Rail, Transportation Concerns Power Discussions

Participants at the 2014 U.S. Soy Global Trade Exchange were treated to a harsh reality Tuesday and Wednesday at the Wisconsin Center in Milwaukee–infrastructure drives growth, and infrastructure, both globally and in the United States, is degrading.

Walter Kemmsies, Chief Economist for Moffat & Nichol, painted a bleak picture about the U.S. Economy, one that involved a path to a stagnant economy with outdated infrastructure.

“If you want the economy to grow, you need to hitch it to something that will help make it grow,” he said. “We need to concentrate on exports to get that growth.

Kemmsies pointed to Brazil as a country that has developed a plan for infrastructure, one that could have lasting impacts on the U.S. Soy industry. He says Brazil has invested in a major highway that will change how it ships grain to Asia, which means China will be able to buy much cheaper beans then those currently bought from the U.S.

That prospect worries Minnesota Soybean Research & Promotion Chairman Paul Simonsen.

“The big thing with Brazil is they are going to be such a low-cost seller of soybeans that we aren’t going to be in the same ballpark with them,” he said.

Minnesota Soybean Growers Association director Joel Schruers, who sits on the Market Development action team at Minnesota Soybean, agrees.

“If we lose this market to Brazil it is going to be very upsetting because we don’t have to lose it,” he said. “If we do, we just gave it to them.”

Kemmsies says the U.S. can avoid future troubles by concentrating on rebuilding infrastructure, and then by pushing exports.

Rail Concerns present
Several breakout sessions at the conference focused on rail transportation and the logjam affecting all sectors of rail shipments. Jay O’Neil of O’Neil Commodity Consulting and Senior Agricultural Economist at Kansas State University, says the rail epidemic is bigger than just agriculture.

“Rail business across all sectors has increased,” he said. “It’s not just a grain story. If it were only a grain issue, the problem would be much easier to fix.”

Anne Erickson, General Director of Feed Grains, Feed Products, Oilseeds and Meals for Burlington Northern Sante Fe Railroad, said their company acknowledges the current struggles with the rail shipments and has pledged to invest $5 billion into capital investments, including adding an additional 500 locomotives to the rail line and increasing and staggering the number of sets produced to accommodate the growing grain industry.

“It’s not about putting more cars out on the railways but getting more out of the assets we already have,” she cautioned the group of industry leaders, agribusiness professionals and international buyers.

O’Neil echoed the comment.

“We need greater efficiencies,” he said. “We need to move more cars in an efficient manner and not just clog up the railroads. We don’t want to play Whack A Mole and just feed the squeaky wheel.”

Even Minnesota Assistant Commisioner of Agriculture Charlie Poster, who presented an overview of crop production and food security in Minnesota, couldn’t escape questions about the rail situation in the U.S.

“Minnesota farmers have done well over the last several years and that is because they are highly productive,” Poster said. “We are producing more and more every year, but we need that effective rail partner to get the goods to the river or to the port and to the people when they need them.”