FallLovdahlTranquility

By Donna Lovdahl, Sioux Falls, SD.

The latest report on the importance of waterways released by the U.S. Department of Agriculture August 28, titled Importance of Inland Waterways to U.S. Agriculture, was welcomed by the Waterways Council Inc., as well as the National Grain and Feed Association and other farm groups.

Under preparation for a year, the report provides firm support for sensible waterway infrastructure funding proposals long supported by farmers and the navigation industry.

The report—prepared by Informa Agribusiness Consulting for USDA’s Agricultural Marketing Service—sketches out the estimated consequences of three waterways infrastructure funding scenarios. The report calls one scenario the “status quo,” or keeping spending as it is now: barely adequate to keep the infrastructure going. The other two options are increased investment or reduced investment.

The report yields some important data points.

Every dollar of waterways activity output [i.e., spending] results in additional economic activity directly related to the waterways of $1.86.

The U.S. currently has a $5.35 per metric ton transportation cost advantage over Brazil when shipping soybeans on the inland waterways system (using a route from Davenport, Iowa to Shanghai as an example), but that advantage could slip if infrastructure spending is not stepped up.

The study calculates that $6.3 billion in extra infrastructure investment could yield 77,000 more jobs, a 4 percent drop in landed costs for corn and soybeans, and an estimated $72 billion in benefits.

Farm product movements on the waterways in 2017 totaled 94.8 million tons, slightly less than 2016’s record of 96.6 million tons. Farm products make up 14 percent of the total commodities moved by water. Processed flour, other milled products and fertilizer add another 5%.

Petroleum and petroleum products make up the largest percentage of waterborne cargoes, at 28%. Coal, once the top waterways cargo, declined by 36% between 2013 and 2017 alone. The estimated transportation cost savings for all products that move by water is somewhere between $7 billion and $9 billion.

The report’s facts and figures on soybean transportation costs to China, compiled with 2017 data, may provoke wistful feelings. One graph shows a steady drop in the cost of sending a metric ton of soybeans from Davenport, Iowa, to Shanghai., comparing it to the cost from North Mato Grosso, Brazil, which is also dropping. The report notes that Chinese investment in Brazil hit a 7-year high in 2017, and now stands at about $50 billion. China’s investments in Brazil have exploded since Brazil began privatizing formerly state-owned companies and industries, and now extend beyond infrastructure into banking, electronics and other areas.

The report was released during a tour of McAlpine and Mel Price Locks and Dams by Secretary of Agriculture Sonny Perdue and Assistant Secretary of the Army for Civil Works R.D. James.

Waterways Council Inc. welcomed the report’s endorsement of the Navigation and Ecosystem Sustainability Program, which it has consistently championed, and which has not received much attention in recent years. “We believe the study makes the case to expedite NESP, [which] would modernize five locks on the Upper Mississippi River and two on the Illinois Waterway to be ready to capitalize on predicted grain shipments, while at the same time improving the health of our marine ecosystems and habitats,” said WCI President and CEO Mike Toohey.

He added pointedly, “NESP is awaiting pre-construction engineering and design funds to be ‘shovel-ready’ for these vital locks.”

It is likely not a coincidence that the report is being released during an upcoming election season. President Donald Trump is surely anxious to show support for farmers who have been devastated not only by this year’s floods, but even more so by the tariff wars with China, which he stepped up in August with fresh tariff escalation threats. Beginning this spring, Chinese retaliatory tariffs have reached beyond soybeans to target other U.S. farm products including pork, wine, fruit and nuts. Even without the tariffs, though, a swine flu virus that has devastated Chinese swine herds had reduced demand for soy feed.

While Congress has stepped up for the Corps in recent funding bills, even in a “normal” election season it’s hard to predict what will and won’t get done.

The full report is available on the USDA’s website at www.ams.usda.gov.

David Murray can be reached at journal@hpj.com.

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