Transportation systems that move agricultural products are often outdated and require improvements.
By Cindy Snyder
Advances in genetics and technology have made U.S. agriculture a highly efficient industry, yet last winter’s railroad crisis exposed a weakness in the system.
Mike Steenhoek, director of the Soy Transportation Coalition, a group that has lobbied for improvements to the inland waterways system, describes it this way: Agriculture is a 21st century industry using an early 20th century infrastructure.
While the railcar shortage of last winter focused attention on one aspect of the rural transportation problem, many regions lack adequate roads or bridges to get product to market. According to a federal transportation study, 20 percent of the bridges in the U.S. are structurally deficient. Other areas of the country rely on waterways with lock systems, largely built in the 1930s with an expected lifespan of 50 years, to transport agricultural goods.
“We’ve got a lot of rural infrastructure that was built with early 20th century rural America in mind,” Steenhoek explains.
Developing a rural infrastructure strategy that considers the evolution of agriculture and future trends is critical to ensure that transportation can deliver inputs to farms and get commodities to market in a timely manner.
Railroads in the Spotlight
Last winter, competition between the agricultural community and the booming oil industry in North Dakota and Montana was fierce for the scarce number of available railcars, and the problem is likely to continue this winter. (The good news is BNSF Railway plans to invest close to $20 billion in infrastructure over the next five years.)
“Railroads are like a pipe,” says Paul Bertels, vice president of production and utilization with the National Corn Growers Association. “There’s only so much you can put through that pipe.”
Rail customers are benefiting from a Surface Transportation Board (STB) requirement that railroads release weekly service bulletins informing customers about how and where they are dedicating their assets. Railcars still may not be where elevators need them to be, but at least they now have a better idea about their availability.
Grower and Director of the American Soybean Association Lance Peterson is watching closely to see how the railroads handle the October through February push. “We can’t have the problems that we ran into last year,” he says. Delays that stretched well into spring cost him 50 cents on every bushel that left his west-central Minnesota farm.
He’s expecting to pay a 16- to 20-cent per bushel premium to ship corn by rail this coming season; but if the same problems emerge as last winter, he wouldn’t be surprised to see that premium jump to $1 per bushel.
He has testified twice before the STB and supports the Surface Transportation Board Reauthorization Act that would, among other reforms, allow the agency to initiate a rate case or an unfair practice case against a railroad.
It’s Not Just Rail Delays
While long waits for shuttle trains to move corn and wheat from the western Corn Belt have generated many headlines in the past year, rivers remain the primary system for moving export-bound grain traffic. The U.S. is not the lowest-cost exporter in the world, but it has gained markets based on quality and reliability. That reliability is jeopardized if commodities are stranded inland because a component of the transportation system fails, Bertels explains.
"Of all the risk factors facing agriculture, which include markets, weather and pests, the last thing farmers should have to worry about is the infrastructure."
A lock failure above St. Louis, for example, would cut Iowa farmers off from their export markets and force that grain onto trucks or the already overburdened rail system. Loss of a key bridge could force trucks to take a longer route to a harbor, causing shipping delays.
Congress has authorized a new waterways project bill to upgrade and construct locks and dams, but appropriation of funding has been elusive. Barge operators and shippers are lobbying to increase the barge fuel tax by 6 to 9 cents per gallon to help pay for those needed projects. The tax has been 20 cents per gallon since 1995. Even though users are asking to raise their own fees, many in Congress see this as a tax increase and are unwilling to support it.
Talk to Your Congressman
“Of all the risk factors facing agriculture, which include markets, weather and pests, the last thing farmers should have to worry about is the infrastructure,” says Ryan Findlay, industry relations lead for Syngenta. “We need to have a strategy for transportation in our country.”
Growers and their business partners must discuss the need for a reliable transportation system with their elected officials—local, state and federal—and highlight when that’s not happening. The STB hearings held in 2013 demonstrate that political pressure from farmers is key to holding the transportation industry accountable.
Steenhoek says growers should lead the discussions on improving transportation. As much as he and others in agriculture would like to see more money for upgrades and maintenance, he thinks a more successful strategy is identifying how to best allocate scarce taxpayer dollars efficiently and give the greatest predictability to the system.
“Stewardship 101 tells us to take care of what we have and then try to acquire what we don’t have to provide a system that is at least predictable, reliable and serviceable,” Steenhoek says.
