Transportation is an increasingly critical issue for agriculture in the United States. Are we doing enough to make sure our rails, roads and river shipping systems don't crumble? What can be done to eliminate tie-ups that slowdown and raise the cost of shipping grain?
The American Soybean Association and seven state soybean associations formed the Soy Transportation Coalition a year ago. Partners include soybean groups from Iowa, Illinois, Indiana, Nebraska, North Dakota, Ohio and South Dakota. The National Grain and Feed Association and the National Oilseed Processors are also members of STC.
The STC provides information and education on behalf of the U.S. soybean industry on transportation issues to help enhance the position and profitability of U.S. beans in the world market. This year's difficulties highlight the need for more industry cooperation to address shipping problems, says Roy Bardole, United Soybean Board transportation team leader and a central Iowa farmer.
Group tackles shipping problems
Flooding in the Midwest this year brought barge traffic to a standstill on major rivers. The U.S. Army Corps of Engineers closed many locks, including those on the Mississippi River, while waiting for water levels to fall.
Traditionally, U.S. transportation and infrastructure has given U.S. farmers a competitive advantage, but shipping is becoming a bigger obstacle to profitability for soybeans. Rail transport is of special concern. Railroad surcharges can be as high as 70-cents per car per mile. For a 110 car unit train hauling beans 1,800 miles to the Pacific Northwest it equates to $130,000 in fuel surcharges alone.
"The reality is we export 50% of what we produce and how we deliver it there overseas affects our local elevator price we get for our beans," says Bardole "Some shippers are reluctant to challenge these issues, but as farmers we must take them on."
Transportation issues are rising
It's important for the soybean industry to come together and work to resolve transportation issues and reduce the basis, he adds. While soybean prices are strong now, there is no indication basis will decrease when prices decrease, so partnerships like STC to work to resolve transportation issues.
Shipping costs are rising because railroad and waterway infrastructure isn't keeping pace with demand, says Mike Steenhoek, executive director of STC. For example, the Mississippi River's outdated lock and dam system is pushing overflow grain onto already crowded railroads. To handle the demand, railroads are requiring some customers to lease or buy their own rail cars. Such problems raise the cost of transporting crops.