#TimeToBuild America’s Infrastructure for Agricultural Trade

Posted by on May 18th, 2017 | 0 Comments »

In support of Infrastructure Week, GHI shares this analysis from the 2015 Global Agricultural Productivity Report® (GAP Report®) on investments needed in U.S. infrastructure for agriculture.

Ninety-five percent of the market for U.S. goods is outside the United States. As worldwide demand for agricultural products increases, U.S. farmers and aggregators must be able to supply food, feed and fiber to agro-processors and consumers across the nation and overseas.

It takes well-constructed, properly-maintained and interlinked infrastructure to move goods to markets efficiently, while conserving freshness, quality and safety of food and other agricultural products. With its large geographic area and long distances from rural production areas to markets, the United States has a high level of freight activity.

In 2014, U.S. food and agricultural exports reached a record $150 billion, supporting more than 1 million jobs.[1] Exports grew by 8 percent on average annually from 2000 to 2014, while imports increased by 7.8 percent. As a result, the U.S. agricultural trade surplus widened to $38.8 billion in 2014. [2]

USDA Secretary Sonny Perdue said he would advocate with the Trump administration for infrastructure investments that are critical for agriculture – inland waterways and coastal ports, water and waste treatment, roads and rail, and broadband and mobile telephone service – during testimony before the U.S. House of Representatives Agriculture Committee on   May 17, 2017. Photo: Alex Brandon/AP

Modernization and maintenance of this infrastructure and the transportation network is critical for ensuring smooth functioning agricultural value chains and expanded trade capacity.

Unfortunately, U.S. government infrastructure investment is lagging behind other major agricultural exporting countries.  The U.S. invests less than 2 percent of GDP, the lowest level since World War II. Other countries are investing more as a percent of GDP: Canada invests 4 percent, Mexico 4.5 percent, Europe 5 percent, India 8 percent and China 9 percent.[3]

Aging U.S. port terminals are not equipped to handle multiple ships holding 8,000 to 14,000 20-foot containers per vessel, which is common with today’s large ocean-going cargo ships. Outdated and insufficient infrastructure, poor connectivity to rail and highway networks, and inefficient operations created massive congestion in 2014–2015 at West Coast ports, slowing and at times halting the delivery of cargo.

Labor disputes also can slow down the export of goods, resulting in waste and loss of food and agricultural products and disruptions to market supply for customers across importing nations.

Without immediate investments to modernize and upgrade these systems and to handle larger ships and the growing amount of trade, the situation will worsen.

Navigable inland waterways have traditionally been the low-cost means of moving agricultural products within the United States. Barges on the Mississippi River system move cargo from the upper Midwest and center of the country to southern and eastern states and ports. But the system has become less reliable and more expensive as the locks and dams on the Illinois, Mississippi and Ohio Rivers, built in the 1930s, have deteriorated.

At the same time, roads and railways that allow trucks and railcars to quickly move agricultural goods are in need of repair and modernization. The American Society of Civil Engineers estimated that U.S. surface transportation infrastructure faces a funding gap of about $94 billion a year.[4]

Solutions must be found to increase investment levels for all modes of transportation infrastructure. Funding must strategically target not only various parts of the system (road, rail, waterways, locks, dams, and ports), but also the transportation bottlenecks that occur at intermodal connections, where multiple modes of transport come together.

Infrastructure improvements will reduce costs across the agricultural value chain, ensure that farmers and the producers of agricultural products have efficient, affordable access to global markets, and reduce post-harvest losses of valuable agricultural commodities.

 

[1] USDA Foreign Agriculture Service Fact Sheet: “The Trans-Pacific Partnership Benefits for U.S. Agriculture.” (April, 2015).

[2] USDAS ERS, using data from U.S. Department of Commerce, U.S. Census Bureau, Foreign Trade Database (2014).

[3] Financial Times, US public investment falls to lowest level since war, (November 2013); Canadian Chamber of Commerce, The Foundations of a Competitive Canada: The Need for Strategic Infrastructure Investment. (December 2013); Bloomberg, ICA CEO Sees Mexico Infrastructure Spending Rising 56%, (September 2012); The Economist, Life in the Slow Lane, (April 2011); The Economist, The Half-Finished Revolution, (July 2011).

[4] American Society of Civil Engineers. “2013 Report Card for America’s Infrastructure.” (May 2013).

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