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Border Crisis Derails Supply Chains

21 Dec 2023

This article was originally posted at 8:56 a.m. CST on Thursday, Dec. 21. It was last updated with new information at 3:36 p.m. CST on Thursday, Dec. 21.

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OMAHA (DTN) -- President Joe Biden is sending Cabinet members to Mexico to talk about what more Mexico could do to help curb the dramatic spike in migrants trying to enter the U.S.

That doesn't specifically address the concerns raised by farmers and other businesses affected by the closed railroad crossings between the U.S. and Mexico that have been shut down since Sunday.

Biden and Mexican President Andres Lopez Obrador spoke early Thursday about the unprecedented migrant flows in the U.S. Biden asked Secretary of State Tony Blinken and Homeland Security Secretary Alejandro Mayorkas, along with a national security adviser, to visit Mexico in the coming days to see what more the Mexican government could do to stop the migration flow, said John Kirby, a retired rear admiral and now spokesperson for the National Security Council.

While acknowledging closed rail lines hurt the economies in both countries, there were no specific details from the two presidents' call when cross-border rail service would be reopened. "The two leaders agreed additional actions are urgently needed so that key ports of entry can be reopened across our shared border," Kirby said.

Kansas Sen. Roger Marshall and other Republican lawmakers have tried to elevate the concerns of agricultural groups over the closure of the rail crossings at El Paso and Eagle Pass -- two critical railroad crossings between the two countries. The railroads have been frozen since Sunday when U.S. Customs and Border Protection (CBP) became overwhelmed in both Texas and Arizona at international crossings and diverted staff to deal with the crisis, forcing the shutdown of bridges used by railroads such as Union Pacific.

"I think the White House underestimated the impact this would have on American agriculture," Marshall said.

U.S. commodities are not flowing south, and fresh fruits and vegetables are not flowing north as the holiday season is peaking. That's going to drive up costs while workers in the auto industry and others are going to see delays getting key parts as well. It could take 30 to 60 days to unwind the logistical challenges for businesses.

"It's impacting agriculture and it's going to impact manufacturing and it's going to impact the cost of groceries at the grocery store," Marshall said. " Not only are we not able to send wheat to Mexico, they're not able to send fruits and vegetables back to America. So that's going to drive the cost of those fruits and vegetables up. I think what's new is it's realizing how delicate our logistics system was and what a great advantage it gives American farmers and ranchers that we can so efficiently get our products to market."

Beyond the holidays, the border closure with the U.S.'s No. 1 trading partner hits the U.S. economy, which is still recovering from the supply chain crises in 2021 and 2022 that sent inflation to a high of 9.1% just 18 months ago.

Railroads, farm groups and other business organizations all are ramping up their criticism of the decision to close two Texas-Mexico railway crossings amid a new, "unprecedented," wave of illegal border crossings this week.

Kirby, speaking at a White House press briefing Thursday, said negotiations in Congress need to continue on legislation over the White House's request for $6 billion more funding for border security. Kirby said the "root causes" of migration -- political instability and crime in other countries -- also need to be addressed.

"The president believes we've got to do better with immigration," Kirby said. He's willing to talk and negotiate with members of Congress about immigration policy just as he has about border security."

While Biden wants an immigration reform bill, House Speaker Mike Johnson, R-La., wrote Biden that there are several executive actions he could take to "stem the record tide of illegal immigration." Congress is also out of session until January, so there is no immediate fix coming from lawmakers.

Union Pacific cited more than 10,000 rail cars are being held up on both sides of the border and is backing up supply chains for more than 60 trains daily. That includes agricultural commodities, foods and beverages as well as other products.

Marshall said the diversion of up to 30 customs inspectors from the railroads isn't going to solve the migrant crisis. Perhaps the National Guard could support the Border Patrol, Marshall said.

He blamed Biden for loosening restrictions on asylum and granting immigrants "parole" that allows them leave once they have been processed. While there are reports about negotiations between the White House and senators on immigration policies, Marshall said the White House has not moved at all on changes to asylum rules.

"There's been, in my opinion, no meaningful negotiations. All they've done is around the edges of the situation," Marshall said. "And meanwhile, it's just absolutely exploded."

Videos from Eagles Pass, a city of about 30,000 people, show thousands of migrants lined up waiting to be processed between a bridge full of stalled semi-trucks on side and an empty railroad bridge on the other.

Since Monday, the railroads and agricultural groups have increasingly pressed for the Department of Homeland Security, which oversees the Border Patrol, to reopen the rail lines.

The National Grain and Feed Association (NGFA) sent out an "action alert" to members late Wednesday to press their members of Congress to reach out to DHS Secretary Alejandro Mayorkas. NGFA and more than 40 agricultural groups sent Mayorkas a second letter "on behalf of the agriculture and food-input supply chain."

Rail lines are critical for grain commodities such as corn. DTN Lead Analyst Todd Hultman said, "Today's weekly export sales report showed Mexico as the top buyer of U.S. corn, wheat, soybean meal and pork in the week ended Dec. 14, before the rail lines were shut down."

The U.S. Grains Council stated Mexico is the top U.S. trading partner for U.S. corn at 16 million metric tons, distiller's dried grains with solubles (DDGS) at 2 mmt, and barley with 317,000 metric tons, in the 2022-2023 marketing year.

Looking at market impacts, the March contract for corn reached a new low on Wednesday, but corn contracts on Thursday closed 2 1/2 cents higher.

Agricultural groups aren't the only ones pushing for the opening of the Texas rail ports. A dozen major California business groups also wrote President Joe Biden and DHS leaders urging officials to "use all necessary resources to address this looming crisis, which will have ripple effects through the entire nations' supply chain." The California groups cited the impacts of disrupted supply chains during the pandemic that included "barren shelves, skyrocketing prices on goods, lack of access to fresh fruits and vegetables, and a myriad of other impacts that took months to normalize."

Union Pacific also warned the port-of-entry shutdowns would continue to impact "goods critical to the U.S. economy."

Ag coalition letter to DHS Secretary: https://www.ngfa.org/…

Also see "Railroads to CBP: Reopen International Crossings at Eagle Pass, El Paso" here: https://www.dtnpf.com/….

Chris Clayton can be reached at Chris.Clayton@dtn.com

Follow him on X, formerly known as Twitter, @ChrisClaytonDTN