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Corn+Soybean Digest

Bye-Bye Barge Traffic?

Corn and soybean exports from the Midwest are doomed to diminish if Congress doesn't move quickly to upgrade the region's aging and inadequate lock and dam system, warn many ag leaders. Dee Vaughan, president of the National Corn Growers Association (NCGA), is one of them.

“Lock delays in the Upper Mississippi Basin cost U.S. farmers and businesses about $94 million per year,” says Vaughan. “Failure to make improvements will likely depress the value of Midwestern corn, soybeans and wheat by $364 million annually by 2020.”

A March 2002 study, conducted for NCGA by Michael Evans of Evans, Carroll and Associates, found numerous economic reasons to improve the locks and dams on the Upper Mississippi River-Illinois River Waterway by 2020. Failure to do so, writes Evans, will:

  • Increase barge transportation costs 17¢/bu.,

  • Reduce farm income by $562 million,

  • Reduce corn exports by 68 million bushels, and

  • Reduce soybean exports by 10 million bushels.

Delaying upgrades to the system will also cost U.S. farmers and businesses future opportunities to increase market share as Asian countries become more affluent and free-trade agreements expand, says Jerry Fruin, University of Minnesota extension economist.

“As China becomes more of a trading nation, it will become more of an ag importer,” he says. “To take advantage of this and other trade opportunities, the U.S. ag industry needs to have an adequate infrastructure to meet most levels of peak export demand.”

Vaughan says the nation's transportation system is coming up short. He likens transporting barges on the Upper Mississippi River to driving today's modern trucks and cars on 1930s highways.

Gerry Brown, president of Cargo Carriers, a division of Cargill Marine and Terminal, Inc., agrees. “We have gates on locks in such bad shape they are ready to collapse,” he says. “The problem is that Congress, for whatever reason, won't appropriate the necessary funds. It keeps putting it off, but reckoning day has come.”

Congress first authorized and appropriated money to ensure a 9 ft.-navigable channel on the Upper Mississippi River system in the 1930 Rivers and Harbors Act.

Today, the Mississippi's 29 locks and dams and nine others on the Illinois River enable bulk commodities to flow between the nation's heartland and Gulf ports. However, lock repairs and maintenance are routinely postponed. According to NCGA, the Upper Mississippi River system currently has deferred more than $330 million in necessary maintenance bills.

Lock 24 is just one example. It was completed in 1940 with an original life span design of 50 years, says David Nulsen, U.S. Army Corps of Engineers assistant lockmaster, Clarksville, MO. “It's been 64 years and ours is the first one in the St. Louis district to have major work done on it,” he adds. That work includes replacing culvert valves, emptying and filling valves and replacing deteriorating concrete walls in the lock chamber itself.

Only three of the 29 locks on the Upper Mississippi River system (locks 19, 26 and 27) can accommodate modern barge tows spanning nearly 1,200 ft. in length. The other locks measure 600 ft. and require a standard 15-barge tow to split the tow into two sections, pass through the lock separately and reattach after exiting the other end.

Attaching and reattaching barge tows to fit through locks is dangerous and time-consuming, says Nulsen. “If a lock were expanded (to 1,200 ft.), it would help to improve safety and only take about 30 minutes to move a 15-barge tow through,” he says. “Now it takes more than 1½ hours.”

Barge bottlenecks on the Upper Mississippi River start at Lock 25, the first 600-ft. lock chamber going north, says Nulsen. Each 600-ft. lock in the system adds to the bottlenecks.

Most of the congestion occurs between Locks 20 and 25 on the Mississippi, and at Peoria and LaGrange on the Illinois River, says Lynn Muench, vice president, American Waterways Operators (AWO), Midcontinent office.

“It's not unusual for a tow to sit at just one lock for one or two days,” says Muench. “Delays at four to five locks can add up to 10 days operating time. With operating costs of $5,000-10,000 per day, barge tow losses due to delays are substantial.”

To install the upgrades needed to stop delays, however, would literally require an act of Congress. “We shouldn't have to go back to Congress to appropriate annual improvements or get stuck in a 10-year process to decide what we should do next,” says Fruin.

The Corps began its multi-year navigation study of the Upper Mississippi River system in 1991 at a cost currently in excess of $67 million. A draft report is due in April and a final report is due in October.

Charging congestion fees might be a short-term way to manage barge traffic, says Fruin, but he emphasizes that any such fees should not become permanent and should only go into effect during peak barge traffic.

He adds that improvements and extensions to the locks still need to be made. Rather than wait for a report from the Corps that is continually delayed, however, he suggests Congress automatically allocate $100-200 million annually to upgrade and improve the parts of the lock and dam system that need it most.

Brown concurs that the Upper Mississippi River lock and dam system needs head-to-toe refurbishing.

Thirty-five years ago, the U.S. ag industry fed the world, he says, but the U.S. has now been reduced to a residual supplier, due in a large part to lock delays that have contributed to lost market share. He adds that as food manufacturers have adopted a just-in-time delivery approach to save storage and spoilage costs, they increasingly contract with suppliers that can guarantee reliable, on-time shipments.

AWO's Muench agrees. “The (barge) delays have really harmed the Midwest economy,” she says. “They have not allowed us to be as competitive with Brazil and Argentina in the agricultural export market.”

Fruin predicts that the U.S. will continue to lose market share to Brazil and other countries if upgrades to the entire U.S. transportation system — rail, barge and roads — aren't made on a routine basis.

Not everyone agrees, however, that extending the length of the locks on the Upper Mississippi River system makes economic sense.

“We'll spend four times more to extend the locks than we'll get out of them,” says Phil Baumel, an economist emeritus at Iowa State University. “I don't think we should get rid of them, but I don't think we should extend them either. The outlook for agricultural exports just isn't that bright.”

Baumel says new technology and development are helping the rest of the world become increasingly self-sufficient in food production. That will reduce, not increase, the need to import food from the U.S. On a per-bushel basis, he says, the savings for extending the locks “is very small.”

Studies show that, on a per-bushel basis, the congestion at the lower locks on the Upper Mississippi River system currently increases barge transportation costs only 3-5¢, notes Fruin. Still, he supports extending the locks.

“We've always had to ship grain three to four times as far as our major competitors, except Canada, which is heavily subsidized,” Fruin says. “That's not going to change. But to stay competitive, we'll have to improve all modes of transportation and find efficiencies wherever we can.”

Farm Groups Back Corps Proposal Six

During October 2003, the U.S. Army Corps of Engineers scheduled a series of public meetings in five Midwestern states (Missouri, Illinois, Minnesota, Iowa and Wisconsin) to obtain public comment on its proposed navigation study.

The Corps is considering six alternatives “on whether to upgrade the outdated series of locks and dams on the inland waterways system.”

Almost the entire agricultural industry supports Proposal Six. It calls for installing or extending several locks on the Illinois and Mississippi rivers and installing tie-off facilities and switchboats at several other locations.

Bob Kruger, Hayfield, MN, was one of several farmers who testified in favor of Proposal Six at a public meeting in Bloomington, MN. Kruger and his sons, Roger and John, regularly truck grain 70 miles from their farm to grain terminals on the Mississippi River in Winona, MN.

Barge traffic is the most economical and safest method of bulk transportation “that disturbs people and the environment the least,” says Kruger. He adds that river transportation helps reduce the nation's dependence on foreign oil.

“A gallon of fuel in a towboat can push one ton of freight 2½ times farther than a train and nine times farther than a truck.”

He urges other farmers to speak in favor of improvements to the Mississippi lock and dam system to prevent losing more grain exports to countries like Brazil.

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