Investing in inland waterways infrastructure worthwhile, USDA study says

The National Grain and Feed Association (NGFA) and the Waterways Council Inc. (WCI) commended the U.S. Department of Agriculture (USDA) for releasing a significant new study that quantifies the cost-savings and competitive advantages that would accrue from investing in long-delayed improvements to inland waterways locks and dams on the Upper Mississippi and Illinois River system.

The study, “Importance of Inland Waterways to U.S. Agriculture”, addresses the connection between the inland waterways and the competitiveness of U.S. agriculture in American markets.

Highlights of the study, which was released on Wednesday, include:

• U.S. farmers enjoy a competitive advantage in global export markets in large part because of the nation’s robust, resilient transportation and infrastructure network that moves corn and soybeans, the nation’s highest yielding crops.

• Because of its efficiencies and lower costs, the inland waterways system saves between $7 billion to $9 billion annually over the cost of shipping by other modes. These values are based on all goods currently being moved on the water compared to the same volume transported by rail.

• Every dollar of waterways activity output results in $1.89 in additional U.S. economic activity directly related to the waterways.

• Compared to the status quo, increasing investment in the inland waterways system by $6.3 billion over a 10-year period (through 2029) and $400 million per year thereafter through 2045 cumulatively would grow the waterways’ contribution to U.S. gross domestic product by 20% (to $64 billion) and increase waterways-related employment by 19% – to 472,000 jobs. The study said this option would more than offset the cost of completing all the proposed projects and would increase the market value of U.S. corn and soybeans by $39 billion. Conversely, reduced investment would decrease the market value of those commodities by $58 billion, according to the study.

• The inland waterways’ infrastructure is aging and needs major rehabilitation and construction to restore its full capability, forestall major disruptions and provide opportunities for growth. Most locks on the Upper Mississippi and Illinois River System have far exceeded their projected 50-year lifespan. Delays can cost operators and shippers more than $44 million annually. For corn, delays on the Mississippi River could have up to a 24 cents per bushel negative impact.

• While the U.S. currently has a $5.35 per metric ton advantage over Brazil when shipping soybeans on the inland waterways system (from Davenport, Iowa, to Shanghai, China), aging U.S. waterways infrastructure will increase the price to the end-user, lower the demand for U.S. grains and soybeans, and make them less competitive in global markets.

“USDA’s study underscores the inland waterways as a conduit to our nation’s agriculture competitiveness, as well as to overall U.S. economic prosperity. We believe the study makes the case to expedite the Navigation and Ecosystem Sustainability Program (NESP) that would modernize five locks on the Upper Mississippi River and two on the Illinois Waterway to be ready to capitalize on predicted grain shipments, while at the same time improving the health of our marine ecosystems and habitats,” WCI president and CEO Mike Toohey said in a statement following the study’s release. “NESP is awaiting Pre-Construction Engineering and Design (PED) funds to be ‘shovel-ready’ for these vital locks,” he continued.

“We appreciate the leadership of Secretary Perdue and USDA in once again spotlighting the importance of the U.S. inland waterways transportation system to U.S. agriculture’s global competitiveness and farmers’ bottom lines,” NGFA president and CEO Randy Gordon said. “Very importantly, this study quantifies the significant cost of further delays in rebuilding America’s inland waterway infrastructure, and it’s not a pretty picture. Foreign competition from countries like Brazil is only increasing given current trade disruptions, and China is investing aggressively in South America’s transportation infrastructure to the United States’ detriment.”

 

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