Kirk Leeds Chief Executive Officer, Iowa Soybean Association kleeds@iasoybeans.com, Twitter @kirkleeds
Digging Deeper
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n last month’s column, I shared that the Iowa Soybean Association (ISA) is going to have to work even harder to get rid of the “pile of soybeans” we have in projected carry-over going into the new marketing year. When answering the question about how to “dig out of this mess,” I answered, “One shovel at a time and one bushel at a time. It’s hard work, but it’s the only way.” Well, soybean farmers and their soybean checkoff continue to get out the shovels and dig. In this case, the “shovels” are being used to help support a significant project to deepen the 256-mile portion of the Mississippi River from Baton Rouge, Louisiana, to the Gulf of Mexico. It's a stretch of river that handles 60% of all U.S. soybean exports. With a $2 million investment, soybean farmers are hoping to speed up the work to deepen the draft of the lower Mississippi from its current 45-feet depth to 50. According to a recent study by the
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Soy Transportation Coalition (a checkoff funded organization housed at ISA), the deepening would allow a load increase from 66,000 metric tons to 78,000 metric tons per vessel (an increase of 500,000 bushels of soybeans), saving upward of $20 per metric ton. When complete, the savings are expected to translate to a margin of 13 cents per bushel for barge river elevators exporting soybeans and increasing annual revenue for farmers by $461 million. For Iowa farmers, the annual increased revenue is estimated at $71.5 million. Keep in mind that even if you don’t farm near the Mississippi River, this project to deepen the river will still have a positive impact. The study shows that areas of the state of Iowa enjoying a positive or slightly negative basis will expand, and the areas with the more pronounced negative basis will be crowded out by more favorable basis territory. Also, whenever barge transportation becomes more viable for more of the soybeans we export, there is a
greater degree of overlap between areas served by railroads and barges. Soybean farmers gain when there is more competition. The overall project to deepen the 256-mile stretch is estimated to cost $245 million and will occur in three stages. Two of the stages will be cost-shared between state (25%) and federal sources (75%), with the other stage cost-shared between the State of Louisiana and several pipeline companies that will have to relocate pipelines buried under the shipping channel. Louisiana has agreed to provide the non-federal funding to begin the project, but we still have work to do to get the federal government on board. Getting our soybeans to customers around the world with lower shipping costs is critically important as we work to sell more soybeans. When you think about our competitive advantages over South America, better transportation infrastructure resulting in lower costs have been and will continue to be our biggest advantage.
