STC report highlights cost of unpredictable funding for locks, dams04/19/2018 | Policy, Transportation, Soybean News
By Lauren Houska, ISA communications specialist
A new Soy Transportation Coalition (STC) study highlights the need for predictable funding to improve crumbling infrastructure negatively affecting the nation’s inland waterways.
The U.S. economy and soybean industry relies, in part, on low transportation costs to stay competitive in the global marketplace. The STC report, “Predictable Funding for Locks and Dams,” released Monday shows how to do it.
As farmers continue to become more efficient and the amount of cargo shipped via rivers increases, the potential for unexpected, widespread, and prolonged failure of the locks and dams on the Mississippi and other waterways increases. The report indicates a crumbling system that lacks adequate funding fails to provide the level of reliability that farmers and transporters need to service soybean customers around the world.
STC Executive Director Mike Steenhoek said the current funding approach for lock and dam projects, which requires separate authorization and appropriation of funds by Congress, all but guarantees a project will be over budget and behind schedule.
“These cost overruns and construction delays of locks and dams we frequently witness should not be regarded as unintended consequences,” Steenhoek said. “Rather, they should be regarded as predictable outcomes.”
Using the current funding method, authorization for a project may be granted long before funds are appropriated. When money is appropriated, it may only cover a portion of the project, whether it’s a new lock or just a lock door.
“We will continue to see resources wasted and benefits of these important projects delayed until we are able to adopt an approach that provides funding in a predictable and reliable manner,” Steenhoek added.
The STC report, conducted by Texas A&M University, reiterated why the current approach is unreliable and often an insufficient use of resources.
Researchers took a hypothetical approach and compared a lock and dam project completed with reliable and efficient funding to one completed with the current method. Both projects had an initial estimated budget of $500 million and timeline of five years.
With reliable and efficient use of resources, the report showed the project could be completed on time and within budget. When the project is funded upfront:
- Inputs are purchased in bulk.
- Workers, equipment and materials are mobilized efficiently and on schedule.
- Inflation is not a factor.
Comparatively, the project completed with the current funding method would cost $573 million and take eight years to complete. Inconsistent, unreliable funding causes:
- Constant demobilization and remobilization of workers, equipment and materials.
- Higher material costs due to smaller purchase increments and inflation.
STC officials say the report clearly shows two approaches to the same project with drastically different outcomes.
“This study really puts numbers to common sense,” said Robb Ewoldt, an Iowa Soybean Association (ISA) and STC Board member from Blue Grass.
Ewoldt farms just miles from the Mississippi River. Nearly all of his grain is shipped to market on the waterway.
“I think STC is spending checkoff dollars wisely on research like this, highlighting locks and dams as a priority for farmers,” he said.
According to the U.S. Army Corps of Engineers, it manages 241 locks at 195 sites around the U.S. To keep transportation costs low, farmers heavily rely on locks that allow barges to transport bulk commodities up and down rivers efficiently.
One barge carries more than 52,000 bushels of soybeans compared to a semi at less than 1,000. A 15-barge tow can transport more than 850,000 bushels of beans to the Gulf of Mexico.
Dams create navigable pools of water in rivers. Locks allow barges and boats to step up or down from one water level to another.
If a lock goes down even for a short amount of time, it’s a serious problem. Grain elevators can’t move product so they are not likely to buy more. Prices drop and the United States’ reputation as a reliable grain supplier suffers.
Outages are costly and extremely frustrating to farmers who know the system could be much better if the government provided reliable funding to repair and replace aging infrastructure.
“I couldn’t run my business that way — I wouldn’t stay in business,” Ewoldt said, referring to the current unreliable and wasteful funding method. “The government should function more like a business. If we’re going to re-do a lock, let’s spend the money upfront and get it done in a timely manner.”
Jeff Jorgenson, an ISA Board member from Sidney, hopes government leaders will read the report, recognize the cost of patchwork repair and piecemeal funding, and understand the importance of appropriating money wisely.
“I think this study is a great approach to catch the attention of those that control the budget — our legislators,” Jorgenson said.
Currently, it’s unclear whether the Trump administration will follow through on campaign promises to significantly improve the nation’s infrastructure. The president unveiled a $1.5 trillion infrastructure plan in February that relied heavily on state, local and private spending.
While some may be concerned that recent issues like the trade spat with China could overshadow this topic on Capitol Hill, Jorgenson doesn’t see it that way. He said the problem isn’t going away — farmers, along with the transportation industry and other interested parties, will continue to ask for improvements until significant changes are made.
“We never lose sight of the big picture — that’s just how we operate,” Jorgenson said. “For years, we have made it known that locks and dams are a priority, and we will continue to make them a priority.”
Contact Lauren Houska at email@example.com.
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