| Midwest soybean growers seek to cut shipping costs |
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| By TIM ALEXANDER
Illinois Correspondent
DES MOINES, Iowa — A consortium of soybean industry groups from Iowa, Illinois, Indiana and other soybean-producing states have joined forces to call attention to a large disparity in rail shipping costs incurred by soybean producers, compared to costs incurred by producers of other commodities.
The recently-formed Soybean Transportation Coalition (STC), which has enlisted the support of the American Soybean Assoc. and the United Soybean Board, wants something done about it.
“Given the make-up of the Soy Transportation Coalition, our voice will be leveraged both on a local level and a national level – both of which are crucial if we are to see any significant improvements in our transportation system,” said Mike Steenhoek, who serves as STC executive director and operates from the office of the Iowa Soybean Assoc. (ISA).
According to the U.S. Soybean Export Council (USSEC), the U.S. Government Accountability Office (GAO) reported in 2006 that the benefits of deregulating the railroad industry, brought about by the Staggers Act of 1980, were not distributed equally among commodity groups. The GAO reported that while railroads reduced rates for coal shipments by 35 percent, rates charged for grain increased by nine percent.
STC maintains that the cost of transporting soybeans to customers, often $1-$2 per bushel, according to USDA, is reducing soybean producer profits and competitiveness in the United States and abroad.
Steenhoek said not only are many soybean producers unaware of STC, which was established about seven months ago, they are often not fully aware of how domestic rail transportation shortcomings have an ultimate impact on their pocketbooks. He said farmers should be concerned about the disparity in rail shipping costs for soybeans.
“Our export markets for soybeans and soybean products are threatened due to the high cost of getting our products to export terminals, and the per-bushel price that farmers receive at point of sale is less than what it could be due to transportation costs,” Steenhoek told Farm World. “This negative basis is growing, and it reveals how much money is not being retained in a farmer’s wallet and the local rural community.”
Steenhoek and STC believe an argument can be made that to care about rural economic development requires one to care about transportation issues.
“There is an understanding that transportation as an issue needs to be upgraded within the soybean industry, and that it needs to be treated in the same manner as other important issues that are essential for profitability, such as the farm bill,” he said.
Many industries, including the U.S. soybean industry, lack faith in the ability of the federal Surface Transportation Board to mediate rail disputes between those who ship freight and those who transport it (such as the railroads), Steenhoek said.
“As a result, most shippers feel there is no reasonable, cost-effective process in place to protest excessive rail rates, for example,” he said.
“Ultimately, we would like the (STC) to help improve this process and thereby restore some confidence in the system that was intended to be more balanced than it actually is.
“We fully expect that there will be occasions when the (STC) and rail companies are on opposite sides of an issue, but we also want to explore opportunities to work with rail companies as well to create win-win situations.”
While the current focus of STC is on rail transportation, the group is ready to address challenges related to trucking and barge shipping as well. “After all, soybeans are transported via all three modes, and the shortcomings of one mode can exacerbate the shortcomings of the other,” Steenhoek explained. “We need to have a broad perspective.
“Ultimately, we want the (STC) to have a seat at the table whenever significant transportation decisions are made, whether locally or nationally.”
Earlier this year, a railroad official said shipping rates have dropped dramatically under the Staggers Act, especially when adjusted for inflation. “Overall, rates have gone down for just about every commodity group,” said Tom White of the Assoc. of American Railroads, as quoted in the USSEC’s Soy Export Weekly Update.
White said the rates (per ton-mile) for grain are second-lowest of any commodity, trailing only coal.
“We will attempt to find areas of common interest with the major railroads,” said Kirk Leeds, CEO of ISA.
To learn more about STC and its mission, visit www.soytransportation.org
This farm news was published in the Sept. 19, 2007 issue of Farm World, serving Indiana, Ohio, Illinois, Kentucky, Michigan and Tennessee. |
| 9/19/2007 |
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