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Move to reduce soybean transport costs

By Sarah Hills , 10-Sep-2008

Soybean producers are pooling resources to combat rising transport costs, compounded by heavy rain and flooding, in a move which could ultimately benefit food manufacturers, according to an industry analyst.

Transportation has increasingly become an obstacle to profitability for the industry, according to The United Soybean Board, which oversees the soybean checkoff, a collective of farmers who invest a portion of their profits to fund research and promotion.

The checkoff has just joined with the American Soybean Association and seven other state soybean associations to form the Soy Transportation Coalition, which will look at ways of keeping costs down to improve the global positioning and profitability of US soybeans.

Gerard Klein Essink, director of PROSOY Research & Strategy, based in The Netherlands, told FoodNavigator-USA.com the move was more likely to be beneficial to overseas food manufacturers rather than domestic customers. However, all manufacturers were likely to expect to benefit from any savings.

Essink said: “If I was a customer buying American soybeans now and knew who was in the coalition, I would say, pass on the profits to me.”

He added that cost savings through the transport venture may make exports more competitive and said: “For those customers or manufacturers who are not yet a customer buying from America, it is another supply source that was maybe in some cases not market relevant before because of prices.

“In food, in Europe, ID (Identity Preserved) is very important and if there are more competitive exports from America of IP soybeans, food manufacturers who are not yet buying from America have the advantage of another supply.”

ID soybeans are part of a system of preserving the quality and identity of soybeans from seed to harvest to delivery.

The USB said that the weather has been a challenge for many soybean producers this season, with heavy rains and flooding affecting much of the soybean-growing area. Similarly, flooding across the Midwest brought barge traffic to a standstill on many major rivers.

Traditionally, US transportation and infrastructure has given US soybean farmers a competitive advantage but now rail transportation is of particular concern, highlighting the need for cooperation.

The USB said that railroad surcharges can be as high as $0.70 per car, per mile. For a 110 car unit train transporting soybeans 1,800 miles to the Pacific Northwest, this can equate to $130,000 in fuel surcharges alone.

Joe Meyer, USB transportation initiative leadership team member and soybean farmer, said: “The reality is we export almost 50 percent of what we produce, and how we deliver it there really affects the local price we receive for our soybeans.”

The coalition aims to provide information and education on behalf of the US soybean industry on transportation issues to help enhance it global position and profitability. The states who are partnering include Illinois, Indiana, Iowa, Nebraska, North Dakota, Ohio and South Dakota.

USB is made up of 68 farmer-directors who oversee the investments of the soybean checkoff on behalf of all US soybean farmers.

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