In Indiana, and throughout the country, anxiety is on the rise in the most routine of places. In the aisles and checkout lanes of the local grocery store, both prices and stress levels are increasing. The increased prices staring back on a grocery receipt have a corresponding effect on the smaller balance staring back on an ATM receipt. Unfortunately, the amount in our paychecks is not keeping pace with these escalating costs. Families are being forced to revisit monthly budgets and make upward adjustments for food and rely on a smaller pool of funds to absorb the rest.

This anxiety has resulted in increased attention and discussion aimed at identifying the primary causes of rising food prices on a worldwide scale. Unfortunately, our nation’s attempts to develop clean and domestically-produced energy sources have borne much of the criticism. 

The critics suggest that if America’s renewable energy and agricultural policies were different, food prices and world hunger would subside. An expeditious argument, but a shortsighted one.
The rising anxiety experienced in the grocery aisles and checkout lanes is less associated with our nation’s renewable energy and agricultural policies and more associated with the anxiety experienced in another routine location – the gas pump.

The price associated with every product we purchase is a function of two efficiencies: efficiency of production and efficiency of distribution. This is especially true for food prices. American farmers have a rich legacy of producing more with less. This trend continues to the present as more efficient techniques, wide adaptation of technology, and higher performing seed results in production yields unimagined years ago.

These production advances have increased America’s ability to not only maintain nutrition independence, but to provide life sustaining protein and fiber to the poor and malnourished in other parts of the world.

The escalation in food prices is not a production problem.
The primary culprit for today’s rising food prices is a more costly distribution system, which is significantly impacted by the escalation in the price of oil. A rise in the price of crude oil not only equates to a more expensive gallon of gasoline, but also a more expensive gallon of milk. In reality, a $1 increase in the cost of fuel at the pump has three times the impact on food prices as a $1 increase in the per bushel cost of corn or soybeans.

Most assuredly, the prices staring back in grocery aisles have more to do with the costs of bringing the food to you rather than the costs of producing the food itself.

The price of oil is a function of many variables. Some are within our control as a nation; others are not. Unfortunately, our nation’s leaders have repeatedly refrained from devoting critical attention and resources to maintaining and augmenting our transportation infrastructure – a system within our control. As a result, the escalation in fuel costs is allowed to have an exaggerated effect on our food prices, and our overall economy.

Our nation’s demand for freight movement – food, or otherwise – is expected to increase by 60 to 70 percent over the next 10 years. Although there is a strong correlation between the quality of our transportation system and economic growth, our nation currently devotes less than 1 percent of its gross domestic product to infrastructure. Because of this concern, the Soy Transportation Coalition (STC) was established in 2007 by the Indiana Soybean Alliance, six other state soybean organizations, the United Soybean Board, and the American Soybean Association.  The primary goal of the STC is to help ensure that the journey from the farm to the dinner plate is as cost effective as possible.

A barge along our river system is capable of transporting one ton of freight 522 miles on one gallon of fuel.  Despite this reality, our nation’s political leaders have repeatedly been unable to allocate funding to update our locks and dams along our major rivers. According to the U.S. Department of Agriculture, 58 percent fewer grain barges have transited the locking systems along the Mississippi River over the same period last year due, in part, to our outdated and inefficient locks and dams.

A railroad is capable of transporting one ton of freight 386 miles on one gallon of fuel. Despite this efficiency, our nation’s leaders have missed the opportunity to provide tax incentives to railroads – particularly the shortline and regional railroads serving rural America – to augment their capacity constrained network. Railroads, largely financed by the private sector, are responding to the increased congestion on their systems by raising rates on their customers in agriculture and other industries. For example, rail customers have witnessed fuel surcharges rise upwards to $0.70 per car mile equating to $130,000 in fuel surcharges alone for a train full of soybeans destined to the west coast.

Semi trucks, the least fuel efficient yet most convenient mode, are able to transport one ton of freight 59 miles on one gallon of fuel. Our country has managed to burden this critical component of our infrastructure by failing to fund our highways and rural roads. The U.S. Government Accountability Office predicts that the Highway Trust Fund, the primary mechanism for financing federal highway and transit programs, can reach a negative balance as early as 2009. County engineers throughout the nation are challenged with maintaining our gravel roads – the initial link in our food supply chain – with fewer and fewer resources.

The more expensive fuel becomes, the more essential it becomes to devote attention and resources to ensuring our transportation system is as efficient as possible. Otherwise, the ripple effect of rising oil prices will continue to be more pronounced and expansive than is justified. Put simply, to ignore infrastructure is to invite higher food prices.

President Dwight Eisenhower, one of the great proponents of a vibrant infrastructure and whose signature established America’s interstate highway system, argued how our nation is “sustained by easy transportation of people and goods.”

May our nation’s current leaders demonstrate similar vision and resolve in making our transportation and distribution system more efficient and, in the process, ensuring that the prices – and anxiety levels – at the grocery aisle and at the pump start heading in a different direction.

Mike Steenhoek, Executive Director
Soy Transportation Coalition