Assessing the Importance of Freight Transportation to U.S. Agriculture

A recently completed national study, conducted jointly by the U.S. Department of Agriculture (USDA) and Washington State University considers a variety of transportation policy issues as part of a comprehensive evaluation and examination of transportation and agriculture movements. One aspect of this study concentrates on the importance of freight transportation to U.S. agriculture and is the principal focus of this paper. America’s transportation system carries the food from our farms to our tables and to a hungry world. That system is based on four principal modes of transportation—trucks, trains, barges, and ocean vessels—that make up a seamless network. They cooperate and compete with one another to make a balanced and flexible system that moves our food and farm products efficiently and economically. The transportation system is more heavily used by agriculture than any other business sector; in 2007, 31 percent of all ton-miles carried were agricultural products or inputs. Many of these products are bound for export. During the past 5 years, half of the U.S. wheat crop, 36 percent of the soybean crop, and 19 percent of the corn crop moved from farms to ports for export on a seamless transportation network. The importance of transportation in making agriculture successful is noteworthy especially because of the role of agriculture in the U.S. economy. The U.S. gross domestic product (GDP) has been $13 to $14 trillion in recent years. Of this, $125 billion (1 percent) has been contributed directly by agriculture, and $540 billion (4.5 percent) by agriculture and its related industries. Looking at the U.S. balance of payments, the importance of agricultural trade is even more substantial. USDA reports that total agricultural exports averaged $82.2 billion from 2005 to 2008, reaching $115.5 billion in 2008. Agriculture’s net contribution to the balance of payments that year was $36.1 billion. If any of these international—and often highly competitive—markets are lost due to inefficient transportation or failures in the supply chain, jobs are lost and farmers and ranchers receive lower prices. Inefficient or costly transportation can hurt agriculture in both international and domestic markets, and affect the balance of payments and the U.S. economy. Adequate, efficient transportation is especially critical to successful marketing of U.S. agricultural products, which depends on transportation to deliver goods. This paper reviews agriculture’s use of transportation within the overall context of the entire freight transportation system, including major transportation corridors. We also examine the characteristics of agricultural supply and demand that make transportation so critical to successful marketing, and analyze the market characteristics of several agricultural commodities for transportation implications.