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Soybean producers rely on export marketBy Jennifer Bremer
More than half of the U.S. soybean crop is exported to other countries, but in order for soy to continue to be the No. 1 U.S. agriculture export, the transportation infrastructure must have continued improvements. The Soy Transportation Coalition was organized by Midwest state soybean boards to focus on the growing realization among farmers that a quality transportation system is needed to get their products to the consumers. Mike Steenhoek, executive director of the Coalition, said their effort is to improve the rural roads, highways, railways and ports and to let legislators know that transportation is important for agriculture. "We know in agriculture we will continue to have new uses, markets and innovation, but we also need to know that we will have a good transportation infrastructure," he said. "Farmers need to speak up for their needs."
Farmer perspective Rippey, Iowa, farmer Roy Bardole pointed out that farmers are the ones paying for the freight for their crop, so farmers should be the ones who tell others what is needed. "We pay for the freight on our crop inputs as well as when we ship our crop off the farm," he said. "So, if I'm paying the freight both ways, then I need to figure out how to make that freight cost decrease in order to increase my profits." Bardole said it is apparent that the transportation infrastructure is aging and needs to have repairs. "The winter in central Iowa has been very hard on paved roads. The gravel roads will have terrible pressure for the next three months. We need to figure out how to fix these roads now," he said. Bridges are another issue for farmers, as they oftentimes have to take a longer route to their end destination when hauling grain or moving machinery because the bridges cannot handle heavy weights. A catastrophic lock system failure on the rivers would affect Midwest farmers, and adding more pressure on an already burdened rail system would also cause problems. "We need to look at all transportation issues. We have to make our legislative delegation understand how important the transportation infrastructure is to us farmers as voting constituents," said Bardole. "Transportation has quite an effect on the agriculture industry, but it also affects more than just agriculture," he added.
Competitive advantage The U.S. has been the leader in the supply of soybeans as a high-quality protein source. However, in recent years, Brazil and Argentina have also jumped near the top. Steenhoek said an improvement in our transportation system can keep us at the top. "The USDA has examined the cost of production for soybeans in Brazil and Argentina with that in the U.S., and transportation costs in both areas," he said. "The South American production cost is less, but our transportation cost is less. This has given us a competitive advantage." The U.S. has been able to get the soy products to the end market at a cheaper cost than our South American competitors. Steenhoek said it is important for us to make the needed improvements in our transportation system to be able to keep this competitive advantage.
Exports "Soybean producers depend on the export market for a place to send our grain and those countries depend on us to supply them with a high-quality protein source," said Bardole. "We have to determine what it will take to keep that market flowing." The U.S. currently exports 55 percent of the soybean crop, which equals 1.56 billion bushels and $15 billion. An important part of exports is the transportation to the ports for the products to be shipped to foreign markets. "If any part of our export market is disrupted, then the price of soybeans will be affected, and that puts pressure on our bottom line," said Bardole. A high percentage of soybeans are exported to other countries from the Port of Los Angeles. Steenhoek said this is a prime location for exporting soy products because it is an area of high consumption, and many cargo ships are coming into the port full of consumer goods from other countries. Grain loaded on trains in the Midwest takes 12 days for transport to the Los Angeles area, first stopping at the LA Harbor Grain Terminal to be loaded onto containers to then be hauled to the port. Soy products are increasingly shipped out on containers to countries like China, South Korea, Japan and Taiwan because the containers are easier to manage. These containers can come to the U.S. filled with general department store merchandise and leave filled with agriculture and other products. "The countries importing our agriculture products have a greater degree of confidence that the products will be preserved better," said Steenhoek. "Since the U.S. is a big importer of products from around the world, we have more of these containers available, which helps us lead the world in grain and all food exports." The Port of Los Angeles is the busiest container port in the U.S. The port officials realize that the transportation infrastructure is very important to their success of sending products around the world. Steenhoek said through careful planning, collaboration with other stakeholders, and diligent focus on its mission, the Soy Transportation Coalition will continue to provide industry players and policymakers with key agriculture-focused information to make the decisions needed to improve the U.S. transportation infrastructure in the future. Jennifer Bremer can be reached by phone at 515-833-2120, or by e-mail at jbremer@hpj.com.
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