How infrastructure investment benefits US feed industry

The Trump Administration’s infrastructure proposal could have significant long-term benefits for rural communities and the U.S. feed industry.

doranjclark, iStock.com
doranjclark, iStock.com

The U.S. intermodal transportation system is crucial to the profitability and efficiency of American agriculture. From the export of animal proteins via our nearly 1,000 ports to the transport of grains to local feed mills, at some point in the production cycle all agricultural products make their way along a rural road, railway or inland waterway.

Shortly after his inauguration, 200 agricultural stakeholders submitted a letter urging President Trump to hold true to his campaign promise to rebuild America’s rural infrastructure.

Animal feed accounts for less than 4 percent of rail transportation. — Association of American Railroads

“There is a sense of optimism that there may be a golden opportunity for infrastructure investment that will really make a difference long term — for agriculture and the economy as a whole,” says National Grain & Feed Association (NGFA) president Randy Gordon. “It’s broader than transportation — and there are folks on the rural side concerned with broadband and electric programs — but we certainly think transportation rises to the top.”

The unveiling of Trump’s $1 trillion infrastructure proposal may be released as early as May; however, in the short term, the details of the bill and its timeline remain uncertain. How this proposal will be funded and the allocation of those funds also remain a mystery. It is known that part of his plan includes loosening regulations to speed up the permitting process and streamline construction.

Sources suggest the Trump administration intends to use tax breaks to encourage investment in bridges, roads and other construction projects or that the proposal may be added on to another bill, but either of these strategies will likely be opposed by Democrats and conservative Republicans for several reasons, including apprehension about public-private partnerships, bids for less goverment spending, etc,.

In addition, many wonder if the proposed funding goes far enough. The American Society of Civil Engineers (ASCE), for example, estimates upwards of $2 trillion to address the highest priority infrastructure projects across 16 categories by 2025.

Specifics aside, infrastructure improvements will be rolled out over the next decade — and agribusiness must ensure that rural interests are part of the conversation.

The feed industry’s stake

Within the infrastructure package, the U.S. feed industry’s primary interest lies in improvements to highways, roads and rural bridges.

“Good rural transportation is extremely important to the feed industry and I think that will be a focus within Congress and the Trump Administration,” Gordon says, noting the association’s involvement in a broad agribusiness working group and developing infrastructure-related recommendations.

NGFA has met with the Administration’s National Economic Council’s (NEC) special assistant who is working on infrastructure legislation; they also have had several visits with Congress in recent months.

“As it pertains to highways and rural bridges, it’s important to get in front of Congress right now and talk about why they need to focus — not just on urban areas — but rural infrastructure,” Gordon says.

Rather than taking a federal approach, NGFA feels a block grant will be the best approach to fund these projects because it will give local and state governments the ability to prioritize specific investments within their states.

The role of inland waterways

Looking to grain exports, Gordon stresses the important of waterway modernization as a key element to the success of the overall transportation system.

“Upwards of 60 percent of agricultural exports reach foreign markets via our waterway system,” he says. “In the last decade, we’ve seen a 700 percent increase in unscheduled work stoppages for repairs.”

Barge transportation disciplines the rates for both trucks and rail, Gordon notes, keeping this traffic on the waterways alleviates the burden for the road system and rail carriers.

“Even if a feed manufacturer doesn’t ship anything or receive ingredients by inland waterway, it really does have a positive impact on feed manufacturers because of that competition and allowing the United States to have an efficient transportation system overall,” Gordon concludes.

What can you do?

“Sometimes I get the impression feed manufacturers feel like infrastructure isn’t their problem, but, really, as a semi-end user in the supply chain, it is,” explains Ken Eriksen, senior vice president, transportation, with Informa Economics.

Eriksen suggests feed producers get involved on the local level to help prioritize infrastructure projects. He also urges rural stakeholders to compile an economic impact report to help them make their case with local lawmakers and in the community.

“Agribusiness needs to be engaged with local transportation boards and public works departments and offer to participate on transportation committees to get involved in infrastructure decisions and to advocate for projects that will help them,” Eriksen says, also suggesting interested parties should consider running for public office to keep agriculture and agribusiness needs in the forefront.

A proactive, educated approach to swaying infrastructure investment can help move important rural construction projects up on a state or local goivernment's prioritization list.

 

The state of U.S. infrastructure

Given the U.S. economy's reliance on transportation infrastructure, one may be surprised to learn how crucially rehabilitation investment is needed. According to ASCE’s 2017 Infrastructure Report Card, a national assessment of eight criteria conducted by the association’s Committee on America’s Infrastructure, gave U.S. infrastructure a D rating.

Drilling down to focus on transportation systems critical to agriculture, with the exception of rail, which scored a B, the rest received questionable marks: waterways, D; roads, D; ports, C+; and bridges, C+. Additional statistics highlighting infrastructure inefficiencies:

  • One-quarter of U.S. bridges require significant repair or cannot efficiently handle the toll of modern traffic and weights. (ASCE)
  • More than 55,000 American bridges (10 percent) are “structurally deficient.” (The American Road & Transportation Builders Association)
  • Most locks and dams are beyond their 50-year design life; nearly half of vessels experience delays. (ASCE)
  • 15 percent of roads are rated in poor condition; 39 percent are considered fair. (TRIP)

Visit this website to view ASCE’s full infrastructure report card.

 

In 2015, TRIP, a private nonprofit organization that researches, evaluates and distributes economic and technical data on surface transportation issues, released its report, "Rural Connections: Challenges and Opportunities in America’s Heartland." To learn more about TRIP's take on rural roads and bridges, click here.

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