Fri October 25, 2013
Shipping Containers Can Open Export Market To Farmers
A huge new rail yard has been buzzing on the outskirts of Decatur, Ill. Agribusiness giant Archer Daniels Midland (ADM) recently opened the 275-acre facility that would be at home at any major port city on the coast. But it’s in the heart of Illinois farm country because farmers have been taking advantage of a new method of shipping out their products.
Every day, U.S. consumers buy products shipped in from overseas. That means shipping containers from all over the world unload here in the U.S – those 40-foot-long containers you might see on the back of a semi-trailer or stacked on a rail car. Now, farmers, grain cooperatives and exporters are taking advantage of those empty containers, filling them with grain and shipping them overseas.
Modular transportation or container shipping, as it’s called, started about three decades ago, says Peter Friedmann with the Agriculture Transportation Coalition.
“The first cargos to migrate into that were clothing, shoes, electronics – all the things that are imported from Asia these days and you find in stores,” Friedmann said. “But then agriculture started migrating into those containers as well.”
The export market is becoming more and more important to U.S. farmers. While the final numbers haven’t been tallied, it looks like American farmers may have shipped a record $140 billion worth of product overseas in the last year.
Usually, corn, soybeans and wheat headed overseas are poured into a giant vessel and three weeks later arrive at an Asian or European port. The goal is efficiency – get as much delivered as you can at an affordable price.
But now, that’s changing a bit. Container shipping allows buyers to receive smaller shipments – helpful with a sluggish global economy and in countries without the infrastructure to receive large deliveries. Plus, it opens up new markets for U.S. farmers.
Today, Freidmann says, there’s an expanding niche of specialized grain products, grown in the Midwest and wanted overseas.
“If you want to deliver to a foreign customer a product that has been well taken care of, not crushed in the bottom of the hold of a ship, you need to have it in smaller quantities,” he said. “Some people want it genetically modified, some people do not want it genetically modified. Some want this kind of soybean, another one (wants) another strain of soybean. So you can segregate the types of cargo that you are shipping out by moving it into container.”
The items going overseas range from the corn remnants at ethanol plants for animal feed, to a small shipment of soybeans that will arrive directly at a bakery in Korea, to soybeans that will be used to make tofu.
Still just a small slice of the export market, these smaller shipments are adding up. Container shipping has seen annual growth at nearly double-digit levels in recent years. Farmers in Illinois, Missouri and Kansas are among those leading the nation in the container shipping movement. They benefit because Chicago and Kansas City serve as major rail hubs, making more empty containers available.
“For us, container freight is becoming a huge part of a niche business that gets inventory to a customer who wants smaller shipments,” said Mark Schweitzer, the managing director of intermodal and container freight for ADM.
Still, more than 90 percent of the grain going overseas is poured into giant ships for the three week trips to the Asian and European ports.
But on this side of the ocean, it allows small businesses export their product – even when they don’t produce enough to fill a ship. In the words of Mike Steenhoek of the Soy Transportation Association, it will allow “micro-businesses to benefit,” including individual farmers, grain elevators and co-ops.
“There’s an opportunity for farmers to not just be involved in growing the crops, but marketing those crops – even internationally,” Steenhoek said.
And farmers are taking notice.
“We always want a little bit more for it whenever we have a specialty crop like that,” said Bill Rayben, a farmer who chairs the Illinois Soybean Association. “You always get a bit of a premium if you have a specific trait or a protein or oil they’re looking for.”
ADM’s new Decatur facility can currently handle 50,000 containers annually and the company hopes to triple its capacity in coming years. That’s good news for farmers who want to tap into the overseas demand for products grown in the U.S.