Hurricane Katrina damaged much of the nation's grain marketing infrastructure located in theNew Orleans region including port facilities, river traffic infrastructure (buoys, moorings, channels,etc. ), and grain elevators, as well as those barges and ships in the region at the time of landfall. Agricultural traffic on the Mississippi River came to a temporary standstill. The sharp decline inbarge availability shifted transport demand to rail and truck systems that were already operating nearcapacity, thus driving alternate transport prices higher and contributing to substantial congestionwithin the Mississippi River grain transportation system centered on the Mississippi River and itstributaries -- the Missouri, Illinois, Ohio, and Arkansas Rivers ( Figure 2 ). Grain elevators withinthe Mississippi River inland waterway system have reported disruptions in train service as rail carswere being diverted to handle grain previously destined for barges according to the Kansas Grain andFeed Association. (1) Farmers' transportation options also have been hurt by rising fuel prices which have sharplyincreased the cost of moving grain by truck. Economists are reporting the shortage of rail cars andstorage space could last into 2006. (2) Figure 2. Most U.S. Inland Waterways are Centered on the MississippiRiver In a competitive market, the price that producers receive for their agricultural commoditiesis derived from the price established in major markets such as Gulf port export terminals, less thetransportation and handling costs required to move grain from the farm to those markets. Whenmarketing costs rise -- as they have in the wake of Katrina -- farm-gate prices usually fall and alongwith them so do farm and rural incomes. This is exactly what has happened following Katrina'sdamage to the inland barge-based Mississippi River system. The news media reported sharp dropsin commodity prices in interior producing regions that depend on the Mississippi River as an outletfor their surplus production. When weather services and news media forecast a second hurricane -- Rita -- approachingthe central Gulf coast, authorities shut down those transport services that were still operable or hadalready been restored. Fortunately, Hurricane Rita dissipated in intensity prior to landfall and dealtonly a glancing blow to most Gulf coast transport infrastructure. As a result, MississippiRiver-based agricultural transportation has again resumed its post-Katrina recovery; however, graintraffic flows are still well below last year's pace. Mississippi Gulf grain inspections during each ofthe first two weeks of September were 81% and 79% below levels of a year earlier. (3) Gulf vessel loading activitywas also significantly below levels of a year earlier. Agricultural producers remain concerned about the rapid resumption of barge traffic on theMississippi in advance of the peak harvest-time period, about repair of the marketing infrastructure,and about rising energy prices in part related to hurricane damage. It is still unclear how much timewill be required before barge and ship traffic resumes its normal flow. In mid-September, USDA announced that it was undertaking several activities to alleviatethe grain transport congestion. (See final section of this report, Government Response, for moredetails on USDA's response.) New Orleans is among the world's busiest ports. It is served by 6 major railroads, 50 oceancarriers, 16 barge lines, and over 75 motor carriers. (4) More than 6,000 ocean vessels annually move through NewOrleans on the Mississippi River. The port of New Orleans and its surrounding Gulf ports are theprimary outlet that links a vast barge-based inland waterway system to international markets ( Figure2 ). Every year a substantial share of the U.S. corn, soybean, and wheat crops are trucked fromfarms in interior states to grain elevators located along the Mississippi River and its major tributaries,then loaded onto barges for the trip down river to a Gulf port facility where grain shipments areaggregated before being loaded onto ocean-going vessels for the trip to foreign markets. The Portof New Orleans reportedly handles 2 billion bushels of grain each year. (5) Corn, soybeans, wheat, andrice are the primary agricultural products exported via the Mississippi River. During the 2002-2004period, nearly 64% and 67% of U.S. corn and soybean exports (by value), respectively, passedthrough Louisiana ports on their way to foreign markets. In addition, about 23% of wheat and 41%of rice exports passed through the mouth of the Mississippi during that same period ( Table 1 ). The Port of New Orleans provides a major destination for international containers, rubber,steel, plywood and coffee, and is an important link to the inward movement of fertilizers, fuel, andother vital farm inputs. The Port of New Orleans is the nation's top port for imported natural rubber. In addition, New Orleans is the nation's premier coffee-handling port, with 14 warehouses, more than5.5 million feet of storage space and six roasting facilities in a 20 mile radius. Two of the mostmodern bulk processing operations are located in New Orleans: Dupuy Storage and ForwardingCorp. (largest in the United States) and Silocaf of New Orleans, Inc. (the world's largest). (6) Table 1. Exports of Major Agricultural Commodities, U.S. Totalversus District of New Orleans, Average for 2002-2004 na = not available. Sources: U.S. Total from World Trade Atlas ; District of New Orleans data are from U.S. CensusBureau, Foreign Trade Division. When Hurricane Katrina struck the Gulf Coast region, the storm brought a halt to the flowof agricultural trade entering and exiting the United States through the Mississippi River Systemcentered on New Orleans and surrounding Mississippi-River-based Gulf ports. Flooding and poweroutages stopped operations at most of the port facilities within the affected region. Concerns for theUnited States' ability to export its surplus agricultural production were immediate. Figure 3. Status of Major Gulf Ports as of Sept. 6, 2005. In addition to affecting Mississippi River traffic and operations at the Port of New Orleans,several other important central and eastern Gulf ports -- Gulfport, Biloxi, and Pascagoula,Mississippi; Mobile, Alabama; and Pensacola and Panama City Florida -- were completely orpartially shut down due to hurricane damage ( Figure 3 ). However, a significant share of shippingactivity was redistributed to alternate western Gulf ports to facilitate the resumption of trade andeconomic activity in the region. During the first week in September, most of the 86 ships that werereportedly queued at the Mississippi River's entrance just prior to Katrina's arrival were diverted toports in Texas and elsewhere to deliver their cargoes. (7) Most export facilities did not sustain major structural damage; however, the bigger problemwas getting power restored, the channel cleared, and work crews back into the region. The principalconcerns regarding the Port of New Orleans were: first, how quickly could the channel be reopenedfor river traffic, and second, how quickly could port facilities for loading and unloading bulk grainresume operation? Within two weeks both the Mississippi River channel and the Port of NewOrleans were engaged in commercial shipping, albeit at substantially reduced levels relative to thepace of trade from a year earlier. Timeline. Following is a brief timelinesurrounding major events at the Port of New Orleans. August 29, 2005. Hurricane Katrina made landfallas a category 4 hurricane just east of New Orleans temporarily closing all transportation and shippingactivities between the Gulf of Mexico and the Mississippi River. An estimated 400 barges (out ofover 11,000 barges that ply the Mississippi River) were destroyed or damaged. Of the ten majorgrain elevators located within the New Orleans region, only one -- Myrtle Grove -- sustained anysubstantial damage. August 31, 2005. The U.S. Coast Guard re-openedthe Mississippi River to tug and barge navigation. Ocean vessels were still barred pending CoastGuard investigation of the status of channel depths and navigation aids. The U.S. Coast Guardreported that about 70% of the navigation aids (such as buoys marking the river channel) along theMississippi River were damaged or missing. (8) The river channel itself had to be surveyed to guard againstpossible shoals or other obstructions that might have been left in the hurricane's wake. In the earlyperiod following the hurricane, the U.S. Coast Guard focused its full resources on search and rescueoperations in the areas affected by the hurricane. September 4, 2005. The communications managerfor the Port of New Orleans announced that the Mississippi River was open in one direction to shipswith a draft of 35 feet during daylight hours. That same day, the Port President and CEO, GaryLaGrange announced that the Port of New Orleans' river front terminals had survived HurricaneKatrina in relatively good shape and, although slightly damaged, they would be workable onceelectrical power and manpower were available. (9) Although the channel was usable, most of the port facilities wereto be dedicated to military relief vessels through mid-September. Commercial vessels would not beallowed to return to the Port of New Orleans until electrical power and manpower werere-established. The U.S. Dept. of Transportation's Maritime Administration announced that it wasproviding several ships to the Port of New Orleans with the capacity to temporarily house 1,000people who will operate the port. September 7, 2005. Secretary of Agriculture MikeJohanns reported that substantial existing infrastructure was available on the Mississippi River inthe New Orleans area for facilitating port activities.