Soy Transportation Coalition

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

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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
  

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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

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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

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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

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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

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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?

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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)

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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.

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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.

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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)

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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.

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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.

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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.
  

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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.
  

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Thank you!

• Mike Steenhoek, Executive Director
• Soy Transportation Coalition
• 4554 114th Street
• Urbandale, Iowa 50322
• 515-727-0665
• 515-251-8657 (fax)
• msteenhoek_at_soytransportation.org
• www.soytransportation.org