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Published July 07, 2014, 09:49 AM

SD Infrastructure is advantage, but efficiency is at risk

DEADWOOD, S.D. — Coming off the highs in agricultural income and production the past few years, South Dakota farmers still have great opportunities — but only if they improve roads and bridges and stop unreasonable regulation.

By: Mikkel Pates, Agweek

DEADWOOD, S.D. — Coming off the highs in agricultural income and production the past few years, South Dakota farmers still have great opportunities — but only if they improve roads and bridges and stop unreasonable regulation.

Speakers at the fifth annual Governor’s Agricultural Summit in Deadwood, S.D., on June 27 said the region’s roads and bridges must be updated and improved if they’re going to continue to get crops to market and larger farm equipment to the fields.

Mike Steenhoek, executive director of the Soy Transportation Coalition, said the U.S. must find creative ways to stay competitive with rivals. Transportation accounts for 25.42 percent of the cost of Brazilian soybeans heading to Chinese customers, compared with 18 percent for South Dakota and Iowa shippers.

About 60 percent of U.S. beans start on the inland waterways and are exported out of the Mississippi River Gulf region and 25 percent go via rail to the Pacific Northwest.

“The reason the U.S. soybean farmer is the most economical on the international marketplace is not because they have a lower cost of production, Steenhoek said, “It’s due to a lower cost of transportation.”

Panama impact

Steenhoek said when the Panama Canal improvements are completed in 2016, grains shipped through the canal will increase 30 percent by 2020. The bigger vessels and heavier loading will mean the Mississippi River barge system will expand the “draw area” for beans into South Dakota and southeast North Dakota. This will tend to make rail costs lower in those areas, because of new competition.

Steenhoek said America must find a way to pay for road and bridge improvements. The federal gasoline tax is fixed at 18.4 cents, and North Dakota has a state tax of 22 cents per gallon. “Even the most conservative, anti-tax zealots” will concede that that can’t go on, he said.

The soy transportation group is proposing a plan that will initially reduce federal gasoline and diesel taxes by 1 cent per gallon — to make it politically feasible to fiscal conservatives — but then tie the rate to the inflation rate. In South Dakota, for example, that would reduce state revenue by $6.7 million in 2014, but would add $9.9 million in average annual tax revenue from 2014 to 2025.

South Dakota state Sen. Mike Vehle, R-Mitchell, chairman of the Senate Transportation Committee, said farmers need to advocate for road funding. He said the 22-cent state gas tax that was set in 1999 is 10.8 cents in 2014 — less than half the buying power it had when instituted.

‘Functionally obsolete’

Vehle, a former bank executive, said more than half of the roads in South Dakota are considered to be in fair, poor or failing condition. Most of the state’s bridges were built in the 1930s, and most were built with a 50-year lifespan, but are “functionally obsolete,” which means they’re somehow inadequate and have to be posted against certain vehicles. State bridges were built in the 1960s.

It costs less to keep up roads before they decline than it does to fix roads that have been broken down, Vehle said. Vehle, who is the chair of a special legislative Highway Needs and Financing Study Committee, said that if all of the grain that is moved out of the state by rail was put in semi-trailer trucks, they’d form a line from Sioux Falls, S.D., to Rapid City, S.D., — about 350 miles — nine and a half deep.

Jim Schmidt, a Lincoln County commissioner, lamented that gasoline prices can jump 10 cents a gallon in a day with “no revolt,” but politicians said the public would revolt if the gas tax increased by a dime.

South Dakota’s appointed Secretary of Agriculture Lucas Lentsch said one of the goals is to increasingly diversify South Dakota’s agriculture. South Dakota, which was the nation’s No. 6 state in corn production in 2013, produced 808 million bushels and was No. 7 in soybeans at 183 million bushels and No. 7 in wheat with 77 million bushels.

Lentsch said the state has asked counties if they want to be studied by the state department of agriculture for agricultural diversification and development. He said 30 of the state’s counties have requested the evaluation for roads, power and cite opportunities to bring in value-added agriculture.

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