Progress achieved along soybean’s largest export channel

January 6, 2022 | Bethany Baratta

A dredging project supported through checkoff investments and a state-federal cost-share is making progress toward expanding marketing opportunities for U.S. soybean farmers.

The effort to deepen the lower Mississippi River from 45 feet to 50 feet has long been championed by soybean farmers, whose checkoff investments were used in helping advance the project. The Soy Transportation Coalition (STC) worked with the United Soybean Board (USB) to secure $2 million from USB to help offset the costs of research, planning, and designing of the dredging project.

According to Mike Steenhoek, executive director of the STC, the Crescent River Port Pilots Association on Dec. 20, 2021, increased its maximum draft recommendation to 48 feet. The association represents the pilots responsible for ocean vessel transit between Southwest Pass (River Mile 1.9 Above Head of Passes [AHP]) and New Orleans. Southwest Pass is the shipping channel at the southernmost portion of the Mississippi River that empties into the Gulf of Mexico. 

The Associated Branch Pilots (the “Bar Pilots”) raised their maximum draft recommendation to 49 feet on Dec. 17, 2021. The Bar Pilots are responsible for ocean vessel transit between the Gulf of Mexico and Southwest Pass.

As a result, the allowable depth for over 150 miles of the lower Mississippi River is now set to 48 feet. 

“This progress will take a number of years to complete but seeing the initial 150 miles being opened at a deeper level and some incremental gains being made as a result of that dredging work is very encouraging,” Steenhoek says.

Ultimately, the project calls for a 50 foot channel all the way to Baton Rouge (river mile 232).  Therefore, there are 82 miles of deepening remaining until the project is fully completed. This remaining work will likely take 2-3 more years due to the increased complexity of the river at that section, including submerged pipelines under the river, according to Steenhoek.

The U.S. government gave the project the green light in early 2020, and work began in late 2020. Seeing progress on this project is motivating, Steenhoek says.

“It’s always nice when you labor for a project and you don’t just have to wait for the next decade before you see the fruits of that,” he says. “We’re seeing something tangible.”

Benefits to farmers

A study commissioned by the STC illustrated the benefits to farmers of deepening the 256-mile stretch of the Mississippi River from Baton Rouge, Louisiana, to the Gulf of Mexico. This area accounts for 60% of U.S. soybean exports and 59% of U.S. corn exports, the leading export region for both commodities.

Areas in Iowa with positive or slightly negative basis (or the difference between the local price a farmer receives and the market value established by the Chicago Board of Trade) will expand as the lower Mississippi River is dredged to 50 feet, according to research by Informa Economics IEG. The areas with more pronounced negative basis will be crowded out by more favorable basis territory. This will result in Iowa soybean farmers receiving more than $71 million more for their soybean crop per year, Informa predicts.

Research from Informa Economics IEG shows that shipping costs for soybeans from Mississippi Gulf export terminals would decline 13 cents per bushel if the lower Mississippi River is dredged to 50 feet. A deeper river will allow both larger ships and current ships to be loaded with more revenue-producing freight, according to STC.

That’s expected to help the United States maintain its competitive advantage in the export arena. Iowa farmers harvested an estimated 601 million bushels of soybeans in 2021, so the deepening of the No. 1 export channel for soybeans will undoubtedly be beneficial, Steenhoek says.

“It’s an opportune time because we’re expecting to have strong exports and we still operate in a tight margin environment, so any opportunity to improve the economics of our supply chain is going to be beneficial to us.”

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