Down the River: How the 2022 Mississippi River Drought Damaged Southern U.S. Agricultural Trade

Sandro Steinbach and Xiting Zhuang

In 2022, the Mississippi River basin experienced a severe drought that disrupted the barge transportation of agricultural commodities from the Midwest to U.S. ports on the Gulf of Mexico. A recent study by Steinbach & Zhuang (2023) estimated the trade destruction effects of these shipping disruptions at Louisiana ports, measured the trade recovery after the water stage returned to normal, and investigated trade diversion to other U.S. ports. Our research found that the drought led to a 3.9% reduction in agricultural exports from Louisiana ports, resulting in agricultural trade losses of $563.9 million between July 2022 and January 2023. Wheat exports were the most affected, with a considerable decrease in export volume of 350 million kilograms at the Louisiana ports. However, there was limited statistical support for adverse trade effects for soybeans and corn.

While our research found some evidence for adverse treatment dynamics at the beginning of the 2022 Mississippi River drought, there was also considerable support for strong trade recovery once the barge transportation disruptions at the Mississippi River dissolved. As a result, there was limited trade diversion for those commodities, while the dynamic treatment estimates provide evidence of trade diversion to East and West coast ports for wheat. Our study highlights the significant implications of climate-induced trade disruptions for US agriculture, especially regarding barge transportation on the Mississippi River.

Figure 1 shows that non-Louisiana Gulf ports exhibited more pronounced trade disruptions (-15.1%) than Louisiana ports (-3.9%), despite Louisiana ports accounting for over 86% of agricultural export shipped through Gulf ports. Our study also found evidence of considerable trade diversion, with positive trade effects for the East Coast (5.8%) and West Coast ports (7.1%). These estimates imply that some agricultural suppliers opted for alternative transportation modes to facilitate foreign shipments via US ports on the West and East coasts.

Panel (a): Quantity.

Panel (b): Unit Value.

Figure 1: Agricultural Trade Effects of the 2022 Mississippi River Drought.

Note. The figure shows the average post-event trade effects of the 2022 Mississippi River Drought for export volume and unit value by U.S. port region. All regressions include port-destination-good-event-year and port-destination-good-event-month fixed effects. The “Louisiana” label denotes ports within the state of Louisiana, while “Gulf” encompasses Gulf ports, excluding those in Louisiana. The “East” category includes ports in the South Atlantic and New England customs divisions, and the “West” category includes those ports from the Pacific customs divisions.

Our study highlights the urgent need to mitigate the impact of natural disasters and supply chain disruptions on US agricultural exports, especially regarding barge transportation on the Mississippi River. Chronic and prolonged hydrological droughts are predicted to increase significantly by the end of this century. While various federal and state agencies offer direct relief and recovery support for drought impacts, a more comprehensive plan may be necessary to address this potential long-term issue at the Mississippi River. It is essential to implement food policies that ensure food security and access to foreign markets. The lack of tools to deal with similar supply chain disruptions can limit the production capacity of agricultural farmers and their access to foreign markets.

While the Bipartisan Infrastructure Law has authorized up to $108 billion to support federal public transportation programs, including barge transportation on the Mississippi River, it may take time for these solutions to take effect, and the federal funding allocation for barge shipping remains unclear. It is crucial to enhance the availability and efficiency of alternative transportation options. Our study underscores the importance of adopting proactive measures to mitigate the impacts of climate-induced trade disruptions on U.S. agriculture.