MOORHEAD, Minn. Agriculture exports are important to Minnesota. The U.S. Department of Agriculture ranks Minnesota fourth among states in farm exports, worth more than $6 billion in 2019.

Tobolt Seed in Moorhead, Minnesota, is a relatively small exporter, sending about 500 shipping containers of specialty soybeans to Japan every year. Those exports are about half of the company’s business. The other half is selling seed to farmers in the Midwest.

In the company’s warehouse, machines clean soybeans, removing the pods and any discolored beans to provide a high-quality, nongenetically modified crop desired by the food industry in Japan.

Earlier this year Tobolt Seed had to shut down for a couple of weeks when it could not get shipping containers and the warehouse was jammed with soybeans awaiting shipment.

"It was kind of a battle all year, it seemed like, trying to get [containers]. I was on the phone quite a lot trying to schedule to get [the soybeans] out of here,” said Brandon Ferris, shipping plant manager.

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"Usually we have them all shipped out by the end of June, and we went into the middle August this year."

It's a similar story at Fargo-based Healthy Food Ingredients, a company with processing plants in Minnesota, North Dakota, South Dakota and Nebraska. The company exports high-quality grains from Midwest farmers and also imports grains like amaranth and quinoa from overseas.

"It’s extremely difficult, we're seeing lead times like we've never seen before in my almost 10 years here,” said Chris Wiegert, chief sustainability and business development officer.

"We've got customers we're telling, ‘We'll put the stuff on the water as soon as we can’, but we're not promising product for four months."

That's a big change from the pre-pandemic model of just-in-time shipping, with quick turnaround on orders to keep production flowing smoothly.

Tobolt Seed company plant manager Brandon Ferris stands next to equipment that cleans soybeans at the Moorhead, Minnesota, production facility on Monday, Sept. 20, 2021. (Dan Gunderson / MPR News)
Tobolt Seed company plant manager Brandon Ferris stands next to equipment that cleans soybeans at the Moorhead, Minnesota, production facility on Monday, Sept. 20, 2021. (Dan Gunderson / MPR News)

Exporting air

Delays and significant shipping cost increases are making it difficult to plan, and it's not just affecting exports of crops Midwest farmers grow. The cost of importing specialty grains like quinoa is also up sharply, an impact sure to be felt in the grocery aisles. And Wiegert doesn't see a return to normal any time soon.

"Volatility in the market is the scary situation for all of us, where it would be better if we just kind of knew for the next month what it was going to cost. Every time we call somebody for pricing, it's changed anywhere from up 50% to 400%," said Wiegert.

"I'm pretty bullish for the next two years. I don't think we've seen the top yet."

So far the company is keeping its international customer base, said Wiegert, because it supplies a high-quality product and has strong relationships with customers.

But many of those customers will need to adjust to the shipping disruptions, perhaps building additional storage facilities so they can keep more grain on hand and aren’t as reliant on just-in-time deliveries.

Thousands of containers filled with consumer goods from Asia flow into U.S. markets every day.

But instead of returning filled with grain grown by U.S. farmers, more of the containers are exporting air.

Officials with the Port of Los Angeles, the largest container port in the U.S., said they shipped out a record number of empty containers in August.

International shippers are making a choice based on profits, and in the process are hurting U.S. exporters, said Eric Wenberg, executive director of the Specialty Soya and Grains Alliance, a national trade group based in Mankato, Minnesota.

Ocean-going carriers can make more money by quickly returning empty containers to China for another load of goods for American consumers.

"Look, there's no argument that businesses should chase a high fee,” said Wenberg. “But these carriers agreed through our ocean shipping act, and are obligated in terms of operating in the United States market, to give our companies access to the system."

‘There's a shock here, and that kind of causes a bottleneck here’

In the Midwest, the current shipping disruptions are compounded by location.

“Minnesota, the north-central states, the Chicago market for transport are kind of at the apogee, at the furthest point from the international system,” said Wenberg. “So when it's out of balance like this, it can sure be hard to find the equipment you need to satisfy your order.”

“This is increasing prices, contributing to inflation, and making it more difficult for the businesses operating in our neighborhoods that are trying to export,” he said.

Congress and the Biden administration should act to force international shippers to make more containers available for U.S. exports, said Wenberg.

This month, more than 70 national agricultural organizations asked the Biden administration to intervene.

The Ocean Shipping Reform Act of 2021, which was introduced in Congress last month, would set minimum service standards for international ocean carriers.

It's a complex issue and there are many factors at play, said Marc Bellemare, professor of applied economics at the University of Minnesota.

Because the international shipping system is so interdependent, something like a COVID-19 outbreak in a shipping port can have a ripple effect across the world.

"There's a shock here, and that kind of causes a bottleneck here. And then it just kind of multiplies, it becomes more and more compounded and complex," he said.

And while ag exporters deal with higher costs and delays, Bellemare said that it's important to remember their competition in other parts of the world face similar challenges.

"This is not like Minnesota producers are hit in a vacuum; this is occurring all over the world. And so the question is, who's going to be the most resilient to those supply chain disruptions?"

Supply chain disruptions the new normal?

Consumers should expect to pay more for food, perhaps for several years, while the shipping industry adjusts, said Bellemare, and they should prepare for the possibility that supply chain disruptions caused by the pandemic or extreme weather might become the new normal.

"Because with climate change, global supply chains become more and more exposed to these disruptions," said Bellemare who believes the pandemic laid bare weak points in the international supply chain.

"We are not ready for prime time,” he said. “How can we do better? How can we anticipate shocks that will be coming almost inevitably because of climate change?"

Significant infrastructure improvements are needed to create a more resilient international shipping system, he said, a process that would take political will and years of investment.