Infrastructure Investments Strengthen Soybean Supply Chain

MarineLink.com
Thursday, April 03, 2014
ISA efforts to open soybean markets through improved transportation infrastructure span overseas, including a recent trade mission to Southeast Asia that focused on exporting more Illinois soybeans in containers. Photo by Scott Sigman.

Transportation plays a crucial role in the soybean supply chain. With access to multiple transportation modes, Illinois soybean farmers enjoy significant advantages for reaching domestic and global markets. But aging transportation infrastructure can increase costs for Illinois farmers.

Working with business, government and industry leaders, the Illinois Soybean Association (ISA) is addressing current infrastructure challenges and finding solutions to ensure Illinois soybean farmers have access to the resources they need to get crops to market. ISA is focused on outreach at multiple levels: local, state, national and international.

"ISA serves as a facilitator between farmers and stakeholders, working to increase support for major infrastructure maintenance work through non-traditional approaches, including funding," says Paul Rasmussen, soybean farmer from Genoa, Ill., and ISA transportation vice chair.

To spread the word that Illinois must find a way to support continued improvements to its transportation infrastructure, ISA recently released new resources on ilsoy.org/transportation, including a presentation and informational video.

"These materials bring attention to the unique transportation challenges we face in Illinois," said Rasmussen. "The goal is to make every Illinois soybean farmer well-versed in the key issues, which prepares us to discuss problems and solutions with the people who can effect change."

Local Action Creates Local Impact

In its work with local government, ISA is helping to identify specific bridges that could be repaired with funds from municipal bonds, using Peoria County as a pilot project area.

"ISA supports the multiple ways soybeans get from farm gate to market," Rasmussen said. "Every bridge that is posted for load and every lock that has to close for emergency repairs can create delays or detours that reduce the profitability of the soybean industry."

ISA is helping Peoria County prioritize which county and township bridges and road segments are the best candidates for bond financing, with recommendations to be completed in late spring. Brian Elsasser, Peoria County board member and grain farmer from Princeville, Ill., appreciates ISA's efforts to look out for the needs of rural residents like himself and his constituents.

"We have more local bridges under restriction than ever before, and we've got to find new revenue sources," he said. "The board is grateful for the dialogue ISA has started and the opportunity to work toward alternative funding solutions."

As Tim Long, president of Long Economic Development Advisors explains, bond financing represents a viable approach to the question of how to finance area infrastructure improvements.

"Bond financing is not a new concept, but is definitely a creative approach for funding critical infrastructure updates," he said. "It takes a little legwork to line up the right resources, but bonds can successfully fund repairs that may otherwise take years to move to the top of priority lists."

Next steps for the project include identifying potential revenue streams to pay back borrowed money to bondholders, such as federal monies, grants and taxes.

Work Continues at State Level
ISA also is addressing state transportation issues. ISA directors and staff meet with state and national legislators regularly to discuss important legislation, such as the Water Resources Development Act (WRDA) and Renewable Fuel Standard (RFS). ISA coordinates with other government organizations, such as the U.S. Army Corps of Engineers (USACE) and Illinois Department of Transportation, to foster work infrastructure improvement projects.

ISA researchers concluded in 2012 that public-private partnerships (P3) provide one solution to dealing with repairs needed on deteriorating locks and dams. ISA approached the Rock Island District Army Corps of Engineers to seek a partnership to help the district supplement funding.

"No other organization had approached the Corps to help and proactively work on developing the P3 concept to the degree ISA did," said Rick Granados, regional asset manager at USACE's Mississippi River Valley Division. "Collaboration with ISA to improve waterways through nontraditional funding is a natural fit with an alternative funding concept the Corps is considering."

Taking the Illinois Soy Story Overseas Exporting soybeans in shipping containers is an emerging, alternative transportation channel for Illinois soybeans to reach foreign markets that ISA is exploring for farmers. In February, a delegation of ISA directors and staff traveled to Southeast Asia on a checkoff-funded trade mission that focused exclusively on transportation logistics and container exports. The team conducted more than a dozen meetings in five days, talking with global shipping carriers, port authority management and soybean importers in Vietnam, Singapore and Indonesia.

"We built relationships with key executives overseas and discussed the advantages of Illinois soybeans and Illinois infrastructure," says Mark Sprague, soybean farmer from Hull, Ill., and ISA director. "We learned more about their processes and logistical considerations, which will help us provide them with shipment routings that best serve them, and in turn, their customers."

Intermodal containers provide a viable opportunity for Illinois soybeans to reach Asian markets. Many packaged goods and raw materials imported from Asia and elsewhere come to the U.S. in intermodal containers that can be carried by ship, train and truck without having to be opened.

"With the importance of Asian markets for our soybeans, these are important discussions for the Illinois soybean industry," Sprague added.

In the past, thousands of containers returned to Asian ports of origin empty. However, shipping companies are recognizing the value of filling these empty containers with Illinois soybeans instead of sending them back empty. The approach provides a more efficient, environmentally friendly and profitable option for both shipper and customer. Illinois currently has 14 grain and soybean transloading facilities operating throughout the state.

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