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Testimony
of Tim Burrack
National Corn Growers Association
Mississippi River Caucus
U.S. House of Representative
March 9, 2000
Good afternoon.
My name is Tim Burrack and I am a farmer from Arlington, Iowa. I am
also a member of the National Corn Growers Association’s Board of Directors.
I would like to thank the Mississippi River Caucus for giving me the
opportunity to voice corn growers’ views on the current state of our
river system.
The National Corn
Growers Association is very concerned about the status of the lock and
dam system on the Mississippi and Illinois Rivers. Many of the locks
are over 60 years old and in need of repair due to major increases in
barge traffic and increasing corn production.
The future financial
success of corn growers throughout the nation is tied to the Mississippi
and Illinois Rivers system. For this reason, infrastructure improvements
are a top priority for the National Corn Growers Association. We are
seeking the extension of the 600-foot lock chambers at Mississippi River
Lock and Dam 25, 24, 22, 20, 21 and LaGrange and Peoria locks on the
Illinois River to 1,200-foot chambers. To further improve the river’s
efficiency, guidewalls at Mississippi L&D 18-14 also need to be
extended.
Improvements in
the U.S. waterways system are urgently needed. These aging structures
no longer can accommodate the volume of traffic or the current size
of the typical 1100-foot tows now employed on the Upper Mississippi
River. This results in long delays at each of these facilities, averaging
three to four hours. It has been estimated that the delay due to outdated,
inefficient locks on the Upper Mississippi River costs approximately
$900 per barge. If we are unable to move agricultural products in an
efficient manner, the United States will become less and less competitive
in export markets and we will lose domestic markets as well.
Unless we make improvements
along the river, U.S. agriculture will pay the price. We face higher
transportation costs as delays on the river increase. We also face the
potential loss of domestic and export markets if our transportation
costs do not allow us to remain competitive in these markets. The state
of transportation infrastructure in the United States is a major concern
for our nation’s corn growers and for U.S. agriculture as a whole.
Changes in agricultural
policy have made farmers more aware of international competitiveness
and the need to maintain and expand foreign markets for U.S. agricultural
products. Without continued investments in our transportation infrastructure,
U.S. farmers are placed at a severe disadvantage as foreign countries
have increased their commitment to developing their agricultural export
markets.
For the past 7 years,
we have watched the U.S. Army Corps of Engineers conduct the $54 million
Upper Mississippi-Illinois Waterway Navigation Study, and I can assure
you we have tried to be fully engaged in the study process every step
of the way. Perhaps we were naive in thinking that this study would
confirm the obvious: that the majority of locks are outdated, under
capacity, under maintained, and in dire need of improvement. Instead
we have seen the Corps produce one implausible theorem after another.
They claim that rail rates will not rise, even though they did not study
capacity constraints at the ports. They have decided that the advances
currently being made in biotechnology will not lead to beyond trend
line yield increases. They have not taken into account what our competitors
are doing to strengthen their export positions. Finally, they are indicating
that the environmental benefits of river transportation will not be
accounted for properly.
Let me state, we
believe that the improvements on the Mississippi and Illinois Rivers
are highly justified and the benefits far outweigh the costs. Specifically
even greater benefits could be calculated if the Army Corps included
1) international competition 2) rail constraints and increasing rail
rates and 3) the increasing yields from biotechnology.
NCGA has commissioned
our own study regarding the impact to corn, soybean and wheat growers
in the Mississippi River Basin if these improvements are not made. I
have attached state specific information, but overall, growers will
lose $364 million per year by 2020 if these improvements are not made.
However, if the improvements are made, the benefits to growers are calculated
to be $169 million annually. These calculations are based on Army Corps
of Engineers data, and generated through an Army Corps of Engineers
and USDA model.
Iowa is the second
largest shipper of corn and soybeans on the Mississippi and Illinois
Rivers. Iowa farmers shipped an average of 203 million bushels of corn
and 66 million bushels of soybeans on the Mississippi River per year,
during the 1990s. Additionally, a large volume of Iowa grain is railed
or trucked to the Illinois River for transshipment. For corn, the Mississippi
shipments equal more than one out of every eight rows grown in Iowa,
and 1997 corn shipments were worth over $340 million.
When barge rates
rise, corn prices throughout the nation drop. If the rates rise because
the barge lines are at capacity for an extended period, we know the
towing companies will expand their fleets. However, many of the locks
are at or well beyond their design capacity. Pushing more traffic through
these facilities will only increase the delay times, causing rates to
rise again. Ultimately farmers, other industries, and all users of the
rivers will pay the price.
Let me also talk
briefly about some alarming trends facing American agriculture. This
year, livestock feeding and processing levels are at near record levels,
yet corn prices are at some of the lowest levels in a decade. The primary
reason for this is low exports. As corn growers we are committed to
increasing the domestic uses of corn and expanding our world markets.
Our competitors
are doing everything they can to improve their position in global markets.
For years, America’s advantage in the export business rested with our
transportation system. Our competitiveness is not based on our cost
of production, but on our ability to deliver corn to deep-water ports
at a lower total cost than other countries.
In 1998, a delegation
of corn growers visited Argentina to study that nation’s transportation
system. Argentina has invested more than $650 million in a dredging
project. This project has lowered the overall ocean freight rates paid
by Argentine grain. More importantly, the ocean freight differential
between Argentina and New Orleans shrank. More dredging is planned or
is already underway. In addition, economic reforms in Argentina are
leading to expanded grain production, the vast majority of which will
find its way into the world market, directly competing with U.S.-grown
grain.
The fact finding
mission to Argentina raised several concerns for NCGA. These concerns
include: 1) the amount of support from government, industry and farmers
for upgrading the river infrastructure in Argentina; 2) the speed at
which these improvements are being made; and 3) the ability for Argentina
to produce and ship corn more cost effectively than can be done in the
United States.
Argentina is our
closest competitor in corn exports. As Argentina’s farmers adopt more
efficient production technology, their export potential will continue
to expand. The cost of production of corn in Argentina is currently
on par with the United States. But if Argentina can move its corn to
port more efficiently and cost effectively, the country will be able
to compete directly for our export markets as well as our domestic markets.
Last year, I had
the opportunity to visit Brazil, and I can tell you it was an eye-opening
experience. I was able to spend several days with Sr. Maggi, the world’s
largest soybean producer. He is part of a group that has invested in
a barge system on the Madera River. They are shipping soybeans from
north-central Brazil to a new floating elevator on the Amazon River.
In addition, this group is studying the feasibility of purchasing another
port on the Amazon. It was obvious to me that higher transportation
costs were limiting Brazilian agricultural expansion. But the gentlemen
we met have solved these problems and they are poised to dramatically
increase their production.
As these Brazilian
projects move forward, how will we compete?
We have one shot:
improve the efficiency of our transportation network. More precisely,
improve the Upper Mississippi and Illinois Rivers by expanding the seven
locks I mentioned earlier. NCGA is seeking in the Water Resources Development
Act of 2000, the contingent authorization of 1200 foot capacity at Mississippi
River lock and dam 20, 21, 22, 24 and 25 and the LaGrange and Peoria
Lock on the Illinois River. Also the addition of guidewalls at Mississippi
River lock and dams 18-14.
We are standing
at a precipice. Is the U.S. about to surrender another industry to our
competitors? If so, the real tragedy is not that we as a nation couldn’t
compete, but that we lacked the foresight to make the necessary investments
to hold onto our grain export markets.
Thank you again
for the opportunity to address this caucus, and I welcome your questions.
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