Port losing ADM grain to Virginia

Exports will ship from Chesapeake via Perdue terminal

North Locust Point still shut

Maryland officials are `surprised and disappointed'

February 02, 2002|By Ted Shelsby | Ted Shelsby,SUN STAFF

Archer Daniels Midland Co. said yesterday that it is shifting its grain exports from Baltimore to a terminal operated by Perdue Farms Inc. in Chesapeake, Va.

The giant grain processor revealed also that it has broken off negotiations with Maryland to repair the port of Baltimore's only grain export terminal - a facility that once accounted for nearly 20 percent of the port's exports and has been considered critical to the state's farm economy.

When the North Locust Point grain elevator was closed by storm damage in June, it marked the first time in more than a century that ships hauling grain did not call at Baltimore.

State officials expressed surprise at the turn of events and acknowledged that they aren't certain how the decision will affect the port and Central Maryland's farmers.

Only a month ago, state officials expressed confidence that they were close to reaching an agreement with ADM to repair and reopen the Baltimore grain elevator.

"The Maryland Port Administration was surprised and disappointed to learn that ADM had been in negotiations with Perdue while we were attempting to reach an agreement with them on fixing the grain pier," said Judy Scioli, a spokeswoman for the port.

Bradley H. Powers, deputy secretary of agriculture, said he was surprised by the decision to move the business to Virginia. "Frankly, we don't know what it means," he said. "We only have half the story. We don't know what ADM is going to do in Baltimore."

John Cunningham, a spokesman for ADM, said the company would like to have a presence in Baltimore and expressed hope that an agreement might eventually be reached with the state to repair the North Locust Point pier.

"That would be great," said Lynne Hoot, executive director of the Maryland Grain Producers Association, which represents the state's grain growers. She said farmers would sacrifice a sizable part of the money they receive from the sale of their soybeans if they have to truck them to Chesapeake, which is close to Norfolk, Va.

"That would cost farmers too much," said Powers. "It is not feasible to truck beans to Chesapeake, especially for farmers in Central Maryland."

John Cassidy, director of grain operations for Perdue, said the Salisbury-based poultry processing company approached ADM about using the Chesapeake terminal about a month after the closing of the Baltimore pier.

He said the move was designed to increase of the volume of grain flowing through Chesapeake. "Export elevators need volume to survive," he said. "When we acquired the terminal from Cargil Inc. ... it exported 20 million bushels of grain per year. We would like to export 40 million bushels a year, the vast majority from farms in Maryland, Virginia, Delaware, New Jersey and southeastern Pennsylvania."

He said foreign buyers want to deal only with terminals that can ship grain on a regular basis. "They don't like it when you can ship one shipload and then wait a couple of months before being able to ship another load."

Under the arrangement with Perdue, ADM is to pay the poultry company a fee for each bushel of grain shipped out of Chesapeake. The ADM grain is to be mixed with the Perdue grain and the two parties share the proceeds when payment is made.

Cassidy described the two-year business arrangement between the two companies as "a loose gentlemen's agreement" in which either side could walk away at any time.

Cunningham said ADM's arrangement with Perdue is long-term regardless of what happens in Baltimore.

"We want to have a facility in Baltimore because it will be closer to some farms growing grain," he said. "This is why we have a dozen grain elevators in Illinois instead of one or two."

According to sources close to the negotiations between the state and ADM, the port wanted ADM to pay the full $6 million cost of repairing the grain pier. It would use the approximately $800,000 a year it receives in ship docking fees to cover the expense.

Once the repairs were paid for, ADM and the state would divide the ship docking fees.

"I don't think the port put such a good deal on the table," said Hoot. "ADM said they have always received the docking fees and that was their profit margin in Baltimore."

Hoot has proposed a different plan to ADM. It would involve a $3 million bond from the state to pay for half of the repairs. ADM would cover the other half. "I think there is a lot of support for such a proposal in Annapolis from rural legislators," she said.

She made the offer to ADM last week and again on Wednesday. "I've not heard back from them."

"I'm sure our people will carefully consider any offer and will respond," Cunningham said.

Scioli said that given the turn of events, the port administration "will now look to see the best use of this deep-water property in the future."

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