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What’s to become of Iowa’s rural roads, bridges?

By Staff | Mar 18, 2014

DARWIN FRANZEN, manager of the Hinton Co-op, joins Rob Jacobs and Dave Mullenburg, of the Ocheyedan Co-op, in a discussion of agricultural transportation needs during a February Iowa Soybean Association’s transportation seminar in Sioux City.

SIOUX CITY – Are county roads as we know them today destined to become an extinct species?

This question loomed as transportation exports viewed the present state of the agricultural infrastructure during the Feb. 12 Iowa Soybean Association Transportation Seminar in Sioux City.

It’s an issue not to be overlooked, said Mike Steenhoek, executive director of the Iowa Soybean Association’s Soy Transportation Coalition, who proposed county governments abandon poorly maintained rural roads, using those savings to develop a streamlined system of higher-caliber secondary roads.

He said agriculture needs a sound and efficient transportation network for soybeans as well as other Midwest commodities

Steenhoek’s comments were backgrounded by U.S. Census Bureau reports that show more than 1.3 billion bushels of whole soybeans, meal from an additional 54 billion bushels and oil from 186 million bushels – totaling 56 percent of U.S. soybean production in 2013 – move across Iowa’s secondary roads.

STC figures show 87 percent of the 2014 U.S. export forecasts are sold. The marketing year officially closes on Aug. 30.

The top 2013 buyers of soybeans and soy products include China, Mexico and Japan, for whole soybeans; Mexico, the Philippines and Canada, for soymeal; and China, Mexico and India, for soybean oil.

The link between an efficient modernized transportation infrastructure, Steenhoek said, and soybean producer profitability, is a pivotal issue in this profitability.

“It’s important to realize that farm organizations and farmers themselves can spend a lot of time and energy to stimulate greater production,” he said, “along with greater demand for their commodities.”

But without connectivity, or transportation, in the supply and demand picture, the whole profitability of the industry will not be realized.

“This becomes so much more consequential over the past decades than years ago when my parents grew up on the farm in central Iowa,” Steenhoek said. “So much of what we produced on the farm then was consumed on the farm or within close proximity.

“Now, when you look at a field of soybeans you can assume that half of what you’re looking at will be consumed internationally, one quarter alone to China as just one example.”

As one looks at the overall transportation infrastructure issue – involving locks and dams, over-the-road hauling and rail- and needed improvements in each case, Steenhoek said, who pays for these improvements?

“We don’t have the luxury of saying the ultimate customer,” Steenhoek said. “In the case of exports, our overseas customers, will pay it.

“As austere as our budgets currently are, we can’t continue asking governments for more money as our solution.

“We have to give attention to what we ourselves in agricultural can do for a sound infrastructure network filling the needs of the entire system.”

When transportation costs increase due to lack of a sound infrastructure, he said, it’s the producer on the bottom line who’ll pay for the additional costs.

A well-thought out and efficient infrastructure can have a positive impact on grain farming profitability.

Producers themselves, he said, must realize their need to step forward, along with other agencies or groups to improve transportation.

Pointing to the role of soybeans in Iowa’s economy, the state’s No. 1 export and No. 2 commodity crop, Steenhoek said, “significant investment” is necessary for improving the over-all transportation infrastructure to get the beans to market.

“This doesn’t happen just by accident,” he said. “You have to be intentional about it.

“Producers, unlike industry that can outsource products at lower costs, can’t outsource farmland.”

Looking at the lifetime of farming’s traditional rural road system, Steenhoek said, county roads and bridges are inadequate, since they were built in an era for smaller, lighter equipment.

The “overarching” contribution of sound transportation infrastructure, he said, is profitability for grain growers.

High-caliber ag roads

Steenhoek’s proposal to for a better rural road system called for abandoning what he called “a glut of poorly maintained roads.”

He said one mile of paved road – assuming a 66-foot-wide road, embankment and right-of-way – equals eight acres if converted back to cropland creating more acres for commodity growth or pasture land.

The one-mile conversion would benefit counties with $100 to $250 in estimated annual county property tax revenue and, using the multiplier effect, additional economic activity from the cropland increase at $808 for state and federal governments.

The other alternative is for counties to consider transforming paved roads with low traffic volumes into gravel roads, drastically lowering the maintenance costs, and investing in upgrading higher-volume paved roads for the increased weights of ag vehicles and equipment.

Designed as they were at the time, Steenhoek said “it’s not an accident” that local governments are “severely taxed” to take care of the county road system.

According to a November 2013 study performed by Informa for the Coalition, the annual cost to properly maintain Iowa’s paved rural road system is $538 million. But the average annual budget for maintenance is $314 million, a deficit of $224 million.

The study said this deficit often lead to diverted maintenance resulting in bridge and road warnings, rather than upgrades.

It said one method for local governments to raise the needed funds was a user fee, based on the number of grain bushels produced.

So a tax based on agricultural production of each farm operation in the county was proposed.

Production information would be collected by the U.S. Department of Agriculture and the Internal Revenue Service each year for each producer.

Since virtually all production at some point requires use of county roads, farm production provides a cost effective means of collecting a use tax for farm production, the study said.

The question is, Steenhoek said, can a producer profit by converting an obsolete rural road to cropland with a “more streamlined” system of higher caliber roads?

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