ANDOVER, S.D. - The agricultural industry is optimistic about the investments that will be made in rural infrastructure under a new administration. In fact, President-elect Donald Trump tipped his hand early in his transition that upgrading the nation's transportation system was a priority.
"President-elect Trump decided to devote a portion of his acceptance speech to talking about the need to invest in and improve our infrastructure," says Mike Steenhoek, executive director of the Soy Transportation Coalition. He says the President-elect has already set the bar with his business background.
"Donald Trump is a builder," Steenhoek says. "He's a guy who has really built his professional career in building physical assets."
Trump recently announced his plans to spend more than $1 trillion on infrastructure projects in the U.S. That action is providing Steenhoek and others in the agricultural community hope for some movement on an infrastructure plan early in 2017.
"(Trump) has an understanding, and rightfully so of the important condition of our nation's infrastructure," he says. "So, he wants to do something about it."
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"We'll certainly be working with them if, and when, the time comes to try and shape it so that it reflects the needs that we have in rural America," says Sen. John Thune, R-S.D. He has championed several infrastructure bills in the Senate and worked to solve the railroad crisis in 2014 that nearly crippled the grain industry and farmers in the northwestern Corn Belt.
For years, lawmakers and the agricultural community have agreed the transportation system is in dire need of repair. Those parties also agree upgrades to the nation's infrastructure from rural roads and bridges, all the way to the inland waterways and ports is long overdue.
Farmers believe it's critically important to keep them competitive globally, especially as they continue to increase grain and oilseed production. "It's a big concern because, you know, two-thirds of our soybeans get exported and it's very important to have infrastructure and be able to export those to foreign countries and have a good supply," says John Horter, South Dakota Soybean Association treasurer and Andover farmer.
Infrastructure is integral to the profitability of farmers. "So much of our production in this country occurs 1,000 miles, 1,500 miles from where it's actually exported from and demand for that product occurs halfway around the world," Steenhoek says. So, the infrastructure system is what connects supply with demand. Plus, export customers rely on the U.S. for a consistent product delivered in a timely manner.
Steenhoek says the bottleneck was created by trying to move a record crop through an inadequate grain transportation system, which negatively impact grain prices.
"When you're not able to deliver product to market, things like interior basis will widen so farmers get a less of a market value for what they produce," he says. That was painfully evident during the rail crisis in 2014 when the lack of locomotives, rail cars and rail lines resulted in basis levels in the northwestern corn belt widening out to near $1.50 per bushel.
"You know the metaphor I like to use is that you never want to be in the business of connecting a garden hose to a fire hydrant," Steenhoek says.
The key, as always, is finding a funding source for infrastructure projects. "Obviously, the big question is how do you pay for it? And that is what has beguiled administrations for a number of years." He thinks the new Congress will likely reject any new spending proposals for transportation projects. "With the Congressional majorities, the Republican majorities in both the House and the Senate, there is going to be a reluctance to doing anything like a new fee or a new gas tax," he says. And any type of appropriation is tough in the current budget environment.
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Steenhoek says one funding plan being discussed by House Speaker Paul Ryan and President-elect Trump is the repatriation of corporate profits from businesses that operate overseas as they reinvest in the U.S. with the lowering of the corporate tax rate.
Senator Thune agrees that funding has been a continual problem for infrastructure maintenance and upgrades. But, he hopes Senate and House appropriators can focus on finding sources when the new Congress convenes in 2017.
