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Propane seeing record demand from farmer needs

BanksPhotos/iStock/Getty Images propane or LPG tank
Supplies adequate, but record demand in Midwest making it difficult to get propane to region on time.

Propane suppliers are facing a supply challenge this fall due to farmers' increased need for crop drying across the Midwest, according to CHS. The issue is not a propane shortage, the National Propane Gas Assn. (NPGA) reported; rather, the challenge is getting propane to the right place at the right time.

NPGA relayed that the supply issues are caused by limits on the safe transportation of propane from supply points as well as limits on pipeline capacity.

The U.S. Department of Agriculture reported Nov. 5 that only 52% of the nation’s corn harvest was completed, 23% behind the five-year average. In addition to harvest delays, corn is also being harvested at a higher moisture content.

CHS said this year’s harvest is proceeding at a slow but constant pace, providing consistent demand for propane used in crop drying.

“The propane industry is in the middle of three key issues,” Adam DeLawyer, vice president of CHS Propane, said. “A wet spring delayed harvest, causing a demand for dryer gas across a large geography where, normally, there is a more gradual harvest from south to north. Add to that a wet crop that needs more propane to dry, and a much colder-than-normal fall means our owners and customers need home heat for homes and livestock facilities earlier than usual.”

The high demand for propane is being felt by Midwest farmers, whose propane is primarily sourced from Kansas, Texas and western Canada and transported by pipeline, rail or truck, CHS explained.

The Minnesota Propane Assn. said in an average November, propane marketers in Minnesota use 190 transport loads of propane per day for the state. This year, however, nearly 300 transports have been shipping per day.

“We have felt it on our farm, and we’ve had to be aware of the situation to not let our turkey barns run out of gas while we’re drying corn,” said Paul Kvistad, Minnesota Turkey Growers Assn. board president and a turkey grower from Wood Lake, Minn.

The Federal Motor Carrier Safety Administration has declared a regional emergency for Iowa, Kansas, Illinois, Nebraska, South Dakota, Missouri, Wisconsin and Minnesota. Several state governors have also issued executive orders to waive hours of service for the delivery of propane due to long wait times at terminals. NPGA said the propane industry is tracking rail and pipeline distribution to help move propane during peak demand periods.

“CHS Propane has been planning throughout the past year for a number of scenarios, strategically placing propane product and working closely with propane marketers,” said Dennis St. Aubin, director of marketing for CHS Propane West Region Sales & Energy Equipment. “Our planning was intended to exceed our customer needs, but demand has greatly exceeded anyone’s expectations.”

To help meet demand, the CHS Propane supply team is working closely with its suppliers and pipeline and rail terminal partners to flex the infrastructure to get propane gallons where they are needed the most. CHS Propane is also partnering with CHS Transportation to help serve customer needs. The efforts resulted in CHS Propane moving record volumes to customers and owners in late October and early November.

In addition to regular communication with a propane supplier, DeLawyer said preventing future issues will require a closer look at propane storage. “Continued expansion of retailer storage and on-farm storage will be critical to meet the farmer’s ability to harvest crops at today’s increased yields and rates,” he said.

TAGS: Business
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