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Soy Transportation Coalition

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Soy Transportation Coalition

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    1. Soy Transportation Coalition

    2. Overview The Transportation Challenge Establishing the Soy Transportation Coalition Action Steps Questions/Feedback

    3. The Transportation Challenge The U.S. transportation infrastructure heretofore a facilitator of economic growth & a source of competitive advantage in both the domestic & international marketplace is increasingly an obstacle to profitability for the agricultural sector, in general, & the soybean industry, in particular. Rail transportation is of particular concern

    4. Why Should the U.S. Soybean Industry Be Concerned About Transportation? Export markets are becoming less favorable for U.S. soybean products Reduced prices for farmers at original point of sale increasingly due to domestic transportation costs

    5. The Transportation Challenge: Escalating Rates & Costs National Grain & Feed Association (NGFA) estimates that over the last 3 years, 43% of grain & oilseed shipments & 28% of soybean meal & oil were moved at rates exceeding 180% of variable costs of the rail companies. (BNSFs) earnings were up more than 25% last year (2006), thanks in part to a 15% boost in freight revenue 2/3 of which came from price increases. CSX revenue grew 8% last year, & the company estimates that 60% of that came from price increases. (MSN Money) No accessible, cost-effective option for shippers to challenge excessive rates (Surface Transportation Board established an excessive threshold) In addition to rates, costs are increasingly shifted onto rail shippers Tonnage carried by railcar ownership: 1987 2004 Privately owned 40% 60% Railroad owned 60% 40%

    6. The Transportation Challenge: Declining Service Soybean producing regions are experiencing an abundance of rail traffic, but a scarcity of rail service. Growing percentage of rail transit occurs via 100+ car unit trains from the West Coast to urban centers with few stops en route increasingly difficult for rural areas to access service Due to inherent challenges facing agriculture (i.e. - seasonality of demand, high volume/low value shipping, diverse points of origin), rail companies are less enthused to service the industry

    7. The Transportation Challenge: Infrastructure Limitations Freight demand expected to increase 67% over next decade (Source: Informa Economics) Railroads in the U.S. are primarily funded via private investments. Highways & waterways are funded with public funds Stock market discourages rail infrastructure investments; encourages rate increases

    8. The Transportation Challenge Railroads understand & are taking advantage of their elevated negotiating position resulting from: Trade with China & India increasing volume of goods to be shipped from West Coast ports to rest of the country High oil prices greater use & transportation of coal Lack of investment in nations interior waterways Trucking (main competitor) hurt by high fuel costs, driver shortages, limits on amount of time behind the wheel, weight thresholds, & limits on highway & road construction

    9. The Transportation Challenge Question If our nations highway & county road system was developed & maintained according to the same guidelines as our freight rail system, how many soybean crushers, elevators, & biodiesel plants would have access to quality roads?

    10. Establishing the Soy Transportation Coalition As transportation concerns continued to become more acute, a group of soy industry leaders (QSSBs, USB, ASA, NOPA, NGFA) decided to discuss how to address them (August 2006 December 2006) Decision was made to establish a formal organization Soy Transportation Coalition (STC) - & hire an Executive Director (February 2007)

    11. Establishing the Soy Transportation Coalition The STC has been established as a legal entity (bylaws, articles of incorporation, etc.) Board of Directors 10-15 members from participating QSSBs & ASA; 5 ex-officio members from USB; NGFA & NOPA leadership ex-officio members Goal of STC Position soybean industry stakeholders to benefit from a transportation system that delivers cost effective, reliable, & competitive service.

    12. Action Steps To be a credible voice on the transportation debate, the STC needs to: Wrap our arms around the issue/Be a respected source of information Accumulate data from processors, biodiesel plants, etc. in order to quantify & increasingly document both problems (rates, service, etc.) & attitudes about transportation issues. Be able to sort by state &, possibly, by congressional district. Continue to assemble specific anecdotes & experiences of transportation concerns & hardships from each state (processors, biodiesel, elevators, etc.) Assemble U.S. vs. overseas transportation infrastructure data & anecdotes illustrating how U.S. agricultures competitive advantage is decreasing with time. Translate transportation concerns & constraints into tangible per bushel costs for farmers & lost revenue for a rural community. Farmers are the only ones who cant pass the buck.

    13. Action Steps To be a credible voice on the transportation debate, the STC needs to: Educate our membership Soybean industry publications Agricultural & transportation focused media outlets In person visits to each state (board meetings, local chambers of commerce, local media, etc.) Collaborate with other agricultural groups & industries (including railroads when appropriate) Develop relationships with Congress, Surface Transportation Board, USDA, etc. ensuring that STCs positions & messages are increasingly penetrating the overall transportation debate (education, not lobbying)

    14. Potential Questions Why establish a group specific to soybeans? Are we reinventing the wheel? For any significant change to occur, the farmer/producer community must be educated, engaged, & motivated (no longer solely relegated to industry). Agricultural groups are either the best of advocates or the worst of advocates completely a function of how engaged the membership is. Network of producers & extensive relationships with other industries puts the soybean industry in a unique position to shape the overall debate & affect positive change.

    15. Potential Questions Why establish a group specific to soybeans? Are we reinventing the wheel? (contd) Other industries are engaged (sources of collaboration), but their prescribed transportation system may not mirror ours. Improving our transportation infrastructure will not result from one single champion on behalf of all industries. It will result from a collaboration of many actively engaged organizations. Neglecting the issue would be a disservice to the farmers/producers. Our organizations have a track record of being advocates for those issues that are important to members (farm bills, exports, etc.). Given the importance of transportation issues our organizations cannot respond by being passive or deferring to other groups.

    16. Potential Questions Can anything of significance be accomplished to improve the transportation climate for the soybean industry? Yes! By the end of 2007, the STC will have: Identified on a more comprehensive level the rate & service challenges facing the soybean industry Raised the awareness level of transportation issues among our producer community throughout the country Developed collaborative relationships with other agricultural groups & effected industries Developed relationships with transportation decision makers (Congress, Surface Transportation Board, USDA) Will provide the foundation for the STC to move forward & leverage our voice for needed change.

    17. Conclusion Our political leaders, the national media, & the general public regularly articulate many goals & objectives that involve the soybean industry: Decreasing reliance on Middle East oil Decreasing our foreign trade imbalance Revitalizing rural America Transportation is a linchpin to each of these goals. Without an coherent, integrated transportation system, these intentions will never become outcomes. The Soy Transportation Coalition can greatly assist this effort &, in the process, provide a valuable service to our industry.

    18. Thank you! Mike Steenhoek, Executive Director Soy Transportation Coalition 4554 114th Street Urbandale, Iowa 50322 515-727-0665 515-251-8657 (fax) msteenhoek@soytransportation.org www.soytransportation.org

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