Soy Transportation Coalition National Waterways Conference March 28, 2012.

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Presentation transcript:

Soy Transportation Coalition National Waterways Conference March 28, 2012

Why Should Farmers Care About Transportation? … Because our international competitiveness depends on it. Costs of transporting soybeans: U.S. vs. Brazil (per metric ton; 4 th quarter, 2011) Davenport, Iowa to Shanghai North Mato Grosso to Shanghai Truck - $10.22 Truck - $ Barge - $ Ocean - $55.33 Ocean – $49.65 Total Trans - $94.46 Total Trans - $ Farm Value - $ Farm Value - $ Landed Cost - $ Landed Cost - $ Trans. as % of Land. Cost – 18.18%Trans. as % of Land. Cost – 31.50% Source: USDA

Why Should Farmers Care About Waterways? …Because farmer profitability is impacted by it.

The Soy Transportation Coalition – Farmer funded & farmer led Established in Comprised of 11 state soybean councils, the United Soybean Board, American Soybean Association. National Grain & Feed Association & National Oilseed Processors: ex-officio members.

Panama Canal Expansion – Opportunity for increased efficiency, or are we shifting the bottleneck? Soybean checkoff-funded study  Total grain & oilseeds transiting the canal will increase 30% by 2020/21  Each vessel will accommodate up to 13,300 additional metric tons (488,642 bushels); $6 million in additional value; 35 cents per bushel savings  Increase the average draw area by 91 miles (70 miles to 161 miles); Impact on rail rates

Panama Canal Expansion – Opportunity for increased efficiency, or are we shifting the bottleneck?

America’s Locks & Dams: A Ticking Time Bomb for Agriculture? Volume of Commodity Flows (2010) Illinois River  Grain: 24 million tons (20%)  Coal: 13 million tons (11%)  Petroleum: 19 million tons (16%) Mississippi River  Grain: 236 million tons (48%)  Coal: 51 million tons (10%)  Petroleum: 19 million tons (4%) Ohio River  Grain: 49 million tons (5%)  Coal: 614 million tons (59%)  Petroleum: 58 million tons (6%)

America’s Locks & Dams: A Ticking Time Bomb for Agriculture? Cost to Agricultural Producers of Lock Closures ($ millions): Lock2 Weeks1 Month3 Months1 Year LaGrange$2.7 $4.8 $21.2 $30.4 Lock 20$2.8$4.9$15.4$44 Lock 25$2.8$4.9$15.4$44.1 Markland$0.89$1.02$3.8$4.9 Lock 52$2.9$3.1$11.9$13.9

America’s Locks & Dams: A Ticking Time Bomb for Agriculture? Most affected districts by lock failure (both production & consumption) LaGrange  Illinois District #20 Reduction in corn prices: 7 cents per ton Reduction in soybean prices: $2.45 per ton Total cost to agriculture: $4.3 million

America’s Locks & Dams: A Ticking Time Bomb for Agriculture? Lost Revenue to Barge Companies from Lock Closures ($ millions): Lock2 Weeks1 Month3 Months1 Year LaGrange$3.6$5.6$4.3$104 Lock 20$5.1$15$33.3$150 Lock 25$5.1$14.2$32.4 $162 Markland$2.2$4.7$7.3$11 Lock 52$17.2$26.1$68$71.5

Is it time to ask some tough questions? Argument #1: How we allocate money is just as important as how much money we allocate.  Comparison: U.S. lock & dam projects vs. foreign examples  Describe alternative funding mechanisms that provide: 1.) Money up front & 2.) Greater certainty  Explore potential for foreign investment

Is it time to ask some tough questions? Argument #2: A predictably good inland waterway system is better than a hypothetically great one.  Should we transition from a “build & expand” approach to a “preserve & maintain” approach? Viability? What would that look like? Cost savings?

Thank You Soy Transportation Coalition 1255 SW Prairie Trail Parkway Ankeny, Iowa (fax) Mike Steenhoek, Executive Director