Infrastructure limits ag export growth, economist says
SAN FRANCISCO — By 2020 the U.S. will become a marginal net exporter of containerized cargo, an economist told the annual meeting of the Agriculture Transportation Coalition.
Agriculture stands to have a key role in that, but poor infrastructure threatens the industry’s future, said Walter Kemmsies, chief economist for Long Beach-based Moffatt & Nichol.
The coalition’s 25th annual meeting ran June 13-14 in San Francisco. Kemmsies, one of several speakers whose presentations are posted at http://www.agtrans.org/, discussed agriculture’s export outlook with conference attendees.
He named New Orleans as one example of lost opportunity. The city saw its share of U.S. grain exports fall from 60% to 46 percent in the past decade, which he attributed to underinvestment in the Mississippi watershed. Much of that business went to rail or to container-ready ports.
But losses aren’t limited to domestic competitors in the transportation industry – or even to countries with better infrastructure.
“Brazil’s agricultural productivity is on par with or slightly above U.S. productivity,” Kemmsies said. “The roads are poor, trucks fall over. It takes a week to get from the farm to the port. Nonetheless Brazil has managed to outpace the U.S. in soy exports to China. Lousy boats, bad ports, further away and they are still getting caught up.”
In the U.S., it isn’t just deteriorating infrastructure, he said, but nonexistent infrastructure that hampers the exports that high productivity rates should make possible.
“As the emerging markets took off, we had stuff set up to flow this way when it needed to flow in the other direction,” Kemmsies said. “When transport infrastructure isn’t aligned with demand you get congestion and that shows up in pricing. Metals prices will come down. When you look at agriculture, we are eons away.”
The U.S. stands to lose almost 3.5 million jobs by 2020 from lack of investment in infrastructure, according to an American Society of Civil Engineers study, “Failure to Invest.” The group pegs gross domestic product losses for 2012-20 at $3.1 trillion and accelerating after that.