one in five broilers is exported.
“Approximately 20% broilers are destined for export markets,” said Jada Thompson, poultry economist for the University of Arkansas System Division of Agriculture. “With the volume of ocean-bound freight that runs through East Coast ports, the strike “could have very real consequences either in spoiled products, lost revenues, or additional, unexpected storage costs.”
James Mitchell, a livestock economist with the Division of Agriculture, said, “this could have a significant impact on beef and pork trade flows. Beef trade to Mexico, Colombia, Costa Rica, Panama, and Honduras, for example, is affected, accounting for approximately 12% of beef exports through July 2024. The Caribbean makes up 4 percent of pork exports through July 2024.”
The strike “doesn’t impact all beef and pork exports uniformly. We export a wide variety of products to many different places. And those products are all valued differently,” he said. “The dollar impact will depend on which types of products are affected, the quantities, and the value of those specific export products.”