Supplying The Soybean
How dredging the Mississippi River will improve costs along the inland waterway for soybean and grain transportation
U.S. agriculture is heavily dependent upon a number of transportation modes, including inland waterways and ports, to supply customer demands.
In order to ensure a cost effective and reliable route via the Mississippi River, the United Soybean Board — a member of the Soy Transportation Coalition (STC) — has provided $2 million to help offset the planning, design and research costs of deepening the lower Mississippi River.
In addition to the USB, the STC consists of 13 state soybean boards and the American Soybean Association. The participating states (Illinois, Indiana, Iowa, Kansas, Kentucky, Michigan, Minnesota, Missouri, Nebraska, North Dakota, Ohio, South Dakota and Tennessee) encompass 85 percent of total U.S. soybean production, much of which is exported to other countries. Besides seeking a cost-effective transportation system for soybean shippers and customers, the STC’s objectives include ensuring the U.S. transportation system has the infrastructure and capacity necessary for the long-term competitiveness of the soybean industry; building and maintaining collaborative relationships; and ensuring the soybean industry understands the impact of transportation issues on profitability and competitiveness.
Soybean farmers and a large number of Mississippi River stakeholders have been promoting the dredging of the Mississippi River from Baton Rouge to the Gulf of Mexico (a 256-mile stretch) from 45 feet to 50 feet in depth. According to Mike Steenhoek, executive director of the STC, the lower river shipping channel accounts for 60 percent of U.S. soybean exports and 59 percent of corn exports — by far the leading export region for both commodities.
The Mississippi River dredging effort is estimated to cost $245 million and will occur in three phases, two of which will be cost-shared between the federal government (75 percent) and the State of Louisiana (25 percent). The first phase focuses on dredging the river from Venice, Louisiana, (approximately Mile 10 Above Head of Passes) to the Gulf of Mexico, which will provide a 50-foot deep channel to approximately Mile 154 AHP of the river.
“A substantial number of soybean and grain export terminals are located within this portion of the river,” Steenhoek says.
The second phase includes dredging from Mile 154 AHP to Baton Rouge (Mile 232 AHP), thereby including the remaining soybean and grain export terminals in the 50-foot shipping channel. The final phase encompasses the relocation of pipelines buried under the northern portion of the shipping channel.
“The estimated $80 million cost of doing so would be split evenly between the State of Louisiana and the pipeline owners,” Steenhoek says. “In February, the Army Corps of Engineers released the details of their fiscal year 2020 Work Plan (i.e. the list of specific projects to receive federal funding). The lower Mississippi River deepening project was included on the list, allowing the effort to proceed.”
According to Steenhoek, this regional dredging project benefits soybean industry stakeholders in a number of ways: decreased cost of shipping, increased exports per vessel load, and more financial return for soybean farmers.
“Recent research conducted by the Soy Transportation Coalition concludes that shipping costs for soybeans from Mississippi Gulf export terminals would decline 13 cents per bushel ($5 per metric ton) if the lower Mississippi River is dredged to 50 feet,” Steenhoek says. “A deeper river will allow both larger ships to be utilized and current ships being utilized to be loaded with more revenue-producing freight. Average vessel loads will increase from 2.4 million bushels of soybeans (66,000 metric tons) to 2.9 million bushels (78,000 metric tons) — an increase of 500,000 bushels or a 21 percent increase.”
The STC’s research also concluded that farmers in the 31 evaluated states will annually receive an additional $461 million for their soybeans due to dredging the lower Mississippi River to 50 feet.
“It is well established that farmers located in closer proximity to the nation’s inland waterways and barge transportation enjoy a positive or less negative basis versus soybeans grown in areas farther removed,” Steenhoek says. “As a rule, the less costly and more efficient the supply chain is subsequent to farmers delivering their soybeans, the higher value a farmer will receive for the bushels of soybeans produced. While those states located in close proximity to the inland waterway system will realize the most benefit, states further removed will also benefit from the increased modal competition between rail and barge.”
While this project is centered here in Louisiana, Steenhoek says that it should not be regarded simply as a Louisiana project. That’s because the inland waterways of the United States — particularly the upper Mississippi, Ohio, Illinois and Arkansas rivers, and the Mississippi Gulf region — create a critical supply chain for agriculture and a host of other industries.
“One cannot care about one without caring for the other,” he says. “The lower Mississippi River deepening project must also be regarded as an Illinois, Iowa, Minnesota, Missouri, Ohio, etc. project.”
The Port of South Louisiana advocates for deepening the lower Mississippi River, and this project is an example of many industries and organizations throughout the country collaborating to achieve this goal.
“Our industries in the port are competing with the rest of the world in getting their product out,” says Paul Aucoin, Executive Director at the Port of South Louisiana. “At the Port of South Louisiana, we have seven grain elevators. We’re the largest grain exporting port in the United States, and most of that grain comes from the Midwest and it comes down the Mississippi River on barges. Last year we had 53,000 barges come through the port, and most of that was grain. Then the product is loaded onto vessels and shipped to over 90 different countries.”
In terms of environmental concerns, Steenhoek says the Army Corps of Engineers conducted an environmental impact study that concluded the deepening project is expected to net positive environmental impacts.
“One of the main reasons frequently cited is how the beneficial use of the dredged material will create approximately 1,462 acres of wetlands, enhancing wildlife habitat and helping mitigate shoreline erosion in southern Louisiana,” he says.