5 top challenges impacting the grain industry

The North American grain elevator and processing industry is facing another challenging year in 2023. Labor shortages, technology shifts, grain transportation issues, geopolitical crises and upcoming regulations all have impacts on the current state of the industry.

Feed & Grain asked the Grain Elevator and Processing Society (GEAPS), National Grain and Feed Association (NGFA) and the U.S. Grains Council (USGC) what they felt would be some challenges the industry would be facing in the current environment. Here’s what they had to say.

1. Labor challenges intensify

The grain elevator and processing industry will continue to face unprecedented labor challenges in 2023.

“The overall market for all labor is tight for the grain industry,” said Barbara Grove, 2022-2023 GEAPS chairman of the board, Central Valley Ag, Mid America Chapter. “The issue is worsened not only because of a lack of candidates, but the candidates who are available often have little to no ag experience and require more onboarding and training than candidates from generations past.”

Jeff Jones, vice president of operations with MKC and former GEAPS board chair, agreed that the rural labor market is in critical condition.

“Labor continues to be an issue in most of rural America,” said Jones. “We struggle to find help and consistent transportation in trucking and rail services throughout the country.”

While many grain companies have now fully embraced job training and continued employee development, there remains a gap in implementing and maintaining a training culture in companies.

“Safety training should always be present, but companies need to be implementing grain quality training and career development for all levels of employees,” said Grove.

There are two items that go together: industry consolidation and workforce age, said Grove. And both will continue their pace over the next decade.

“The industry has experienced a massive amount of consolidation in the past decade, which is predicted to continue,” she said.

“The industry workforce is also top heavy in near retirement-age employees," she continued. "As workers with experience retire and consolidation either incentivizes or forces more out of the industry, the next decade will be challenged with finding and retaining quality talent.”

2. Keeping up with the technology curve

Dovetailing the labor issue is upgrading automation technology, which can help with training and recruiting a younger workforce. Many grain elevators operate with aging equipment and a limiting infrastructure, said Grove.

“Both items limit growth and efficiency,” explained Grove. “As companies look to build or replace facilities, key decisions will need to be made to simply update/upgrade the status quo operations or move into the future with more fully automated facilities.

“The challenges of future operational needs are just as important as the upfront investment demands,” she added.

3. Lingering transportation issues

Last year was turbulent when it came to grain transportation in the U.S. The grain elevator and processing industry dealt with various transportation issues including congestion at ports, drought-impacted rivers, and poor rail service.

The impact of unreliable rail service was felt throughout the agriculture industry in 2022, lowering production and increasing the cost of transporting ethanol, biodiesel, soybean oil, soybean meal, flour, animal feed, meat and other products derived from grain and feed.

Freight rail service will continue to be a primary issue in 2023. While rail service has improved since 2022, the service disruptions over the past year are still fresh in everyone’s minds.

“Too much of the cost of unreliable and unchallengeable rail service is borne by rail customers, agricultural producers and the general public,” said Mike Seyfert, president and CEO, National Grain and Feed Association (NGFA).

“The Surface Transportation Board (STB) has several proceedings underway that could improve competition between railroads and help level the playing field for agricultural shippers,” he continued. “NGFA will also continue its work with lawmakers in 2023 to advance legislation that could improve shippers’ ability to transport commodities efficiently on the rail network.”

NGFA is urging Congress and STB to take appropriate action to provide clearer rules to incentivize better rail service and prevent disruptions.

4. Export expectations

In 2023, the good news is the agriculture industry should have an increased presence in international trade negotiations now that USTR Chief Agricultural Negotiator Doug McKalip and USDA Under Secretary for Trade and Foreign Agricultural Affairs Alexis Taylor are in place.

But when it comes to 2023 export challenges, the supply chain crunch tops this list too.

Cary Sifferath, vice president, U.S. Grains Council (USGC) said the U.S. needs a functioning river system, rail service and containerized feed grain and co-product exports to be successful in 2023.

“We have seen logistic issues with all three over the past year,” said Sifferath. “All have improved, but especially the river system is not completely back to normal water levels.”

Despite these challenges, Sifferath notes the U.S. has one of the best transport systems for moving agricultural products.

“While we have had some logistical issues due to low water levels and other supply chain issues, our logistical system to move U.S. feed grains and their co-products to the export market is and will continue to be the most reliable in the world,” he said.

More broadly, challenges for agricultural exports are expected in 2023 due geopolitical conflict including Russia’s invasion of Ukraine and increasing output from Brazil.

Sifferath said strong competition from South American origin feed grains, as well as discounted Ukrainian corn that is priced to incentivize movement out of Ukraine and overcome higher freight and risk costs to move grain out of the Black Sea region will be a challenge for overseas exports. He noted the strength of the U.S. dollar has helped competing origins.

“The U.S. continues to be a reliable supplier of corn, barley, sorghum and their co-products and ethanol as well,” said Sifferath. “This continues to position the U.S. to be a supplier to the global market.”

5. Regulatory environment

There’s always something to keep an eye on when it comes to regulatory issues. In 2023, Seyfert said NGFA will be closely monitoring the U.S. Food and Drug Administration (FDA) definition of “farm” and potential Occupational Safety and Health Administration (OSHA) workplace rules.

• “Farm” definition. The FDA has indicated that it intends to initiate rulemaking to potentially modify its definition of “farm” in 2023. The rulemaking has the potential to affect various agriculture operations. FDA’s farm definition plays a key role when determining whether a given operation is subject to many of the FDA’s regulations.
• COVID-19 standard. At OSHA, the final COVID-19 standard applicable to healthcare workplaces is scheduled to be issued in early 2023. A separate proposal addressing workplace infectious disease hazards, such as COVID-19, severe acute respiratory syndrome (SARS), tuberculosis, chickenpox, shingles and measles, is not expected until May 2023. “There is concern that, considering COVID-19, OSHA will change the scope of the infectious disease standard to apply to all workplaces to prepare for future pandemics,” noted Seyfert.
• Heat Injury and Illness proposed standard. OSHA is working on developing this proposed standard before the end of President Biden’s term. The agency, however, has not yet completed the Small Business Regulatory Enforcement Fairness Act process – a mandatory first step in the rulemaking process that is required because the economic impact of the rule will be significant. “This will be the most complex rulemaking OSHA has attempted since the ergonomics standard Congress struck down in March 2001,” said Seyfert.

The next 10 years: uncertainty and sustainability

When it comes to the next decade, what will be the greatest challenge for the grain elevator and processing industry? We will all have to get used to uncertainty, said sources.

“Uncertainty is the greatest challenge for any essential industry like agriculture that depends on several unpredictable external influences, including Mother Nature, politics and international relations that influence trade,” said Seyfert.

“Greater volatility in the grain markets due to unresolved labor challenges, water resources depletion and geopolitical instability will only add to this uncertainty for the grain elevator and processing industry in the next decade.”

“Sustainability” is another issue you’ll hear a lot about.

Consumers increasing interest in the environmental impact of agricultural products has motivated investors to reward carbon reporting and retailers to set ambitious new sustainability commitments. The federal government has also proposed a climate disclosure reporting rule, which would mandate extensive greenhouse gas (GHG) emissions reporting from publicly traded companies.

In response to these trends, Seyfert said an increasing number of grain processing companies are creating sustainable agriculture programs to address supply chain GHG emissions.

Grove offered a word of caution to grain elevator and processing companies to stay on top of sustainability trends coming to the grain industry.

“There is always a tendency to work in the business rather than on the business,” she said. “For many in the grain industry, this leads to short-term thinking of some of the critical issues that will affect it.

“Whether discussing blockchain or FSMA regulation for elevators or something to come, the industry has yet to implement sustainability initiatives at large,” she added. “The impact will ultimately be a rush to catch up to meet consumer expectations.”

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Top grain producer challenges in 2023

We asked the National Association of Wheat Growers (NAWG), National Association of Corn Growers (NCGA) and the United Soybean Board (USB) to weigh in on their producers’ top concerns for 2023. They discussed Farm Bill reauthorization, rail service, and lower incomes/tighter margins and how farmers are dealing with these challenges. Click here to see their insights.

— Lisa Cleaver