Brazil and Panama Highlight Importance of Transportation

By Mike Steenhoek

On March 12-24, the Soy Transportation Coalition (STC) joined the United Soybean Board in sponsoring Top Producer magazine’s 2010 “Frontier Tour” to Panama and Brazil.  The focus of the trip was the critical role of transportation in the profitability of U.S. agriculture.  STC board members Dean Campbell, Dennis Feiken, Ed Ulch, Scott Gauslow, and executive director Mike Steenhoek participated on the trip.

While in Panama, the group visited the canal and met with officials from the Panama Canal Authority to discuss the role of the canal in facilitating agricultural exports.  The group also received an update on the expansion of the Panama Canal.

At 48 miles in length and accommodating over 14,000 ships per year, the Panama Canal is an essential artery for U.S. agricultural exports.  In 2009, 57 percent of U.S. grain – 1.35 billion bushels – exported from the Gulf of Mexico traveled through the Panama Canal.

The expansion project – currently underway – involves the construction of a third channel with a new set of larger locks – allowing most of the largest ships currently in operation to utilize the canal.  The project is scheduled to be completed in 2014 at a cost of $5.2 billion.

While the expansion project will mitigate the bottleneck currently experienced at the Panama Canal, this bottleneck will simply shift to U.S. ports or to our interior waterways unless our country more adequately invests in our transportation system.  After all, our overall logistics chain is only as strong as its weakest link.

More than half of the 240 operational Army Corps of Engineers-funded lock chambers are over 50 years old – exceeding their economic design lives.  Of the 37 locks on the Upper Mississippi River system, only three have more than a single lock chamber.

While in Brazil, the group saw many examples of poor quality roads that serve as significant obstacles to the delivery of Brazilian agricultural products.  However, the group also observed numerous examples of newly constructed, well maintained roads that are enhancing Brazil’s competitive position in the world marketplace.  One producer of soybeans, corn, and cotton in Brazil remarked to the group, “The road system today is night and day better than it was seven years ago.”

Brazil realizes the country’s transportation system is an obstacle to its agricultural economy and the main reason U.S. agriculture maintains a competitive advantage in the export market.  Transportation enables U.S. agricultural products to be the more economical choice for our international customers.

Brazil has ambitious plans to invest in its infrastructure.  The nation’s agricultural economy will benefit from this investment.  U.S. agriculture cannot assume our competitive advantage – due to our superior transportation system – will continue in perpetuity.  It is essential that farmers increasingly prioritize investment in our nation’s infrastructure.  Our international competitiveness and farmer profitability depend on it.

Additional information about the “Frontier Tour” can be found at: http://www.soytransportation.org/STC/, http://www.unitedsoybean.org/Programs/Frontier_Study_Tour_Program.aspx, and http://www.agweb.com/TopProducer/Frontier.aspx.

-Funded through the Soybean Checkoff