Derailed supply chain: Food prices set to soar once more as railroad strike looms

09/15/2022 / By Mary Villareal

U.S. food sectors are expected to see more problems as grocery prices are bound to skyrocket once more if railroad workers go on strike, with stores limiting U.S. grain exports to countries facing famine.

Around 115,000 freight rail workers could walk out if they cannot reach a new contract with railroads, which can lead to the shutdown of the national rail network that transports 20 percent of all grain shipments.

Unions say they want to avert a strike, and Congress has the power to block it. However, the U.S. food sector is already rattled at the prospect as the harvest season nears its peak.

Lee Sanders, senior vice president of government relations and public affairs at the American Bakers Association, said even a short-lived interruption would create a “devastating ripple effect” on the fragile supply chains, adding that “rail-dependent facilities would be unable to receive materials and ingredients, and millions of Americans a day would be unable to receive the baked goods they rely on to feed themselves, their families and communities.”

A railroad shutdown in mid-September would quickly overwhelm grain storage facilities, which could leave farmers with few options to store their crops and boost their chances of spoilage. (Related: Farm worker protections updated for the first time in two decades: New rules establish age limits, improved training to reduce pesticide exposure.)

Grain processors would shut down, which could lead to the rising prices of bread and other common items. Farmers, on the other hand, will be saddled with huge crop quantities and lower commodity prices.

Max Fisher, chief economist at the National Grain and Feed Association, remarked that the issue is “kind of a double whammy,” when they are hit both at the beginning and the end of the supply chain.

Freight railroads also carry around half of the fertilizer, and farmers can’t afford delays. If they don’t receive the fertilizer as scheduled, it could result in lower crop yields, higher food prices and more inflation for consumers.

Agricultural groups blame the soaring food costs on existing railroad disruptions that hit Americans particularly hard as grocery prices rose 13.1 percent over the last year ending in July. That was the largest annual increase in more than four decades.

What makes the problem even worse is that there is typically no backup plan for crops that are transported by rail, especially with the trucking industry already struggling to keep pace with demand. This is the same for coal, crude oil, steel, lumber, car parts and other items that are frequently loaded onto freight.

If railroad works stop, it could cost the U.S. economy more than $2 million per day as shipping containers stack up at ports, as per estimates from the Association of American Railroads.

Global food security on the line

Roughly one-third of the U.S. grain exports travel by rail, and work stoppage could cut down on the nation’s ability to ship food to foreign nations, including East Africa and the Middle East.

The American Farm Bureau Federation and other food coalitions and agricultural groups urged lawmakers to block the potential freight rail strike, warning of devastating consequences for global food security, putting in writing to top lawmakers on transportation committees that Congress “must be willing to act to ensure our farmers and ranchers can continue to help feed the world.”

U.S. rail workers could legally strike as soon as Friday, September 16, after the White House-appointed Presidential Emergency Board (PEB) released recommendations last month meant to bring railroads and unions closer to a deal.

Several unions have already reached tentative agreements with railroads on a new contract based on the PEB recommendation, which calls for 24 percent raises over five years and back pay. However, it did not address workers’ concerns about the grueling hours and their limited time off.

Two of the largest unions, where the bulk of rail workers belong, are yet to strike a deal. A recent online survey from grassroots group Railroad Workers United has found that more than nine in 10 railroad workers would vote to reject the PEB recommendations and go on strike.

If workers vote for a strike, Congress would likely intervene to block it and vote to fast-track a new contract.

Visit FoodCollapse.com to learn more about how the railroad workers’ strike could impact global food supply.

Watch the video below to know how supply-driven inflation can affect the U.S. economy.

This video is from The Red Express channel on Brighteon.com.