Cash Market Moves
US Infrastructure Report Card: Waterways, Dams Get Failing Grade
The nation's infrastructure received an average grade of D+ in the American Society of Civil Engineers' (ASCE) 2017 Infrastructure Report Card released on March 9. The report is an assessment of the conditions of the nation's infrastructure across 16 categories.
Of the 16 categories graded, six are essential to the success of commodity shipments and, in particular, agriculture shipments. Those categories are bridges, which were graded C+, ports C+, railroads B, roads D-, levees D and inland waterways D.
While our roads and bridges are in dire need of repair, the poor condition of our inland waterways, specifically our aging locks and dams, remains a detriment to our infrastructure.
Here is a link to the entire report card: https://goo.gl/…
The U.S exports nearly one quarter of the grain it produces. When it comes time to move these crucial commodities to export grain elevators, barges account for the transporting of 61% of corn, 42% of soybeans, 40% of wheat and 26% of sorghum, according to the National Grain and Feed Association (NGFA).
Since most of the corn and soybean crops in the U.S. are grown close to the Mississippi River system, shipping by barge is the most economical method. One barge can carry the same quantity as 15 jumbo hopper cars or 58 large semi-trucks. In near-perfect conditions on the river, barges are tied together into 15-barge "tows," carrying the same quantity as 2.25 100-car trains and 870 dry vans, 53 feet long. A tow of 15 barges has a total capacity of 787,000 bushels.
There are currently 28 locks and dams on the Mississippi River. This series of locks and dams is operated by the U.S. Army Corps of Engineers and maintains a 9-foot channel on the Mississippi from St. Paul, Minnesota, to St. Louis, Missouri. As the aging locks and dams continue to deteriorate, especially when damaged by floods, the Corps has to make costly repairs, and in some cases, can only make a temporary fix. The USACE has said that it is "unable to adequately fund maintenance activities to ensure the navigation system operates at an acceptable level of performance." Vessels may be delayed for hours while aging locks are shut down for maintenance and repair. That can cost shippers money, and in some cases, those costs can be passed on to farmers in the way of lower prices for their grain.
Mike Steenhoek, executive director of the Soy Transportation Coalition, told me via email, "Constructing and maintaining infrastructure is very expensive and requires years of planning and execution. It is much more effective when government can provide greater certainty of funding over a number of years rather than a surge of funding in one year and a scarcity of funding the next. Because we do not provide this certainty, especially with regards to our lock and dam inventory, cost escalations and project delays become commonplace."
On March 9, the NGFA joined a small group of leaders from other farm, agribusiness, and rural-focused organizations for a meeting at the White House with key staff from President Donald Trump's National Economic Council. During the meeting, the NGFA highlighted the importance of infrastructure investment in the "dilapidated locks and dams" on the inland waterways, as well as ports, and noted that an estimated $8.7 billion is needed to complete the 25 lock-and-dam projects already authorized by Congress, many of which are on the Upper Mississippi and Illinois River System. The NGFA said that, in recent years, "the number of unscheduled disruptions attributable to malfunctioning inland waterways locks has increased 700%."
That meeting followed a letter written to Trump on Feb. 22, 2017, signed by NGFA and more than 200 other organizations (spearheaded by the Farm Credit Council), encouraging him to focus on rural infrastructure. The letter noted, "Transportation infrastructure improvement is the most obvious need in rural communities, but not the only one. Highways, bridges, railways, locks and dams, harbors and port facilities all need major investment if we are to continue efficiently getting our agricultural products to market."
Steenhoek added, "I like to argue that agriculture has one of the most diverse and elongated supply chains of any industry in existence. We are heavily exposed to and dependent upon our system of roads and bridges, highways and interstates, inland waterways, railroads, and ports. Farmers do not have the luxury of locating themselves in proximity to infrastructure. Rather, farmers hope infrastructure locates in proximity to them. Our viability as an industry depends upon having each of these modes being properly maintained and providing seamless transition from one to the other."
The Soy Transportation Coalition (STC) funded and disseminated an analysis a few years ago that suggested indexing the fuel tax to inflation so that revenue to improve our roads and bridges can better keep pace with the costs of doing so. Steenhoek noted that, "It is also important for federal, state, and local government to demonstrate better stewardship of taxpayer dollars when maintaining and improving infrastructure."
Here is a link to the STC website, which includes analysis and studies related to U.S. infrastructure issues that affect agriculture: https://goo.gl/…
"Before the government asks more from the taxpayer, it should ask more from itself. There are opportunities to institute and employ best practices so that taxpayer dollars can be stretched further," Steenhoek said.
Mary Kennedy can be reached at email@example.com
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