Soybean farmers met with Louisiana Gov. John Bel on June 13 to present a $2 million ceremonial check for the lower Mississippi River deepening project. The deepening project received formal approval by the U.S. Army Corps of Engineers in February of 2020, and work commenced in September of 2020. According to the Soybean Transportation Coalition, there was a strong desire to have the ceremonial check presentation coincide with the beginning of the deepening project, but the COVID pandemic put these plans on a lengthy hold.

“It continues to be my pleasure to work with Louisiana leaders and stakeholders like the Louisiana Department of Transportation and Development, the U.S. Army Corps of Engineers, the Big River Coalition, and many others who have been so consequential in making this project a reality,” said Mike Steenhoek, executive director of the Soy Transportation Coalition, who attended the ceremony. “This project is a terrific example of teamwork between Midwest agriculture and Southern Louisiana. I look forward to continuing to help move this project forward until completion as well as continuing to broadly advocate for this key export region for U.S. farmers.”

Sixty percent of the nation’s grains are exported down the river, but the goal is to get to 70%. To do that, the river needs to be dredged from 45 feet to 50 feet in Baton Rouge, Gov. Edwards said during the ceremony, which was also attended by Meagan Kaiser, chairwoman of the United Soybean Board.

The overall project will cost approximately $245 million. It is being 75% funded by the federal government, and 25% by non-federal sources. 

The overall project has been conducted in three phases. 

Currently a 50 ft. or greater navigation channel has been achieved up to Mile 175. The remaining deepening work up to Mile 232 should be completed by early 2025. 

Research conducted by the Soy Transportation Coalition (STC) concluded that shipping costs for soybeans from Mississippi Gulf export terminals would decline 13 cents per bushel ($5 per metric ton) once the lower Mississippi River is dredged to 50 ft. A deeper river will allow both larger ships to be utilized and current ships being utilized to be loaded with more revenue-producing freight.  Average vessel loads will increase from 2.4 million bushels of soybeans (66,000 metric tons) to 2.9 million bushels (78,000 metric tons) – an increase of 500,000 bushels or a 21% increase.  

The research also identified the impact on interior basis – the difference between the local price a farmer receives and the market value established by the Chicago Board of Trade – for soybeans in 31 states if the lower Mississippi River shipping channel is dredged.

“It is well established that farmers located in closer proximity to the nation’s inland waterways and barge transportation enjoy a positive or less negative basis vs. soybeans grown in areas further removed,” Steenhoek noted. “As a rule, the less-costly and more efficient the supply chain is subsequent to farmers delivering their soybeans, the higher value a farmer will receive for the bushels of soybeans produced.”

The STC research estimates farmers in the 31 evaluated states will annually receive an additional $461 million for their soybeans due to dredging the lower Mississippi River to 50 ft. While those states located in close proximity to the inland waterway system will realize the most benefit, states further removed will also benefit from the increased modal competition between rail and barge.

“When modal competition increases, a downward pressure on shipping rates will often occur. With barge transportation becoming more viable for a larger percentage of the soybean-producing areas of the country, there will be a greater degree of overlap between areas served by railroads and barge,” explained Steenhoek. “Soybean shippers will benefit from this modal competition.”