Can U.S. Make Way for Larger Ships?

Panama Canal expansion could hold significant implications for U.S. soybean farmers

Four out of ten bushels of U.S. soybeans on their way to international customers travel through the Panama Canal. U.S. soybean farmers who serve on the USB Global Opportunities Committee launched a study in partnership with the Soy Transportation Coalition that will explore the impact of the $5.25 billion effort to expand the canal’s locks, speed up vessel transits through the canal and accommodate larger ships that exist today and may exist in the future.

USB past chairman Phil Bradshaw, a soybean farmer from Griggsville, Ill., believes the canal expansion could hold significant implications for U.S. soybean farmers since few U.S. ports are deep enough to handle larger ships that will be able to move through the enlarged canal.

“Only a handful of U.S. ports can now handle the big ships that could start coming our way,” says Bradshaw, who participated in a ceremony in Washington D.C. on May 9 where representatives of the U.S. Soy Transportation Coalition and Panama Canal Authority signed a Memorandum of Understanding (MOU). The MOU could help obtain the necessary information needed to help complete the checkoff-funded study on what the canal expansion, scheduled to be completed in 2014, will mean to U.S. soybean farmers.

A new, third set of locks that will be part of the expanded Panama Canal will be 40 percent longer and 60 percent wider, allowing so-called “Suezmax” ships, which are large enough to travel through the Suez Canal, to move through the Panama Canal. But these larger ships require deep ports, and many U.S. ports need additional dredging and other upgrades to accommodate these larger ships.

Soybeans represent the leading agricultural commodity transported through the canal. In 2010, U.S. exporters shipped 560 million bushels of soybeans through the canal locks, which serves as a shortcut between the Atlantic and Pacific Oceans. The United States helped build the canal nearly 100 years ago.

“We want U.S. farmers to be able to benefit from the expanded canal, but we have a lot of questions about how the expansion will affect them,” says Bradshaw.

The checkoff-funded study will include:

* A 10 year historical review of trends in the soybean and grain shipment patterns through the Panama Canal.

* A thorough description of the expansion effort underway.

* How the expanded canal will impact soybean and grain exports.

* The extent U.S. ports will be able to accommodate the larger ships the expanded canal will allow.

* Specific actions required to ensure U.S. soybean farmers and the rest of the U.S. soy industry fully benefit from the expanded Panama Canal.

USB, along with 19 state soybean checkoff boards, participates in the STC in order to examine and expedite road, railway, river, port and other U.S. transportation infrastructure improvements. U.S. Department of Agriculture statistics show that the U.S. transportation system currently can transport U.S. soy more cheaply than transportation systems in some other major soybean-producing countries can transport soy. But many U.S. river locks, roads and bridges have fallen into serious disrepair and shallow ports could reverse that competitive advantage and jeopardize U.S. agriculture’s ability to get commodities such as soy to major global customers.