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Propane shortage is affecting grain elevators in eight states
 

By TIM ALEXANDER

Illinois Correspondent

SPRINGFIELD, Ill. — Illinois joined Indiana and six other states who’ve signed onto a Regional Emergency Declaration due to an extended shortage of propane, which is crucial to drying wet grain and keeping homes warm.

The Nov. 14 declaration, issued by the Federal Motor Carrier Safety Administration at the request of Illinois Governor JB Pritzker, permits the transportation of propane, natural gas and heating oil, all of which are in high demand due to delivery issues caused by early winter weather conditions and high moisture grain.

Indiana Governor Eric Holcombe, citing reports of propane shortages and long lines at terminals, signed an executive order on Nov. 11 waiving some time restrictions for truck drivers who transport fuel products. “The current demand for propane exceeds the locally available supply of propane,” the executive order states.

“Farmers are struggling to dry high moisture grain caused by wet weather and delayed harvest,” said John Sullivan, director of the Illinois Department of Agriculture, in an Illinois e-News release announcing the emergency declaration. With the announcement, Illinois joined Iowa, Kansas, Minnesota, Missouri, Nebraska, South Dakota and Wisconsin as states under disaster declaration conditions.

A predictable side effect of the propane shortages, a spike in prices, is already surfacing in Illinois, according to the Grain and Feed Association of Illinois (GFAI). “An elevator manager I spoke to this morning said he was able to get some propane, but had to pay two and a half to three times as much to get it than he did when he last purchased it in the summer,” GFAI Executive Vice President Jeff Atkisson said on Nov. 15. “I’m hearing numbers that are all across the board.”

Though he cautions it is too early in the season to say for sure, Atkisson estimates that it could cost elevator operators as much as 50 percent more in 2019 and early 2020 to dry this year’s crop than in an average year. “Especially in the northern third of the state, you’ve got grain that’s still very high moisture. It takes a lot of Btus, a lot of energy to dry down that moisture,” he said.

Total energy usage to dry the 2019 crop may fail to eclipse the amount of energy elevators expended to cook down the 2009 crop — which was another, comparable high moisture grain year— only because this year’s crop is expected to be smaller in size than the latter, Adkisson said.

Perhaps less than 25 percent of elevators in the state of Illinois operate their grain dryers using propane, according to Adkisson; the majority run ton natural gas. However, record cold temperatures in late October and early November caused many grain elevators to suspend grain drying operations until temperatures rose above 25 degrees.

Natural gas customers in certain areas in Illinois serviced by Ameren, a utility company, must pay a steep tariff, known as GDS (gas delivery service) Rate 5, for natural gas delivery on days forecast to plunge below the 25 degree threshold.

Another Illinois utility provider, Nicor, has its own demand charge rate system for delivery of natural gas during times of extreme cold temperatures. Though elevators in these companies’ territories may choose to dry grain on days when temperatures fall below 25 degrees, the practice becomes cost prohibitive. In addition, low temperatures cause dryers to work harder, further raising energy costs.

Of Bell Enterprises, Inc.’s four central Illinois grain facilities, only one operates its dryer with propane; the rest use natural gas. With four large propane tanks at its Deer Creek facility, the company was well-stocked with propane heading into winter. “We have not had a hiccup in our supply here, but I know of some elevators around us who have had issues,” said Kim Craig, Bell Enterprises grain merchandiser. “Natural gas has also been a bit of an issue at several elevators in this area, especially for Ameren customers. Fortunately, the natural gas in our other three elevators is not with that supplier. But nobody expects to be drying corn when it’s 25 degrees or less this time of the year.”

Craig estimated that Bell’s family of elevators will use “three to four times” as much fuel to dry corn this year as was used in 2018, when crops came in dry, but around 50 percent more than during a “normal” year for moisture.

In Rushville, Western Grain Marketing General Manager Mark Hobrock said that after a challenging year endcapped by propane shortages and natural gas delivery issues at his company’s elevators, he was ready to flip his calendar to 2020.

“Propane is in extremely tight supply. Contracts are not being honored as pipeline terminals are struggling to get enough product,” Hobrock reported. “So far we have stayed ahead of the game with just-in-time arrival at most facilities, but it is going to get worse before it gets better. Also, Ameren natural gas rates are cost prohibitive to run dryers, so some of our facilities have been shut down for short periods of time.”

 

Caption

 

A propane shortage is causing angst for grain elevator operators who use that fuel source.

(Photo by Tim Alexander)

 

11/19/2019