Despite headwinds, soybean farmers hoping for a strong export year
1/19/2022
By Grace Connatser, Associate Editor
Even with supply chain disruptions, labor shortages and severe weather presenting challenges, soybean farmers figure to have a strong export year in 2022, says Mike Steenhoek, executive director of the Soy Transportation Coalition (STC).
With the soybean industry relying on bulk movements, most often by rail car and barge, the key export period is between fall and spring — the time between harvesting and planting soybeans.
“There's a lot of strong demand fundamentals with our industry. Supply was very strong this past harvest, [it was a] really robust harvest,” says Steenhoek of STC, an organization comprising 13 state soybean boards, the American Soybean Association and the United Soybean Board.
The 13 participating states in STC — which aims to position soybean industry stakeholders to benefit from a transportation system that delivers cost-effective, reliable and competitive service — encompass 85% of total U.S. soybean production.
Despite the onset of the pandemic, 2020 was a solid year for soybean exports, Steenhoek says. While exports dipped slightly in 2021, business for soybean farmers was good and it should stay that way this year, he says.
Not that there aren’t headwinds. The labor shortage continues to plague many industries, especially those with significant ties to trucking. For soybean farmers, it can be difficult to move product due to a lack of long-haul route drivers, Steenhoek says. A typical journey for soybeans involves a two-week stint between the Upper Mississippi River and the Port of New Orleans (Port NOLA), which annually exports more soybeans than any other U.S. port. It’s difficult for trucking companies to find drivers willing to spend those kinds of hours on the road, he says.
‘Micro examples’ of supply chain dysfunction
Farmers also continue to face what Steenhoek calls “micro examples” of supply chain dysfunction, such as lack of parts available to repair farm equipment including tractors and combines. Farmers have had equipment go out of commission for days or weeks due to a missing part, which in the agriculture industry can be a huge setback for those with limited equipment. When said examples of “dysfunction” happen to many farmers at once, it creates waves, Steenhoek says.
“Things aren’t flowing like they normally do,” he says. “The biggest challenge has been [for] those who export soybeans or other agricultural products by container. The timely delivery, the sufficient quantity of containers, getting them picked up — that's all becoming really problematic, and so that's something that there's not really an elixir or a magic wand for at the moment.”
Meanwhile, soybean farmers and other commodity producers can expect increased demand from grocery stores. Grocery stores are looking to get ahead of the product shortage curve;during the pandemic, many have run out of basic products much more often than usual, Steenhoek says. In response, some stores over-order products to avoid shortages, putting more pressure on soybean producers to deliver supply, Steenhoek says. And that increases the need for efficient delivery of soybeans to buyers, he adds.
While soybeans mostly are shipped in bulk, exports by container grew 6% to 7% in the past year, in part because of customers’ increasing interest in quality assurance, weather protection and environmental sustainability, Steenhoek says. Plus, some customers now prefer smaller, more frequent deliveries rather than less-often bulk deliveries. Ultimately, the agriculture industry is experiencing more segmentation and requires a more “nimble and nuanced” supply chain, he says.
More investment also is required, some of which should come via the $1.2 trillion Infrastructure Investment and Jobs Act, which President Biden signed into law last fall. It'll provide $110 billion for roads, bridges and major infrastructure projects; $11 billion for transportation safety; and $66 billion for freight and passenger rail.
Additionally, $17 billion has been set aside for port infrastructure. Steenhoek hopes a significant amount of the money goes toward improving infrastructure in rural areas.
“We make sure that the needs of rural America don't get just entirely displaced by the needs of urban America,” he says. “We have to be attentive to both.”
STC pays close attention to the nation’s lock and dam systems, especially along the Mississippi River. The organization also keeps tabs on the allocation of maintenance and operation funding, as well as money for roads and bridges.
A project Steenhoek says he has been proud to lead during his 14-year STC tenure is the deepening of the Lower Mississippi River between Baton Rouge, Louisiana, and the Gulf of Mexico. The goal: deepen the river to 50 feet minimal water depth. Deepening the channel to 48 feet has already been approved, and it’ll provide a more competitive terminal scene at Port NOLA. STC provided $2 million in funding — raised from soybean farmers to offset costs — for the private-public partnership to deepen the channel, Steenhoek says. The project was greenlighted in early 2020.
“We spent a lot of time doing research on that project and explaining how it benefits soybean farmers,” Steenhoek says. “You’re seeing this export channel getting more … capacity and competitiveness. That’s going to be a real significant accomplishment.”