The US’ aging locks and dams are long past their designed lifespan and need to be rebuilt.
It may seem to be a long way from US cattle markets, but the country’s infrastructure is the envy of many nations and the main reason for the US’ success in world markets. The system of roads, railroads and river transportation just works, and the geographical position of the Mississippi River and its tributaries in relation to its agricultural producing region is unparalleled.
But it’s old and inefficient, making some wonder what would happen if one major link – barge transportation – failed. Corn and soybeans, along with a host of other exportable goods, would back up, pressuring the whole economy.
A study of such an event was done by Edward Yu, associate professor at the University of Tennessee Institute of Agriculture Department of Agricultural and Resource Economics. He concluded that the system must not be allowed to fall in to disrepair. The following is a summary of his study.
LOCKS OUT OF DATE
The Upper Mississippi and Illinois rivers contain 36 locks and dams that have long since surpassed their designed lifespan. These waterways provide the primary corridor for the movement of bulk corn and soybeans and nearly 90% of food and farm products.
Barge transportation costs are relatively low when compared with rail and truck. However, the inefficiencies of the locks are adding fuel and labor costs, which means less profit for producers, higher costs for consumers and a growing handicap when competing in the world market.
CONGRESS TO THE RESCUE? NOT SO MUCH
Congress authorized the Navigation and Ecosystem Sustainability Program in 2007 to address the capacity constraints on the most congested segments on these waterways. However, implementation of NESP has been delayed by a lack of appropriations from Congress.
The estimated economic effects of lock closures include:
- Aggregate economic activity related to grain barge transportation reduces by $933 million, or 40%, if Lock 25 on the upper Mississippi River is closed from September to November during the 2024/25 marketing year. The reduction reaches to nearly $2 billion if the lock is unavailable for the marketing year.
- A decline in economic surplus in the corn and soybean sector from a Lock 25 closure could cause a decrease of more than 7,000 jobs, $1.3 billion in labor income and about $2.4 billion of economic activity annually.
- While similar consequences are anticipated if the LaGrange Lock on the Illinois River is closed for a period of time, the degree of magnitude is less.
Study recommendations stress how crucial it is to maintain the navigability of the Upper Mississippi and Illinois River system. The risk of delaying infrastructure improvements is too great.
CATTLE, BEEF RECAP
Only moderate fed cattle sales were seen on the livestock exchange video auction Wednesday, with trade in the north at $117.25 to $118.75 per cwt on a live basis, steady to up $1.50, some with extended pick-up. In the South, cattle sold at $117.75 to $118.00, steady to up $1.00.
Cash cattle subsequently traded at $117 to $120 on a live basis, down $1 to up $2 from the bulk of last week’s action. No dressed-basis sales were reported but traded last week at $188.
The USDA’s choice cutout Thursday was down $2.84 per cwt at $209.85, while select was off $1.47 at $197.26. The choice/select spread narrowed to $12.59 from $13.96 with 223 loads of fabricated product sold into the spot market.
The CME Feeder Cattle index for the seven days ended Wednesday was $150.74 per cwt, up $2.02. This compares with Thursday’s Aug settlement at $153.02, up $1.27.