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Soy Transportation Coalition

Soy Transportation Coalition Overview The Transportation Challenge Establishing the Soy Transportation Coalition Action Steps Questions/Feedback The Transportation Challenge

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Soy Transportation Coalition

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  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

  4. 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

  5. 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. “(BNSF’s) 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%

  6. 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

  7. 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

  8. 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 nation’s 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

  9. The Transportation Challenge Question – If our nation’s 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?

  10. 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)

  11. 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.

  12. 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. agriculture’s 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 can’t “pass the buck.”

  13. 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 STC’s positions & messages are increasingly penetrating the overall transportation debate (education, not lobbying)

  14. 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.

  15. Potential Questions… • Why establish a group specific to soybeans? Are we reinventing the wheel? (cont’d) • 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.

  16. 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.

  17. 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.

  18. Thank you! Mike Steenhoek, Executive Director Soy Transportation Coalition 4554 114th Street Urbandale, Iowa 50322 515-727-0665 515-251-8657 (fax) msteenhoek@soytransportation.org www.soytransportation.org

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