world war ii. and women workers during the milled very -- the military buildup of the second world war. >> american industry rolled out -- [captions copyright national cable satellite corp. 2014] [captioning performed by national captioning institute]

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captions copyright national cable satellite corp. 2008 hundreds, if not thousands, of people will start working again. i've seen it happen in my prior life as a mayor, and i see opportunities for this all

across the country. in dubuque, iowa, dubuque, iowa, usdot helped redesign the roads in part of the city where old mills and factories laid vacant. and when we did that, ibm moved in and gave those old factories a new lease on life. you all know this. you get it. you understand it. and the chamber, as i mentioned, has been one of the loudest voices calling for an increase in the gas tax. your president, tom donohue, has been a very vocal leader on this issue. prodding congress to be courageous. now, at d.o.t., we happen to believe we can pay for infrastructure a different way, but i would much rather see a

national debate about how we get there than whether. that's why i'm glad tom is standing up. and we absolutely agree that congress is going to have to show a little political courage to fix this problem. their courage increases when their core constituencies like the folks in this room tell them it's okay to figure this out. it's actually the fiscally responsible thing to do. we need you to speak up. all of you can play a role in putting our transportation system on a more certain and sustainable curious. and we do it by let congress know that a one or two-year band-aid won't cut it this time. tell them what's at stake for you. tell them what's at stake for your employees and the products you sell. tell congress to get to yes.

i know they care about your priorities. i know they care about your companies. i know they care about the jobs you create. and they care when you tell them yourselves. so our mission is pretty clear. we've got to create the context for a solution this year. i'd be committing malpractice if i didn't tell you that. but the truth of the matter is, we've got a lot of work to do, and you're a critical partner in that work. thank you very much. it's great to be with you. [ applause ] >> the secretary's willing to take a couple of questions this morning. so let me ask you to do this. we should have roving microphones in the room. raise your hand if you've got the microphone in your hand. please flag down one of the people holding that microphone.

and then when you stand up to ask your question, as tom donohue would say, tell us who you are so we know what you really want. no one has a question for the secretary of transportation? all right. mr. secretary, i have a question for you. >> all right. >> d.o.t. has been doing a lot of work on connecting the economy with transportation, especially in the area of freight. can you tell us a little bit about what the department is doing and what your vision is for making sure we can move goods in, out and through this country officially? >> that's a great question. sounds like you've thought about that one before. so one of the really smart parts of map 21 was the requirement that usdot go out and pull stakeholders together to develop a national freight plan. and we've got a committee of 47 people, from all walks of life,

all parts of the transportation ecosystem who are involved in helping us develop this plan. the vision of it is multy focal plan. in easing the flow of commerce across our country. i would say once we have done that analysis and we have done that work, and it will probably be ready before the end of the year. we will identify some of the gaps in the system. from there, the challenge is how do you get those gaps addressed and, you know, i think that's a

place where a strong competitive program that encouraged not just one off projects but ones that had real scale would be useful. and that may involve, you know, multiple states coming together to solve a particular problem, whether it's rail or highway or whatever. i think that's what i'd like to see. but that's -- that's my view. >> do have a question here. do stand up and introduce yourself, please. >> good morning. one of the things i'm sure you came across as a mayor, and i'm sure in north carolina, when you're trying to get these projects off the ground, is the issue of streaming and permitting. map 21 did some of that. how would you take in that mayoral experience and the business experience, look at some of the issues we have with environmental and permitting and streamlining when we're trying to get some of these high-job

producing projects off the ground. >> yeah, no, it's a great question. you know, i had a similar situation as a mayor. we had a city that permitted everything outside the building and a county that permitted everything inside the building. and the two groups of people that did that work didn't sit next to each other. didn't -- there was no common plat for for these things to get resolved. and a lot of this -- the review process were sequential in nature and not concurrent in nature. so they weren't all doing the work at the same time. which meant it took longer. one of the things that i think is under emphasized in the media and the political world is how

much president obama cares about, you know, making sure government is working well. and doing everything we can to ensure that on an interagency basis, we're get things done as effectively and efficiently as possible. the truth is, on a given project, they'll be a d.o.t. review. they'll be an army corps review. sometime, a coast guard review. lots of different agencies involved. and they don't all roll up to the same agency leader. and what i can tell you is that is a focus for the president. it is a focus that i have. and we're looking at ways we can get things done even without congressional action to get things more streamlined. there's good news. the number of categorical exclusie

exclusie exclusi exclusions. the need for process has actually been increased under this president. so more projects are moving faster. but the ones that aren't moving faster are the big ones. and we've got a responsibility to try to work on making sure we're getting as much done as possible. but i'd like to see us cutting the time, you know, as close to half as we could get in terms of getting projects moved through our system. >> great. next question. >> mr. secretary, what's your personal take on the keystone pipeline? >> that's a very good question. i do have a view on that. my view is that secretary kerry is going to be a great figure to resolve that one for us. >> other questions. they see a couple of hands over

there. give these ladies a moment to get through the crowd this morning. >> thank you very much for participating. i'm wondering, given the challenges that any administration has to get proposals through omb and given the fact that senator boxer has announced a very accelerated schedule for moving forward on map 21 reauthorization, how does the department anticipate making its priorities known to the senator and to the committee on both the house and senate side? it seems unrealistic to think that the department can actually put together a complete reauthorization proposal. perhaps some sort of an outline? how do you envision that going forward? >> well, in the past, a lot of the policy frameworks the

administration has had on transportation have come through the budget process and -- but i wouldn't count us out. i wouldn't count us out. that's all i'll say right now. >> we have a question in the back corner there. >> mr. secretary, joe sculley with the truck renting and leasing association. you said the d.o.d. believes there's a different way to pay this. can you elaborate on other ways you have in mind? >> basic outline, you know, there's been some fairly substantial work that chairman camp of the house ways and means committee and chairman baucus, former chair of the senate finance committee, have been doing on corporate tax reform,

and if you look at those proposals, there's a -- there's actually a -- a savings -- or a dividend, if you will, that comes through, through doing that, and we believe that some part of that dividend could be used to support infrastructure over a multiyear time frame. there's paper on those ideas and concepts that have been produced out of congress. and we think it's a good framework for getting past some of the gridlock that's been in place over this issue for a while. >> mr. secretary, i know your time with us is up. thank you so much for your generous time and your thoughtful comments. please join me ih us from out

of town today. thank you, and please join me in thanking the panel. [ applause ] . before i introduce our next panel, and they are welcome to come up and start getting miked up and settled, i would like to

remind you you can join in on the conversation today. we have our tweet wall -- it's called a tweet wall, right? if you tweet with #connectingus, you can tweet with us. that goes for everyone at home watching us on c-span 3 or people streaming us. we are going top continue the conversation about connecting the united states and transportation long after this conference, so we welcome your thoughts on that. you know, so many interesting themes are coming up throughout the course of these conversations. we're talking a lot about how are we going to fund transportation? what's the role of the federal government? what will the private sector need to do? what is it going to take to have a good comprehensive strategy as a country, even when it's largely in the hands of states and locals to invest in

infrastructure? and i'm not sure there's any sector of the economy to rely more heavily on the need for partnership between public and private and for a true federalism to work. agriculture is a sector that is as old as the world itself. and in this country agriculture has been a driving force in the economy since before we were founded as a nation. . blake hearst who is president of the missouri farm bureau knows a little bit of agriculture. he raises corn and soybeans. he has a wholesale greenhouse business. he raises flowers and two acres of greenhouse. so continuing with our theme of moderators who know what they're talking about, blake is a prime person to talk about the role of transportation in agriculture. i would also mention he himself speaking out on foreign policy issues, and an article he wrote

titled the omnivore's solution quickly received over 1,000 hits on the american magazine. as you're googling about it, i would tell you to take a look at blake's history. well, blake, it's easier to move the food to the table instead of moving the farm to the table itself, so i'm going to turn it over to you and your panel to discuss the importance of agriculture. >> thank you so much. it's great to be here. we have quite a challenge this morning on -- let's face it. transportation is sort of boring. moving a system of rails, highways and rivers just doesn't have the excitement of the latest tweet from justin bieber. twitter's public offering, amazon getting ready to deliver

packages by drone. we in agriculture what what is called declining sectors of the economy. those of us who farm move farm products to market and products to the farm will never be trending, never be interesting, never be cool. we can be thankful for this, but we'll never be expected to twerk. all that doesn't mean that we we do, transportation of agriculture products isn't important. and the challenges we face in the industry don't have an extraordinarily important and pertinent impact on how well our economy functions. our infrastructure is outdated, often poorly maintained, and we need to invest in updating the dams and rivers and highways. over 60% of the grain produced in america spent some time on water, and of course, 95% of our exports go through our ocean ports. our competitors are investing

billions and we're living on our capital as a country failing to maintain the legacy we inherited. well over half of our nation is in bad condition. over half functionally obsolete. most of our locks and dams were built in the 1930s and designed with a 50-year life. our flood control infrastructures tied the federal budget and so is withstanding of all the pressures of everything else tied to the federal budget. we in the midwest are faced by challenges from the endangered species act. and just to give you an example of the challenges he faces, there are multiple uses of the missouri river enacted in legislation. all those uses are often in

conflict. i have sympathy for the challenges the corps of engineers faces as they manage our river system. the endangered species act, has a tremendous impact on how the river system is managed, which brings up a quote. perhaps the last time that rivers and river transportations were interesting and romantic was when mark twain wrote "life along the mississippi" in the 1840s. here's what he had to sap about science in that book. "there's something fascinating about science. one gets such returns out of such a trifling investment of fact." those of us that live and farm along the missouri river often thinks that described our endangered species policy all too well. so there you have it. we don't have enough money. we're facing environmental

challenges. we're the only industry -- wow know, we talked about how important energy is. but you'll live longer without energy than food. yeah, we face tremendous challenges in our transportation system. that's the bad news. the good news is we have a panel of experts and 45 minutes to solve all these problems and i'm going to ask rick to start. >> great. my naim is rick calhoun. i look for carhill of minh yap lils. some young traders just recently gave me an article that was written about carhill. it says big traders need more grain. it was from january 4th of 1964. i said even i'm more current on my reading than that. he said, no, i gave it to you for a reason. i think you're from that era and you'll get this. there's a quote quite telling. sooner or later the visitors is bound to hear at least a thumbnail description of what

the value they bring to grain. it's a guiding principle that everybody knows by heart. and it's what the grain division does is buy grain and appoint a surplus and carry it or move it to a pointed deficit. or we buy it at a time of surplus and carry it to a time of deficit. our profit comes from being able to do this at a little lower cost than the competitor, or at least most of them. that's really sophisticated head di stuff, not really. that was half a century ago. and it is a long time ago, but the fact is even though the world has changed dramatically since 1964, some things really haven't changed very much. and certainly in the grain business we found uses for corn and soybeans with the uses of ethanol and corn syrup and bio diesel in the last 50 years but transportation still drives agriculture. m and every additional dollar in our world of penny margin

business spent on transportation is a dollar that our customers don't get to retain in the case of the american dollars or it's an additional dollar that the foreign or domestic buyer has to pay. and what drives the cost of sufficient transportation? good, reliable infrastructure. if you have good infrastructure you tend to have low cost. if you have unreliable infrastructure, you'll tend to have high cost. carhill understands transportation and we think we understand infrastructure. we buy a lot of transportation and we use a lot of infrastructure. we spend about $3 billion a year on truck freight alone. 300 million on container freight. we use 500,000 rail cars annually. and we have upwards of 400 ocean going vessels on the sea at any time. so when infrastructure fails, we know it. when infrastructure gets a cold,

we get a pneumonia. it turns the penny profits into significant losses. i've given a lot of speeches over the year and testimony. i think a lot of you heard it before. i suggest you're bored with it. i'm bored with giving it. if we fix the problem, i promise you i will quit talking about it. we need to invest in our infrastructure to help drive down cost and allow farmers and businesses in the country to continue to thrive. as i've heard this from other people here today, other people around the globe are investing. china is going to invest $32 billion from 2011 to 15. bah zil is going to spend $27 billion in the next ten years and the u.s. will spend $10 billion in the next five years on ports and waterways. really? that's not enough. general john peabody who is the commander of the emergency operation and headquarters made a speech last week at waterways counsel incs symposium, and he said we have more miles in the

united states than the rest of the world combined. so we need to use it. because infrastructure in part drives investment decisions. and ironically our locks and dams were in better shape in the 1964 when this article was written than they are iowa. i was too. i was 9 years old. as somebody said, they were built in the '30s and in the '40s and back then they still worked. okay. and you had a few, a thousand hours of down times every year instead of what we had today, which is several hundred thousand hours of down time. i think 166,000 is the last figure i saw. and the world keeps on spinning. time does not standstill, except perhaps inside the beltway. i spent part of tuesday inside a meeting working on a project for more efficient movement of grain and soybeans on the river, driving significant costs out of the system to help serve our customers. but it wasn't in north america. . the next meeting i went to was

to talk about how we were going to cut through some red tape to build a new dock and terminal on a river. guess where that one was? that one was in the united states. and so infrastructure is, will, and is always going to play a role in investment decisions. so what signal is it, do you think we send people when it takes seven years to pass a bill. well, we need to find a way to keep it in the united states as well. i'll close after this. there's two words i want you to think about when we think about infrastructure and why it's important to agriculture. one is relative to transportation infrastructure's capacity. ze we need the rivers. we need the rails. we need the roads to get it to the ports. it's the three-legged transportation stool that i talked about before. this winter has shown us what happens when you lose capacity.

the profits advantaged and they reared their ugly head. the second word that's important is competition. a lot of people don't like to talk about competition, but it's very, very important. we need options. we need alternatives. we need choices. m and that's what drives competition. it's absolutely true in agriculture and well beyond agriculture and that's why americaning ary churl has in part grown and flourished. it's had the capacity to grow. ch it's had the competition to keep the margins razor sharp. creating investment and reinestment and jobs and taxable earnings for shippers and consumers alike. so i have to ask you why a country this great would turn its back on what got us to here in the first place. and that's the strong infrastructure and competitive advantage. infrastructure is very important. it was true in 1964. it's certainly true today. >> thank you, jim. >> well, thank you. i really appreciate being here today and being with this

distinguished group here. . i ask the question sometimes when i'm talking to folks, are we a maritime nation? there's no question in my mind and others would agree that our zus system is a key vital part of our economy and how we move goods and services. it's not the only part, of course. but it's a very key part. many times we hear discussions about transportation that's been alluded to already, rick talked about it. we hear the three r's. roads, rails and runways. we're starting to hear about the river ls and more importance about the rivers and reeducating people about the rivers. within the corps of engineers, our goal is to provide a safe, reliable, resilient marine transportation system, one that supports the economic viability

of our nation. and part of the role we play in regards to the marine transportation system is to be the stewards and managers of the inland and coastal system. rick talked about the number of miles that we -- that we manage, and we have over 12,000 miles of inland rivers and channels. we have 13,000 miles of coastal rivers and channels and certainly our role at the ports and particularly my role in the operations and maintenance is maintaining those ports as far as dredging, but from an infrastructure perspective, talking concrete and steel, you know, we have over 197 locks and many of those have downs on the inland and coastal systems. in actually in the next five years, 70% of those 197 lock sites will be greater than 150 years old. that 50 years is looking at the economic life cycle on those. so we have a challenge, you

know, we have a couple of challenges here. and the that is, of course, the aging infrastructure. as i just alosed to the age of those locks. and with age comes deterioration of that infrastructure. and with that we see a more unschedu unscheduled outages, as rick talked about. to get things back into operation we have to schedule outages, and we're seeing that number begin to increase over the last five or six years. those unscheduled outages lead to the delays, which of course gets to the reliability of the system. the other challenge that we have, of course, is resources. limited resources. so we're faced with looking at how do we prioritize and how do we put those dollars and resources on the highest priority areas that will bring back a return on investment to our users, to our customers, to the nation, and get that greatest return on investment. so a couple of ways that i want

to talk about a little bit today and how we're addressing these challenges. and the previous panel talked about life cycle asset management. and that's a key. that's a key to everything that we are doing and we're looking at and what we are working on within the corps of engineers as far as our in living coastal and navigation systems. we're taking an approach to the life cycle asset management system of a total risk evaluation. we're looking at, for example, risks from a residual risk perspective all the way to an operational risk perspective. when i say residual risk, i'm talking about looking at those assets, those components that we focus on the critical components. we put those dollars where we get the biggest bang for the buck on critical components in the infrastructure. there may be other needs that are there, but they're not as

critical. we will resume residual risk on. so it doesn't get to a complete catastrophe if you will, within the system. so that's one of the primary ways is we're using our life cycle asset management, focusing on critical components. really looking at and plugging into our maintenance management improvement strategies to improve on the reliability of the system. along with that, i think we have to think about our model. some years ago we may have said it's more important to rehabilitate or recapitalize what's in the system. bigger locks, larger locks to push more materials through. i think the mood is changing to where we need to focus first and foremost on the reliability we have right now. that's not to say there's not a need for new locks and downs out

there. whether from the perspective of bottleneck choke points because of the size or just the condition they're in already. but we really have to focus on the reliability, getting after the most critical areas of what's existing in the system right now. that's one of the primary focus areas that we're looking at, that we're working on right now. and this is not something that we're doing by ourselves. it's key, you know, folks like rick, craig and mike. we work with the waterways. we work with the stake holder ls. we work the -- pempb who has a play in the inland system to be a part of developing those priorities. to be a part of looking at how do we address those key critical areas first, and then to kind of help us prioritize collectively, the collective of us, where we need to put our dollars, and so that gets to the next step of challenges and how we -- how we address the resource needs and

funding. there was a lot of discussion in the previous panel about alternative financing. how do we leverage other resources? and we're really looking at that really closely and really hard right now. we're working in a couple of ways. one is our existing authorities. where do we have existing authorities that we can bring to bear and work with our customers, our stake holders, our partners to bring resources to the table, whether it's dollars or whether it's other types of resources to address the needs of this system. . so we're working in that lane right now. we're also looking at where we need new authorities. how do we match up against other of our sister federal agencies that have authorities we may not have? is there a way to get those authorities with our water resource infrastructure as well? so we're looking at that. we're working those two areas as far as existing and new

authorities on an alternative financing mechanisms, something that's beyond the traditional appropriations. but the key to all of this is that we're not doing this in a vacuum. it requires the collective us. our partners, our stake holders, local, industry, everyone working together to be a part of coming up with a solutions that are key to, again, making our navigation system, our ma reen system a key component part of transportation and moving goods and most importantly, being that support to the economy of the nation. thanks. >> thank you, sir. rick? >> good morning. my name is craig phillip. i lead one of the largest operators of tow boats and barges on the mississippi river system. delighted to be here this morning. realize they could have slotted us, in terms of the maritime discussion and agriculture, it is very important son the agriculture side. it's a part of the other panels

as well. for us agriculture is our second largest commodity as a company. energy is first. kou could have been on that panel. i have just a couple of things to add to provide a little bit of context. i think the maritime world generally, but the inland part of it in this country is we sometimes talk about ourselves as the invisible mode of transportation, and many times we like it that way. sometimes the only times we get visibility are when there's been something that goes bad in the night. but it does have a very long history. it predates huck fin and mark twain. the federal government took responsibility for the system that we have today, back in george washington's time. i think there was legislation passed in 1824 that specifically

authorized the u.s. army corps of engineers to take the waterway system and its development and its maintenance as a uniquely federal responsibility that provides both a -- it's been one of the reasons that the system was developed so robustly and effectively paz we went through the 20th century. ment there wasn't any disagreement about whether it was to be done at the federal, state or local level. it was a federal job. i think it provides some of the impediments today as we try to develop a coherent freight strategy for the future and testimony movement of investment dollars to all the modes of transportation, each of which is suffering in its own way from lack of dollars. the secretary of transportation talked about the first time ever attempt to develop a freight policy for this -- for the nation. but it's inside d.o.t., and

d.o.t. itself is a stovepiped agency, as all of you know, with highway and rail and transit and pipeline, each in their own separate -- their own separate units. but in the water case -- in the case of waterways it's even worse. the nexus of responsibility for waterways in this country still reside with the corps of engineers over in the department of defense and the other agency very important to our success and livelihood, the united states coast guard, which is in essence a traffic cop for everything maritime in the country, used to be in d.o.t. it's now over in the department of homeland security. so i happen to serve on the national freight advisory committee. i think i'm one of three waterway representatives among that group of 47. so we do feel like a distinct minority, and trying to draw in a broader perspective when you're d.o.t. centric and address maritime issues is very difficult and challenging.

it is true that our infrastructure is old. and depending on the story we're trying to tell, we'll beat that story into the ground. "x" percent is 50 years or older. in some ways we're blessed. i think what they built 50 years ago or with a 50-year design life was really a 150-year life. and we're finding that to be true actually for the most part. and the other piece of the story is the nature of the structures that need to be built, these locks and dams are typically built with much more capacity than the system really requires at any point. not that we don't have our choke points at few locations. but most of the locks and dams are not close to operating at their design capacity. and they never really have. so that's one of the reasons that the systems have -- most of them -- many of the pieces of

the system have an element of design life that is quite a bit longer. . and i don't think we need to think about whole sail replacing the system. there's also been significant improvements in the capacity system in the last 25 years, which i -- especially in agriculture sector, has been really important to keeping the cost structure that we can offer customers like rick, in spite of the the fact that we have the challenges of more delays and more anticipated breakdowns and so forth, and that is that a huge success story of the core of engineers in recent decades has been the effort to improve the way the channels themselves are maintains, and they've used dikes and other structures so that the river itself, as it's rising and falling over time will naturally scour itself and ma maintain the channel that we need tom operate.

and when i joined the industry 30 years ago the typical barge was a 12-foot depth barge and would carry about 1,500 tons of cargo. today all the new barges we build are 14-feet deep, and when we load them full they can carry 20 tons. now, they can operate everywhere, all times of year at that depth level. but that's significantly implooufing the commissions that we're able to offer to our shippers. unindication of that, and for those of you that have very long memories, we had the most extreme low water conditions in contemporary times back in 1988 when the flows got to the lowest point that had ever been recorded, and for a significant chunk of the fall and summer of that year the whole of the mississippi from st. louis to

new orleans was unnavigatable because of the water. in some places in 2012 the flows along the mississippi river were lower than they were in 1988. and most of that system from st. louis to new orleans, we continue to operate through that record setting drought. now we have an issue that got a lot of prom nans in the press up near st. louis. something called the rock pinnacles. and that stimulated a lot of interest and activity on the part of the government. but i think the success that the corps has had over a long period of time in making this system as ro bu robust and resilient as it is. it always hardens me to hear from a variety of sources people saying it's not about one mode

versus the other anymore. and if we're going top continue to be a healthy, thriving economy, we need the system that we have to this be better on all levels. it's not rail versus truck or rail versus barge anymore. we're all in it together. 80% of what my barges carry started or ended on a different mode of transportation. so we can't live without it. we look forward to being okay. >> jim, if you could hand me the remote, i have just a few slides that i would like to share just to sundays score the point of the importance of transportation to agriculture. this audience is pretty sophisticated and knowledgeable, so you may not fall victim to this, but there's kind of a temptation when a lot of people who don't have much history or prior touch pointing with farm or agriculture to have a real norman rockwell imagery in their mind when they fi of farming,

they think of things like bib overalls and the farm life that spends all of their waking moments canning. but the reality is this is one of the most innovative industries in existence. when you look at a field of soybeans in the united states, you can assume that what you're looking at -- half of what you're looking at will be consumed outside of the united states. one quarter will be consumed by someone in china. . and so it's a quite innovative industry. m and we talk a lot in this country about being energy independent. there's a lot of countries in the world that are not nutritionally or protein independent. and that's been one of the blessings for the united states. not only are we table to feed ourselves, but we're also able to feed the rest of the world. and the fact of the matter is this has been favorable development over the last few decades. we've seen the largest development of people from

poverty into the middle class in world history. and one of the positive consequences of that is when you move : ingredients for livestock, for poultry is soybean meal and corn as well. and this is projected to continue. so the demand for fundamentals for soybean industry are quite favorable given the fact that you have this very hungry world. in industries, you know, in part of the infomercial about agriculture, you can't outsource your productive farm ground. and so this is one of the industries that has the

potential to provide permanent competitive advantage for the u.s. economy if we invest in it. and the success and agriculture is not just a function of stimulating supply and it's not a function of stimulating demand. you have to have connectivity between supply and demand. i would like to describe -- and we haven't made tp investments in infrastructure, so i think agriculture can be described as trying to attach a garden hose to a fire hydrant. you have increased production that is projected to increase in the future. that's a good thing. unfortunately if you don't make investments in the logistic systems that is handling the production, you are attaching a garden hose to a fire hydrant. my fear is as production continues into the future and while we remain anemic investing in our own infrastructure, the future could be where we're trying to attach a drinking straw to a fire hydrant.

that has an impact on our competitiveness. i like to use this slide to really tee up why this issue is so important. i apologize for those in the back who may not be able to see this. this slide illustrates the cost of transporting a metric ton of soybeans from three locations, two in the united states. davenport, iowa, for those of you who kind of know our inland waterway system is located on the mississippi river. about 1,400 to 1,500 miles to a terminal in the midwest. the davenport movement will be 900 to 950 mile journey via the mississippi river down to an export terminal in southern louisiana on the mississippi river, and then north of brazil, madigroso state is the largest producing in brazil. they're vying for number one.

the number one soybean producer in the world. so that's the main competitor. as you can see highlighted in red, the total cost of transporting the metric ton of soybeans, the line underneath it is the farm value. the cost of actually producing. the value of the product itself. that includes input costs. as you can see, the costs are pretty comparable. sometimes the u.s. is the lower cost producer. sometimes brazil is the lower cost producer. again highlighted in red. note that the extreme differential in the cost of moving that metric ton of soybeans. and it highlights the power of the more efficient freight modes of transportation. in the united states, the inland waterway system and our freight rail infrastructure. brazil has not -- does not have a sophisticated effort to invest in the inland waterway system or the freightway system.

they're acutely aware of this data. but they're still largely relying on the leased fuel mode of transportation. very important truck. but that is without question this least fuel efficient mode. what this expresses is the reason why the u.s. is the most competitive on the international place. our pomsy makers talk about out competing the rest of the world. doubling exports over between now and the year 2015. and usually when that discussion ensues, the discussion tends toen center on innovation. we need to out innovate the rest of the world. and it's reasonable to do that. but sometimes out competing the rest of the world expressed in the slide is not just a function

of about innovating. taking a product that can be produced elsewhere and just getting it to a customer in a more cost-effective, reliability and competitive manner. my concern is we are a spending nation. we're not an investing nation. there's a big difference between the two. and i was talking to a group of brazilian soybean farmers a couple of years ago, and i said to them, if a time ever comes where you, brazil, are the most competitive and most economical on the marketplace, i hope it's because you have done a sublime job of investing in your infrastructure, not because we've been lslow in ours. my concern is we're the latter. . and just to duck tail with the comments made about the inland waterway system. you know, given the fact agriculture is heavily invested

against and dependent upon all of the systems, we as a farmer funded, farmer led organization, we're actively engaged in all of those modes. but just to duck tail since we had such quality comments about the inland waterway system. one just to piggy back on that. a project that is -- that continues to generate a lot of attention is the panama canal expansion. a major link in the ag logistics chain. i've taken my board down to panama. i've been down there several times to visit the canal. really important we think to the future competitiveness to the soybean industry. we financed a study that we released a couple of years ago that highlights that subsequent to the canal expansion. we think the oil seeds

transiting the canal will increase 20% by the year 2021. and each vessel loaded down in southern louisiana could accommodate an additional 500,000 bushels of soybeans per v vessel. a typical vessel has 2 to 2.3 million pounds of soybeans. so the expansion to that is quite notable. that equates to 6 to $7 million of additional value per vessel, and with a 35 cent per bushel saving to our customer. and one of the things that i think is more interesting is the question, if you're making -- if ocean shipping down in in southern louisiana, and the mississippi gulf accounts for 58% of soybean exports, by far our number one port region. if you're making capacity, loading capacity down in in southern louisiana more competitive, to what extent is it going to make the system that feeds into it prodominantly the

waterway system more competitive? so we had the rezesearchers loo at to what extent are you going to expand the waterway rareas? right now people can dispute the actual miles. our research shows if you're about 70 miles or closer to the river, the inland waterway system is really the most economical for you. but if you're outside of 70 miles, freight rail is really the viable option. we think that with the subsequent panama canal extension, that draw area could expand to 111 miles, if you're loading a vessel to a 45-foot draft in southern louisiana, or even 161 miles if you're loading a small cape sized vessel in louisiana to a 45-foot draft. but again, the moral of the story is, there is going to be substantial areas of this country that all the sudden will regard the inland waterway system as a viable option to them. but it won't come to fruition if

we're not making adequate investments in it. notice the black dots on the map. those are where -- those are the locations of rail shuttle loading facilities. you can clearly see that the railroads know where the competitive vis-a-vis barge and where they are not. because you're not seeing a lot of black dots close to the river. and this may -- you know, my friends in the freight rail industry may not appreciate this, but from a shipper perspective, there's widespread evidence that when you have competition among various modes or among various mode or competition within a mode, it has pressure on the downward freight rates. so what we looked to see after the panama canal is expanded, and you are expanding the straw area, to what extent is that going to exert pressure on freight rates in the area enhancing our competitiveness. a lot of people regard the illinois waterway system as kind of this antiquated system that's on a slow trajectory to

obsolescence. and this is a mode that can be very temporary, very germane, but it depends on us to invest in it. with that i will turn it over to you and we'll proceed to questions. thank you very much. >> thank you, mike. i'm going to -- i have several bones to pick with all the panel lists. first of all, i wear bib overalls every day that i'm home, and i find it not at all in conflict with being what i hope is a progressive farmer. i will start off with craig, my questions is, you say we have plenty of capacity in the lock and dam system, and yet a barge tow has several barges hooked up to one tow boat. and many of the dams are so small that they can't go through them without splitting the tows.

they have to split the tows off, tie them on the side, take half through the lock and go back to get the other half. if you want to know what this looks like, just imagine two elephants mating. it is very big, it is very precise, it is very hard to do. and i would say is a pretty good sign of a lack of capacity. so i would ask you to respond to that. >> in speaking of -- the system has converged on two different -- two basic sizes of locks and dams there, all 105 feet wide to allow three barges to be rested up aside. and they are either 600 feet long or 1200 feet long. and if you have a 1200-foot chamber, you can take 15 barges plus the tow boat throughout without a single passable lock. and if you have a 600-foot chamber, break it in two and it's a two-step process. and each lock is a little different, but the single pass through may be two hours long

and the multi-pass would be four hours long would be an average. that adds cost. in the middle of iowa, davenport, for example, you would go through ten locks. on the voyage to new orleans, you may add ten times two hours, you might add as much as 20 hours to that voyage, but that voyage is a three-week voyage. so there is an incremental cost, but most of the locks most of the year aren't at capacity, meaning that even though the processing time is longer, for most of the locks, most of the year, we don't find big cues of traffic building up. not that it never happens, and when there's a breakdown, of course you do, but that can happen on either lock. so i think our industry has been a bit misguided on focusing on

trying to expand the locks. a noble effort and frankly it appeals to the people of this town because they want to build stuff. the congressman from iowa has enjoyed extending the locks, but we have done that in sacrifice to some degree as i'm becoming painfully aware because of the delays you speakers talked about from the maintenance, that we have not maintained what we have adequately. so for me where i sit and look, it looks to me like we would be better served to spend the dollars that we can muster to keep everything in good repair rather than focusing on this capacity expansion. we have a huge project called homestead that could be a topic of a whole panel if we wanted it, where -- that is a congestion point.

they are replacing two locks to a single lock with two 1200 chambers. they will solve the problem there if we can get it completed, but my bias is to think we have been misguided for a long time in spending money to expand when we should have been spending money to preserve what we've got. >> i won't go into it. you also make comments about the advantages that the wing dams have made along the river. many farmers would disagree, they think they have caused harm to the levee, but that's a little assentary for this group. i realize that the core has many masters. congress, fish and wildlife service, the president, chief of staff of the army, but in missouri the corps is involved in land purchases for habitat development. they are involved in developing