-Submitted photo by the Soy Transportation Coalition
A variety of vessels pass through the Panama Canal daily, from cruise ships to cargo ships transporting ag commodities, including U.S. grain.

As farmers prepare to grow the 2025 crop, there’s renewed focus on a critical link in the global ag supply chain — the Panama Canal.

Millions of tons of grain pass through the Panama Canal each year.

“About 70% of all freight passing through the Panama Canal is going to or from America,” noted Mike Steenhoek, executive director of the Iowa-based Soy Transportation Coalition (STC), which signed a memorandum of understanding in 2011 with the Panama Canal Authority. (The Panama Canal Authority is the Panamanian government agency that manages the Panama Canal and is responsible for the canal’s operation and maintenance.)

The Panama Canal came into sharp focus in late 2024, when Donald Trump began talking about China’s role with the canal and his interest in taking back the Panama Canal.

Steenhoek shared a quick history of the Panama Canal to help put this into context:

-Submitted photo by the Soy Transportation Coalition
In 2006, Panamanian voters approved plans to expand the Panama Canal by installing additional sets of locks to allow a new generation of larger ocean vessels to transit the canal. This is a view of one of the locks in 2023.

1534: The earliest discussions about building a canal in what’s now Central America emerged during the Age of Exploration, 42 years after Christopher Columbus sailed to the New World.

1848: The California gold rush unleashed one of the largest mass migrations in U.S. history, igniting renewed interest in building a canal through Central America. The only choices for traveling to California at this time included 1. overland wagon trails (a six-month, 2,000-mile journey from Missouri to San Francisco); 2. a boat around Cape Horn at the southern tip of South America (a six-month journey covering 18,000 nautical miles), or 3. take a boat to Panama, cross overland and take another boat to California (a three-month journey of 10,000 nautical miles).

1881: The French, who had completed the 120-mile Suez Canal in the Middle East in 1869, attempted to build a canal across what is now Panama, Steenhoek said. High humidity, flooding, dangerous snakes and other woes, along with thousands of deaths from malaria and yellow fever, derailed the construction project.

1888-89: The French canal project went bankrupt, and assets were liquidated.

1898: The Spanish-American War erupted. America needed to move its limited naval resources (including the USS Oregon, one of America’s newest flagship battleships) from the West Coast to the Caribbean for battle. “Newspapers across America trace the Oregon’s long, difficult journey around the southern tip of South America,” Steenhoek said. “The public was captivated, wondering if the Oregon would arrive in time.” The battleship arrived 66 days after departing the West Coast. This convinced many Americans that it was prudent to build the Panama Canal for national security, Steenhoek said.

1903: Panama declared its independence from Columbia. U.S. President Theodore Roosevelt dispatched U.S. warships to Panama City in support of Panamanian independence. In November 1903, the United States signed the Hay Bunau-Varilla Treaty, establishing the Panama Canal Zone, a long, 10-mile-wide strip of land that’s sovereign U.S. territory. America made a one-time, $10 million payment to Panama and an annual annuity of $250,000. America also agreed to guarantee the independence of Panama.

1904: America began constructing the Panama Canal, which utilizes a series of locks operated by the gravity flow of water. The project required tens of thousands of laborers working in Panama’s mountainous terrain. With a price tag of $375 million (roughly $11.8 billion in today’s dollars), this was the most expensive infrastructure project in history up to this point.

1914: Construction of the Panama Canal was complete, symbolizing America’s technological prowess and economic power. The project came in $23 million under budget, compared to a 1907 estimate. The inaugural transit through the new Panama Canal occurred on Aug. 15, 1914.

1960s and 1970s: Significant tension grew between the U.S. and Latin America, due to the expansion of Communism into Cuba and the rise of socialist fervor in other parts of the region.

1977: U.S. President Jimmy Carter and Panamanian leader Omar Torrijos negotiated the Torrijos-Carter Treaties, which the U.S. Senate ratified in 1978. The treaties allowed the U.S. military to intervene and defend the Panama Canal against any threat to the canal’s neutrality. The agreements also initiated a 20-year transition period from the U.S. to Panama.

1999: Full transfer of the control of the Panama Canal occurred on Dec. 31.

2006: Panamanian voters approved plans to expand the Panama Canal by installing additional sets of locks to allow a new generation of larger ocean vessels to transit the canal. The expansion also called for deepening the shipping channel and increasing the volume capacity of Gatun Lake, the source of fresh water that allows the canal to operate.

“It takes 50 million gallons of water for every transit through the locks of the Panama Canal,” Steenhoek said. These water volumes are shocking, added Suzanne Shirbroun, a northeast Iowa farmer and past president of the Iowa Soybean Association (ISA) who has toured the canal. “Every time the canal lock system is opened and closed, it’s equivalent to the volume of water used in the city of Minneapolis in a single day,” she said.

2016: The $5.2 billion expansion project initiated in 2006 was completed in June. The Panama Canal Authority provided more than half of the funds, while international banks financed $2.3 billion of the project.

2023: U.S. soybeans remained a leading ag customer of the Panama Canal. The U.S. exported 16 million long tons (600 million bushels) of soybeans via the Panama Canal in 2023.

2024: There were 36 to 40 transits per day between the original locks and the expanded locks of the Panama Canal. About half (20 to 22) of those vessels transported grain. Annual revenue from the Panama Canal for fiscal year 2024 (October 2023 through September 2024) totaled nearly $5 billion, according to the Panama Canal Authority.

2025: Panama was among the first stops for new Secretary of State Marco Rubio. He informed Panama’s president and foreign minister that President Trump made a preliminary determination that the Chinese Communist Party’s influence violates the Treaty Concerning the Permanent Neutrality and Operation of the Panama Canal. Absent immediate changes, it will require the United States to take measures necessary to protect its rights under the Treaty, Rubio stressed.

Does China control the Panama Canal?

So who’s in charge of the Panama Canal?

The Panama Canal is owned and controlled by the Republic of Panama and operated by the Panama Canal Authority, Steenhoek said. Two of the main ports along the Panama Canal are at Balboa (Pacific side) and Cristobal (Atlantic side). They’re operated by Hutchison Port Holdings, based in Hong Kong. Hutchison Port Holdings is one of the largest port operators in the world, operating 53 ports in 24 countries.

The typical arrangement for ports around the world is that a particular country, state, county or municipality owns the port, Steenhoek said. The port authority — elected by the voters or appointed by a governing authority — provides long-term concessions to a company to manage the port operations.

“Concessions are usually longer in duration, since the port operator will often make significant investments like cranes, shipping berths, warehousing, container yards, etc. in the facility,” Steenhoek said. “This requires a lengthy period of time to recover those investments.”

In 1997, Hutchison Port Holdings received an original concession to operate the two ports at the Panama Canal. This was around the same time as the official transfer of Hong Kong from Great Britain to China on July 1, 1997. “As of late, Hong Kong has been increasingly under the influence of Beijing,” Steenhoek said.

In 2022, Panama renewed another 25-year concession for Hutchison to operate both ports along the Panama Canal. Also, under a previous presidential administration, Panama was the first Latin American country to sign onto China’s Belt and Road Initiative, a massive infrastructure project that aims to expand China’s influence around the globe. “Panama certainly is a country (among many others) that have received actual or planned investment by Chinese interests,” Steenhoek said.

While Steenhoek won’t speculate on China’s intentions, he’s positive about his many interactions with Panama Canal Authority officials. “I’ve always found them to be extremely professional, collaborative and hospitable to U.S. agriculture,” Steenhoek said.