A pandemic-induced supply chain meltdown, followed by drought and high interest rates are at the heart of current export issues.
“The strong U.S. dollar makes imports relatively less expensive, but it makes it difficult for our exports to compete globally because our products are priced in a relatively expensive dollar,” explains Veronica Nigh, American Farm Bureau Federation senior economist.
However, infrastructure improvements should help with future snafus and make exports more durable.
In November, USDA announced a record ag trade deficit of $16.6 billion and released a list of 41 port improvement projects worth $653 million. The Port Infrastructure
Development Program, funded by the recently approved Infrastructure Law, is part of the largest — $17 billion — investment in ports and waterways in U.S. history. The money is earmarked to help strengthen supply chain reliability, speed up the movement of goods, and improve safety, reliability and resilience of ports.
This fall, Farm Journal’s Chip Flory and Michelle Rook traveled to the Port of Grays Harbor in Aberdeen, Wash., and the Port of South Louisiana with the United Soybean Board (USB) — two very different ports with two very important jobs.
Crush Goes West
The Port of Grays Harbor is home to AGP, a soy processor working to double soybean meal loading capabilities in the next couple of years. The port is an important infrastructure link for U.S. farmers getting their product to markets in southeast Asia.
“We’re the largest soybean meal exporter on the west coast,” says Gary Nelson, executive director at the port. “We found a niche that works for us.”
The port will play an even more essential role in the near future as the soybean export market experiences a shift due to expanding soybean processing capacity, explains Mac Marshall, vice president of market intelligence for USB.
“If you look at all the company announcements that have been public today, we’re looking at roughly a 30% expansion, maybe a shade higher than that, in the U.S.,” he says.
Nelson says that’s also driving the current expansion and investment at the port with AGP.
“AGP has worked on a new ship loader and dump buildings, so we’re making enhancements to the dock by adding fender systems and a new stormwater system to ensure the runoff is not going to harm any of our fish and our environment here in Grays Harbor,” Nelson says.
The port has also invested in dredging and the third addition to the rail line since 2000.
“We’re going to add another 50,000' of rail on dock rail, and it will probably be in the $30 to $35 million range,” Nelson adds.
USB and soybean producer groups in the northwestern Corn Belt have also contributed to infrastructure feasibility studies to aid the project.
Construction is currently underway with a target for competition in 2025.
“Investment toward that means dollars back in farmers’ pockets,” Marshall says. “When you have more efficient transportation, you don’t take the same hit on basis.”
Chip’s Perspective: Soybean Crush Pipeline
U.S. fuel refiners are investing in renewable diesel, which means they’re investing in oilseed crushing facilities to secure feedstock for those refineries. Some project soybean crush as high as 2.6 billion bushels by the 2026-27 marketing year (up 18% from the crush record set in 2022-23).
Soybean oil from the expanded crush is spoken for. If there is “uncommitted” soybean oil, it will easily find a home in the fuel tank of a semi, jet plane or train engine. An 18% increase in soybean meal production points to a mountain of meal left over at the end of each year. Refiners are making the investment in soybean crush to incentivize U.S. producers to increase production, and U.S. exporters are gearing up to export more meal. The final link in this chain is USB directors (and others) helping foreign protein producers understand how meal increases feeding efficiency in pork, poultry and fish production. It’s a well-planned, logical process that increases odds of success for all involved.
The Mighty Mississippi
The massive Port of South Louisiana is 54 miles long and handles approximately 60% of U.S. corn and soybean exports. It’s the No. 1 export port for grain by volume in the U.S. and a significant link for moving grain down the Mississippi River — handling products from 31 states that are eventually exported around the world to more than 90 countries.
The efficiency of this key outlet also helps keep freight rates down.
The journey, because it’s by barge, is very economical” says Mike Steenhoek, executive director of the Soy Transportation Coalition. “It’s very reliable and it’s really one of those secrets to our success.”
That competitive edge has been threatened the past two years with historically low water levels on the inland waterway system tied to the drought. However, new investments are pouring in to help mitigate a number of those challenges.
“The United Soybean Board invested $2 million to help underwrite part of the cost of deepening this lower stretch of the Mississippi River from a minimum of 45' of water depth to 50',” Steenhoek says.
That deeper depth allows another 500,000 bu. of soybeans to be loaded for export, which helps to lower freight rates and adds to the overall value of the soybeans being exported.
“Our $2 million investment is getting a return of basically 13¢ per bushel,” explains Garrett Marsh, director of the United Soybean Board and a Louisiana farmer.
The dredging project on the Mississippi River is only two-thirds of the way done, but it is already returning tangible benefits.
“Last year, we actually saw a net increase in tonnage for our port for the first time in six years,” says Micah Cormier of the Port of South Louisiana.
Currently, the channel is 50' or greater from the Gulf of Mexico to about river mile 170, Steenhoek says. When the project is complete it will run through river mile 232.
The Port of South Louisiana has also been able to underwrite some much needed improvements, including new cranes that will help move products more efficiently.
Chip’s Perspective: River Revival
In August 2005, Hurricane Katrina caused the greatest disruption to Gulf grain exports I’ve seen.
But with the bad comes the good. The draft on the lower Mississippi River was increased 5’ with Louisiana, the Port of South Louisiana, the U.S. government and U.S. soybean farmers all contributing. Port CEO Paul Matthews says this allows three vessels to carry as many bushels into the Gulf that required five before, equaling about $1 million per foot per vessel per trip into the port.
Two years of low water levels have shaded those benefits. One year with normal river conditions in the Midwest will help bring export demand back to U.S. corn and soybeans and some of that “$1 million per foot per vessel per trip” to Midwest producers.
More needs to be done (expansion of locks and dams, for example) for the U.S. to regain a logistical advantage. But seeing the investment at work gives me confidence it can be done.
