Pending Railroad Strike Could Cause Food-Supply Chaos In America

Railroad Strike

A railroad strike could affect the country’s supply of food, driving up grocery store prices and limiting U.S. grain exports to famine-stricken countries.

Unless railroads reach a new contract next week, 115,000 freight rail workers may walk out, potentially shutting down the rail network that transports 20 percent of all grain.

In the middle of peak harvest season, the U.S. food sector is rattled by the prospect of a national railroad shutdown, despite unions’ desire to avoid a strike.

According to Lee Sanders, senior vice president of government relations and public affairs at the American Bakers Association, even a short-term interruption “would have devastating effects” on the country’s supply chains.

Materials and ingredients would not be able to reach facilities that rely on rail, and millions of Americans would not be able to receive the baked goods they need for themselves, their families, and communities,” she said.

The railroad shut down in mid-September would quickly overburden grain storage facilities, leaving farmers with few options for storing their crops and increasing the risk of spoilage. There would be a lot of grain processors closing down, which would raise the price of bread and other items, while farmers would have to deal with huge crop quantities and low commodity prices.

Max Fisher, chief economist at the National Grain and Feed Association, said it’s a double whammy when you hit both ends of the supply chain.

Approximately half of fertilizer is also transported by freight railroads, and farmers cannot afford delays, according to a letter to congressional leaders on Wednesday.

As a result of farmers not receiving fertilizer, crop yields are lower, food prices are higher, and consumer inflation is higher, said Corey Rosenbusch, the group’s CEO.

American families have been particularly affected by rising food prices — which agricultural groups blame partly on existing railroad disruptions. According to Labor Department data, grocery prices rose 13.1 percent over the last year ending in July, the largest increase in over four decades.

Crops that are transported by rail often don’t have a backup plan, especially when trucking is already struggling to keep up with demand. A similar situation exists for coal, crude oil, steel, lumber, and car parts.

Approximately $2 billion would be lost every day if the railroads stopped operating across the country, according to estimates from the American Railroad Association.

The stoppage would also impede America’s ability to ship food to foreign countries, especially to those in East Africa and the Middle East that face famine following Russia’s invasion of Ukraine.

A coalition of food and agricultural groups urged lawmakers on Thursday to prevent a freight rail strike, warning that it would have “devastating consequences” for global food security.

In a letter to the top lawmakers on transportation committees, the groups wrote that Congress must act in order to make sure our farmers and ranchers can continue to feed the world.

Food insecurity has increased from 145 million to 345 million since 2019, and 50 million people are on the verge of famine in 45 countries, according to the United Nations.

At the start of the invasion, Russia cut off Ukraine’s access to the Black Sea, cutting off nations that depend on Ukraine for grain shipments.

Russian President Vladimir Putin criticized the agreement on Wednesday, prompting fears that he may cancel it completely. The warring countries signed an agreement in July to open up Black Sea shipments.

A deal between unions and railroads could be reached as early as Sept. 16 following recommendations from the Presidential Emergency Board (PEB) appointed by the White House.

A tentative contract reached by five unions with railroads calls for 24 percent raises over five years and back pay, but does not address the concerns of workers about grueling hours and limited vacation time.

Over nine out of ten railroad workers would vote to reject the PEB recommendations and go on strike, according to an online survey conducted by Railway Workers United.

It is likely that Congress would intervene and block the strike. Then they could vote to fast-track a new contract. Railroads, retailers, growers, and other industries are urging legislators to simply implement the PEB’s terms.

Despite this, some business groups are concerned about a slow congressional response to a rail walkout, either due to lawmakers’ inexperience or political games ahead of the midterm elections.

In an effort to avoid more economic disruption before November, the Biden administration is pushing railroads and unions to reach an agreement before the issue goes to Congress. Before the National Mediation Board, Labor Secretary Marty Walsh participated in a negotiation session Wednesday.

In an email, a White House official said, “We are confident both sides will make good faith efforts to reach a mutually acceptable settlement.”

For more ont this story, please consider these sources:

  1. How a railroad strike could send food prices soaring
  2. Unions blast rail move to delay shipments before deadline  msnNOW
  3. US Freight Railroads Prepare for Potential Strike Disruption  Newsmax
  4. Rail-Strike Deadline Carries Economic and Political Risks for Biden  Bloomberg
  5. Trucking industry calls on Congress to settle rail labor dispute  TRAINS Magazine
John Nightbridge is a veteran reporter, researcher, and economic policy major from UCLA. Passionate about world issues and potential ways to solve them is a significant focus of his work. Writing freelance and reading the news are John's passions at work. Outside of work, it's all about sky diving, surfing, and stock market modeling.