The American Soybean Association (ASA) emphasized the importance of addressing rail service issues and their negative impacts on soybean growers, at a public hearing before the Surface Transportation Board on Thursday.
ASA Director Lance Peterson, a soybean farmer from Underwood, Minn., represented ASA at the hearing in Washington D.C., highlighting the great impact the railways have on soybean farmers who rely on the transportation to get their crop to the growing world population.
“Soybeans are especially impacted by transportation costs, as over 50 percent of U.S. soybeans are exported and soybeans and soy products are the leading U.S. agricultural export, with an export value of over $28 billion in 2013,” Peterson said. “Many in the world rely on U.S. soybean farmers to meet their protein and vegetable oil demands. U.S. farmers, in turn, rely on trucks, rail, and barges to move our products to those markets.”
Peterson said that while a great deal of discussion has taken place in the last few months in regards to inadequate rail movement in the upper Midwest, centered on slow shipments due to cold weather—warmer weather may not fix the problems.
“The real issue is the shifting of rail assets to the rapidly expanding oil industry. This is occurring at the expense of long standing shippers who rely heavily on rail movement to conduct their business he said. “As an agricultural producer in Western Minnesota I am faced with a direct and substantial financial impact. Inadequate rail service directly drives up the cost per rail car by thousands of dollars. This is reflected in the price I am paid locally.”
When tabulated for the thousands of farm operations across the upper Midwest, the losses will be in the hundreds of millions and potentially over one billion dollars.
“This is making lenders hesitant and could make it difficult for farmers to get operating loans to finance their business. A restriction on operating loans would have a devastating impact on farmers and on the rural economy,” Peterson said. “And the impact to agricultural producers is not just on the shipping of harvested commodities to market, but also in getting inputs, such as fertilizer, to the farm to produce a crop in the first place. For many of us, that time is now or is rapidly approaching.”
Another issue Peterson presented was the fact that the demand for soybean rail shipments is expected to continue growing in key states where rail service issues are already having trouble keeping up today.
Most forecasts indicate that soybean shipments will be increasing and the rail network needs to accommodate this growth along with the growth in crude oil shipments
For our part, to address demand over the long-term, ASA will continue to carry the message to Congress and the Administration in support of policies that encourage or provide direct investments in expanding transportation capacity, including rail, trucks and waterways. These would include a tax credit applied to new rail infrastructure, l, funding for waterways infrastructure, and increased truck weight limits that will expand transportation capacity and increase transportation service competition. Steps to improve and expand energy infrastructure could also alleviate rail demand by providing alternative ways to accommodate the growing domestic oil and gas production.