The Big River Coalition received the attached Press Release from our colleagues at the Soy Transportation Coalition (STC) and wanted to update our membership of the United Soybean Board’s financial commitment to the Mississippi River Ship Channel (MRSC) Deepening Project.  The Big River Coalition has worked closely and cooperatively with the STC since our efforts to revitalize the MRSC to 50 feet began in 2012.

The following quotes are reproduced from the Press Release documenting the pledge of a $2 million financial commitment:

“As U.S. soybean farmers continue to encounter challenges with both growing a crop and marketing a crop, it remains essential to maintain and enhance the transportation system established to transport that crop.  U.S. soybean farmers are not only increasing the time and effort devoted to improving the competitiveness of their transportation network, they are also strategically investing resources to do so.”

 “The United Soybean Board (USB) recently announced a $2 million allocation to help offset the planning, design, and research costs of deepening the lower Mississippi River from 45 ft. to 50 ft.  The 73 USB farmer-directors are responsible for investing soybean checkoff funds to enhance the value and preference for U.S. soy.”

 “During this challenging period, soybean farmers are being aggressive in trying to increase our competitiveness,” says Mike Bellar, a soybean farmer from Howard, Kansas, and chairman of the Soy Transportation Coalition (STC).  “The $2 million in funding from our national checkoff organization, the United Soybean Board, will help improve our number one export region of U.S. soybeans.  It will remain critical for the Soy Transportation Coalition, the American Soybean Association, and the individual state soybean associations to continue to promote this project at the federal and state level.”

 “USB is allocating the $2 million to help offset planning, design, and research costs, combined with approximately $21 million in federal funding and $7.5 million in funding from the State of Louisiana to initiate the first year’s work of the project (i.e. commencing the deepening of the river from Venice, Louisiana, to the Gulf of Mexico).  While the State of Louisiana has provided its initial $7.5 million allocation of matching funds, the federal government has yet to approve its approximately $21 million in initial funding.” 

Several articles have recently been publish to document the USB’s contribution, the article first shared with me by the STC is clickable below:

United Soybean Project Sets Stage for Mississippi Dredging (July 10, 2019)

The membership of the Big River Coalition applauds the USB and STC for their unwavering commitment during hard times with farming and shipping both heavily disrupted by the Great Flood of 2019 and the wettest 12-month period in our nation’s history.

Dedicated members of BRC will recognize the financial figures and dredging details from previous distributions and note that much of the utilized economic information is reproduced from an economic impact report commissioned by the STC that was prepared by Informa Economics based on a request from the Big River Coalition.  The BRC requested economic information from the STC to document the transportation cost-savings specific to soybean shipments out of the Mississippi River Ship Channel by a channel deepened by 5 feet (45 feet to 50 feet).  This information was first distributed by the BRC on September 14, 2018 and was utilized to help the U.S. Army Corps of Engineers complete the required General Reevaluation Report.

The official economic report as prepared by Informa Economics and commissioned by the STC remains available at the link below:

“Impact on Crops and Product Export Flows of Dredging the Lower Mississippi River to 50 Feet”

The information from Informa Economics details the following factors related to the potential channel deepening:

1. It would expand the “draw area” for farmers shipping their exports via the Mississippi River from 205 miles to 245 miles;
2. Decrease shipping costs of soybeans by 13 cents per bushel for 205 miles from the river, and then steadily declining cost savings until reaching 0 at 246 miles;
3. Increase soybean revenues by close have $461 million annually throughout 31 states evaluated.

The following quote is reproduced from the full report by Informa Economics:

“The impact of the deeper draft on the lower Mississippi River will save $5 per metric ton in ocean freight as the average weight loaded onto ocean going vessels increases from 66,000 metric tons to 78,000 metric tons. The upriver elevator loading barges with grain destined for export position to an export elevator will have an additional 13 cents per bushel margin to buy volume. To prevent the volume from flowing to the river, the inland facilities will have to pay up to keep the soybeans. The amount the facilities will be willing to pay will depend on how close the facilities are to the river. In short, an inland elevator will not pay more than the transportation to the river. Currently the draw area is estimated to be 205 miles based on an average load of 66,000 metric tons. Increasing to 78,000 metric tons per load will extend the draw area to 245 miles. From a basis standpoint, the basis will improve 13 cents per bushel for 205 miles from the river and decline steadily until reaching zero at 246 miles.”

Mr. Steenhoek please accept my personal thanks for you leadership and dedication, please share that with your collective memberships and all involved.

The following quote from my friend and colleague Mr. Mike Steenhoek, the Executive Director of the Soy Transportation Coalition, matches the sentiments of the Big River Coalition.

“If I had to select a single infrastructure enhancement that would provide the most benefit to the greatest number of U.S. soybean farmers, deepening the lower Mississippi River would be my choice.”

• Dredging from Mile 154 AHP to Baton Rouge, Louisiana (Mile 232 AHP). The remaining soybean and grain export terminals would be included in the 50-ft. shipping channel upon completion of this phase. The estimated cost of this phase is $65 million. Given a 75% federal and a 25% non-federal cost share, the federal obligation would be $48.75 million, and the non-federal obligation would be $16.25 million.
• 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.

USB is allocating the $2 million to help offset planning, design, and research costs, combined with approximately $21 million in federal funding and $7.5 million in funding from the State of Louisiana to initiate the first year’s work ofthe project (i.e. commencing the deepening of the river from Venice, Louisiana, to the Gulf of Mexico). While the State of Louisiana has provided its initial $7.5 million allocation of matching funds, the federal government has yet to approve its approximately $21 million in initial funding.

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 ft. A deeper river will allow both larger ships to be utilized and current ships being utilized to be loaded with more revenue-producing freight.

The research also identifies the impact on interior basis – the difference between the local price a farmer receives and the market value established by the Chicago Board of Trade – for soybeans in 31 states if the lower Mississippi River shipping channel is dredged. It is well established that farmers located in closer proximity to thenation’s inland waterways and barge transportation enjoy a positive or less negative basis vs. soybeans grown in areas further removed. 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. The STC directed the researchers to produce basis maps for soybean-producing states located adjacent to navigable inland waterways – highlighting the current situation and how basis could improve for soybean farmers if the lower Mississippi River shipping channel is dredged to 50 ft.

State Example: Illinois Soybean Basis Pre and Post Lower Mississippi River Deepening (September through November)

As the above basis maps highlight, areas of the state of Illinois enjoying positive or slightly negative basis will expand if the lower Mississippi River is dredged to 50 ft. The areas with more pronounced negative basis will be crowded out by more favorable basis territory. It is estimated that this development will result in Illinois soybean farmers annually receiving over $77 million more for their soybean crop. This dynamic will be replicated in other soybean producing states along the inland waterway system.

The STC research estimates 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 ft. 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. When modal competition increases, a downward pressure on shipping rates will often occur. With barge transportation becoming more viable for a larger percentage of the soybean-producing areas of the country, there will be a greater degree of overlap between areas served by railroads and barge. Soybean shippers will benefit from this modal competition.

“If I had to select a single infrastructure enhancement that would provide the most benefit to the greatestnumber of U.S. soybean farmers, deepening the lower Mississippi River would be my choice,” explains Mike Steenhoek,executive director of the Soy Transportation Coalition. “Soybean farmers are demonstrating a willingness to collaborate with federal and state government on an innovative public private partnership that will enhance the competitiveness of both agriculture and a host of other industries. The Soy Transportation Coalition, the American Soybean Association, state soybean associations, and other stakeholder groups look forward to working together to ensure this critical projectbecomes a reality.”

Additional information can be accessed via the STC’s website at www.soytransportation.org.

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Established in 2007, the Soy Transportation Coalition is comprised of thirteen state soybean boards, the American Soybean Association, and the United Soybean Board. The goal of the organization is to position the soybean industry to benefit from a transportation system that delivers cost effective, reliable, and competitive service.