Propane delivery bows under intense demand

Nov 8, 2019  | 2 min  | Ep4512

The USDA is planning to release the next tranche of MFP 2 by the end of the month or early December. Payments will help sooth some of the pain associated with the Chinese trade war.

While trade wrangling continues in Beijing and Washington, D.C., farmers are still faced with a harvest that is well behind the 5-year pace. As producers dodge one harvest roadblock after another, a new problem has appeared.

Peter Tubbs has the story. 

Matthias Schwartzkopf, Energy Manager, Mid-Iowa Coop: “A normal fall isn’t this fall on the propane side of things.”

A difficult harvest season has been compounded by a new problem - soaring demand for propane that has outstripped the capacity of the supply chain. 
Spring planting, delayed by rain, resulted in a late harvest. A cool wet fall created a wet corn crop making for billions of bushels that need to be dried with propane before storage. 
Matthias Schwartzkopf, Energy Manager, Mid-Iowa Coop: “Normally we can deliver between 200,000 to 300,000 gallons of propane in the fall. That’s a good steady amount. This fall already we are over 900,000.” 

Matthias Schwartzkopf is Fuels Manager for Mid-Iowa Cooperative in Conrad, Iowa. His five fuel drivers have been busy sourcing propane from 50-miles away and delivering it to customers. Twelve-hour waits to load at terminals have become common and deliveries have the drivers working 15-hour days. Demand is so high, State of Iowa trucking rules have been waived during the propane emergency.
While high demand and short supply has resulted in delays and short orders, there has yet to be a major increase in the price of propane. Currently, the price sits below the 2018 per gallon average. 
Some producers have brought harvest to a stop as they wait for their drying systems to be refueled, a bottle neck most hadn’t anticipated.
Corn growers looking to dry wet corn also have to accept they are a lower priority customer. Home owners and livestock operators – neither of which can wait-out fuel delays when temperatures drop – are at the top of the list. 
Deb Grooms, CEO, Iowa Propane Gas Association: “The whole upper Midwest, it’s also getting cold right now, a lot of my marketers are try to help also the homeowners, so there might be some short fills along the way to help everyone get some propane where it’s needed.” 

The only good news is that each bushel of corn that is dried brings farmers and distributers one bushel closer to ending the harvest season.
Matthias Schwartzkopf, Energy Manager, Mid-Iowa Coop: “Everyone is in the same boat. I don’t think everyone is going to be in full capacity of deliveries that they make for the rest of the fall time. So we are just going to have to, day by day as I said, it’s going to be a new plan every day, and hopefully it’s the right one.”

For Market to Market, I’m Peter Tubbs. 

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