By ship, train and truck, soybeans grown in northeast Indiana fields and the products made from them reach all corners of the globe.
American farmers and processors want to keep those transportation costs low. Otherwise, they risk losing overseas markets to South American competitors.
Hoosier soybean farmers hope to use the lobbying strength of an industry trade group to keep transportation costs down. The Soy Transportation Coalition, based in Urbandale, Iowa, said it wants to eliminate tie-ups that slow down or raise the cost of shipping soy-based products. Industry members say that is critical as competing South American farmers develop more transportation infrastructure.
Even small transportation cost increases can cut into the prices farmers receive for their beans. Farmers typically pay to truck their crops to a local grain elevator or processing plant, but they may indirectly pick up part of the tab for later shipping, said Chris Novak, executive director of the Indiana Soybean Alliance, an industry trade group. When they negotiate the purchase price with farmers, elevators and processors factor in how much it will cost them to ship the soybeans to the end user.
Soybean processors cannot pay farmers as much if their transportation expenses rise, said Mike Steenhoek, the Soy Transportation Coalition’s executive director. That’s why his group wants to work with processors to address transportation choke points. The Indiana Soybean Alliance is a member of the Soy Transportation Coalition.
“There’s obviously a lot of money that’s not being retained in farmers’ pockets and is not being retained in the local community because of transportation inefficiencies,” he said.
Costs are rising because railroad and waterway infrastructure is not keeping pace with demand, Steenhoek said. The Mississippi River’s pressed lock and dam system is pushing overflow grain onto already-crowded railroads, he said. To handle the growing demand, railroads are requiring some customers to lease or buy their own rail cars. These problems can raise the cost of transporting crops, he said.
Foreign importers take these costs into consideration, Roanoke farmer Jerry Osterholt said. If American and South American soybeans are of similar quality, overseas buyers will opt for the less expensive choice. Transportation costs can factor into that decision, he said.
“They look for quality and price competitiveness,” he said, “probably price more than anything.”
About 50 percent of American soybeans and soy-based products are exported each year, Novak said. Trade groups have not calculated exactly how much it costs to get soybeans to the end user.
American processors have always been able to export grain cheaply, said Deb Seidel, a spokeswoman for Bunge North America, which operates a soybean processing plant in Adams County. But it is important to keep that advantage. Anything farmers can do to raise awareness of transportation challenges is helpful, she said.
Farmers may not have firsthand knowledge of transportation obstacles later in the supply chain. But they can use their collective clout to push for additional government funding or other solutions, Steenhoek said. In the future, the organization would push for laws like last year’s water bill, which includes improvements to the Mississippi River lock and dam system.
The Soy Transportation Coalition will educate farmers about how their interests are affected and the ways they can campaign for change, Steenhoek said.
“If farmers aren’t really engaged on this issue,” he said, “our voices won’t really be leveraged.”