EDF REPORT: Missouri River Barges Provide Little Benefit To Farmers

Missouri River barges have little or no impact on rates charged by railroads to move goods anywhere near the river, according to a study released today by the Environmental Defense Fund (EDF). The report contradicts the findings of a study prepared for the U.S. Army Corps of Engineers that claimed railroads lower their rates greatly as a result of competition from shipping on the Missouri River.

The report’s author, Dr. Phillip Baumel, Charles F. Curtiss Distinguished Professor in Agriculture at Iowa State University, also found that the region’s farmers would probably benefit more if water used for occasional barges on the Missouri River were instead saved and used to float barges on the Mississippi River below St. Louis during droughts. Mississippi River barging does result in significant transportation benefits to farmers.

Missouri River barges have carried an annual average of only around 1.5 million tons of commercial traffic, compared to almost 100 million tons carried on the Mississippi River below St. Louis. According to an earlier study by Dr. Baumel, the Missouri River carries less than 2% of the grain exported from any of the states it serves (Iowa, Nebraska, Kansas and Missouri). According to the U.S. Army Corps of Engineers, the Missouri River provides annual economic benefits of less than $10 million per year, compared to $1.3 billion generated by the Missouri River for other industries, including recreation.

Despite this fact, navigation advocates have claimed that the potential competition of river barges forces railroads to lower their rates in ways that benefit farmers along the Missouri River. The report prepared for the U.S. Army Corps of Engineers estimated that railroads lowered rail rates roughly $200 million per year.

Dr. Baumel’s review of this report concluded that it was fundamentally flawed. “The report is sufficiently flawed that it provides no evidence to refute the common sense notion that barge traffic on the Missouri River is so small that railroads almost certainly ignore it. Rail rates are based almost entirely on competition with other railroads, and, in recent years, on the ability of farmers to truck their corn and soybeans directly to the Mississippi River or to local corn milling plants and feedlots.”

“The flaws with the report to the Army Corps start with the basic data,” said Dr. Baumel. “The study used deliberately coded reports of rail rates that cannot be used without a key to the code, which the authors simply did not have. They then arbitrarily rejected more than two thirds of the data. There is good reason to believe that much of the remaining data are equally unreliable.”

Dr. Baumel’s report also found that the conclusions of the report conflict with the conclusion of another Corps report, backed by Corps of Engineers’ traffic data, which found that the amount of grain taken by barge down the Missouri River is fixed by the amount of fertilizer brought up the river. This fact means railroads provide no meaningful competition to railroads for grain, in contrast to the findings of the report that grain shipments provided two thirds of the alleged benefits. “Use of the Missouri River is only likely to decline in the future because of the rapid growth of direct railing of grain to the west coast, to local feedlots and to other destinations that could not use the river,” added Dr. Baumel.

By contrast, Dr. Baumel’s review summarizes some of the critical problems faced by farmers when the Mississippi River below St. Louis runs shallow, which can bottle up three times as much commerce in a month as the Missouri River carries in a year and more than double barge rates.

“The Army Corps of Engineers has indicated that water from the Missouri River could be used to help keep barges moving on the Mississippi River at critical times if it were not used up to support barges on the Missouri River,” said Dr. Baumel. “The region and the Army Corps should take a hard look at the trade-off because it would probably be of real benefit to farmers.”

The U.S. Army Corps of Engineers is studying new ways of managing water on the Missouri River. EDF has advocated that it eliminate efforts to stabilize flows for Missouri River navigation because of the great potential alternative uses of that water for the environment and far vaster economic uses including river- based recreation and Mississippi River navigation.