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Harvest 2020 at Deardorff Farms in Colville.
Photo by Jayson Deardorff

Wilbur-Ellis

POLICY

The benefits of barging

River transportation critical to PNW grain company's farmers, customers

August/September 2021

Columbia Grain International, based in Portland, is a leading supplier worldwide of bulk grain, pulses, edible beans and oilseeds, both conventional and organic. Their supply chain stretches across the northern tier of the U.S., from North Dakota to Washington. They operate nine grain elevators in Eastern Washington, as well as barge loading facilities on the lower Snake River. To say they have a stake in the fight over breaching the lower Snake River dams is a bit of an understatement.

Last month, Wheat Life talked to Jeff Van Pevenage, president and CEO of Columbia Grain, on the importance of barging to his company and to farmers as far away as North Dakota.

How important is barging to Columbia Grain?

Barging to Columbia Grain is twofold. All of our origination of soft white wheat, specifically to our own facilities, is based off of Snake River barge facilities. We operate a facility at the Port of Wilma, in Clarkston. We operate a facility at the Port of Central Ferry, and then we utilize a facility at Lower Monumental Dam. So, in terms of what we originate and buy from farmers, we barge nearly all of that grain down the river out of the Palouse, Camas Prairie and out of Adams County. We are also a partner in a joint venture of export facilities in the Portland-Kalama area where we have a terminal at Terminal 5 in Portland. And we are highly dependent upon barge unload in order to really operate that facility efficiently.

Given that, it’s a big deal to us. Sixty-five percent of the grain that is barged down the entire Columbia-Snake River System comes from the lower Snake River. That’s a large percentage.

Do you utilize barging both up and down the river?

Primarily downriver, but there are companies that utilize barging for bringing fertilizers and nutrients upriver, as well as fuels.

How does Columbia Grain currently use the railroads to move product?

We utilize rail on our unloads coming from Montana, North Dakota, Minnesota, South Dakota and Iowa. That’s part of it. We like to utilize our rail unload for that movement of grain and utilize our barge unload capacity for the soft white wheat that comes out of the Pacific Northwest.

In February of this year, Rep. Mike Simpson (R-Idaho) introduced a plan to remove the lower Snake River dams. A $33.5 billion fund, the Columbia Basin Fund, would be established to help mitigate the impacts removing the dams would have on the region. The money would be used, in part, to replace the energy produced by the dams, pay for salmon habitat and restoration, help agriculture adjust to the lack of barging capabilities on the Snake River and make necessary improvements to the region’s transportation infrastructure.

What do you think about Rep. Simpson’s plan to remove the lower Snake River dams?

I think it is a little bit of a grandstand plan to make a few people happy, primarily the environmentalists. If people took the time to go and tour the dams, tour the fish ladders, talk with the U.S. Army Corps of Engineers and really study the numbers of fish that are coming up today vs. the number of fish that were coming up in 1938 when Bonneville Dam was built, they would find that the numbers are very similar.

Typically, when you see downturns in the numbers of fish coming up, it’s not because of the dams, it’s because something is happening in the ocean. For instance, we kind of peaked fish runs in about 2016, and they’ve been going down since. But they go down at Bonneville, too. They don’t just go down on the lower Snake River, they are down on the Columbia River, meaning the fish aren’t returning to the Columbia, so the problem is somewhere out in the ocean. And that’s climatic changes, in my opinion, that are probably causing issues out in the ocean.

Do you think the price tag Rep. Simpson has put on removing the dams ($33.5 billion) is an adequate number?

I think it is outlandish to spend that kind of money. We have much bigger problems in the U.S. If you look at the way they’ve manipulated the dams in order for the fish to be safer and to travel easier, that’s working. I don’t think you need to spend even a billion dollars to continue increasing the numbers of fish by adapting to what we have in place today. (Rep. Simpson) wants to spend $34 billion to get rid of that, and there’s no guarantee that that will help the fish. But you will lose power generation, which with 115 degrees here the other day and air conditioning, it sure seems nice to have as much power as we could have.

Proponents of removing the dams often point to wind power as one of the replacements for the hydropower the dams provide. Van Pevenage recently took part in an industry tour of Lower Granite Dam on the Snake River, and on his drive home through the Walla Walla area, which has a large number of windmills, he noticed very few of them were turning. Unlike the windmills, which need wind to generate power, the dams can produce power under any conditions, 24 hours a day.

I’m a big proponent of, if this bill is even going to be considered in the Appropriations Committees, Appropriation Committee members need to come out and really study the issue. It was really enlightening to me to listen to the Corps of Engineers. We’ve sat here for the last year and a half under COVID saying “listen to the science.” Well, come listen to the science, and it will tell you whether you should spend $34 billion for this or not.

Could you bypass the Snake River altogether and load grain in the Tri-Cities?

You are talking about taking 13 facilities on the lower Snake River and the volume of grain they run through there and converting it somewhere down on the Columbia River. While there are a couple of facilities down there that could be utilized, you are talking about a lot more trucking. Trucking is the most carbon-creating form of transportation in the Pacific Northwest, and I thought everybody was talking about zero carbon emissions. So you take the most efficient form of transportation in terms of pollution, which is barging, and convert it into the worst, which is trucking, in order to save the salmon. I’m not sure which one is better for the environment.

Not only that, but there’s the ability to find the trucks. One of the biggest problems we have in our industry today is the labor to run our facilities, as well as people to drive trucks and enough trucks to do it. That’s really difficult, and I don’t think that’s getting better. And your costs would increase, as well, to the farmer.

How does barging compare to rails?

The timeliness of barging is typically faster and a more reliable service than what we would get from rail. Rail has improved tremendously over the years through the shuttle system, but a lot of transition of this grain from barge to rail would probably have to be in smaller units. For instance, there’s no room to put in shuttle trains along the rail line that goes up the Snake River right now. We do have rail service in Clarkston, and we ship a lot of our peas and lentils via rail to Seattle, but there’s no room to put 110-car trains there, so you’d have to ship grain in 25-car trains, and those get the worst service there is from the railroad. We can call and say “give us a barge in the next day or two,” and we can have it back down here in Portland in five days. With rail, you aren’t going to be able to just call up and say “can I get a train?” It could take two to three weeks just to get that train to your facility.

In our terminal at Terminal 5 (in Portland), we can’t expand our rail capacity. We are unloading as much there as we can. We don’t have any more land there to add more tracks. We are pretty dependent on barging at that terminal. And it’s not us, but the industry. I’m sitting here in my office right now, staring at the Temco facility downtown on the Willamette River that is primarily all barge, and there’s no room for additional rail unload there.

One of the benefits of growing grain in the Pacific Northwest is the shipping options farmers have. The competition between river, rail and roads helps keep shipping costs down. Remove that competition, and costs are almost guaranteed to increase. Under Simpson’s plan, approximately $4.5 billion would be used to study and mitigate the transportation effects of removing the dams, including the shift from barging to rails and roads. One of the options the congressman has floated is the creation of an account, using part of that money, to subsidize farmers and businesses who will end up paying additional shipping costs.

If you don’t have the space to build out the rail infrastructure, the money doesn’t do any good.

Not at all. And how long is Rep. Simpson trying to cover the additional shipping costs?

We export soybeans and corn heavily in October, November and December, and rail is a traded commodity. So when we are loading rail in Minnesota and North Dakota with these soybeans to ship to China, there’s a huge demand during that time period. The cost of rail, which is traded on the open market, sometimes will trade as high as 70 or 80 cents per bushel above the tariff cost. That would apply to trains that would be loading out in Washington as well. If you are going to put grain on the shuttle system, you are going to have to pay those kinds of prices to get your freight to load. So we can either not load white wheat onto trains in October, November and December, because the cost is more than double the actual barge freight today, or that cost has to be paid from somewhere. It will come from the farmer.

Using a representative number of bushels of wheat, Van Pevenage did some quick math. Across the 13 facilities on the lower Snake River that barge grain, let’s say they average 12 million bushels a year, totaling 156 million bushels. If 30 percent of that is moved during the fall, that means 46 million bushels would need to be loaded on the rails, right at the time when the demand for rail is highest. At an extra 60 cents per bushel for freight, that’s an extra shipping cost of $28 million that farmers would have to pay. As Van Pevenage pointed out, one can never predict where rail will be traded at, but he has seen it trade there “many, many times.”

I don’t think that’s a hit a wheat farmer could absorb.

I don’t think so either. So Simpson’s bill has to pay for all that, and how long is it going to pay for all that, and how are you going to push that subsidy out to people? It seems pretty confusing to me.

More information on Columbia Grain International can be found at columbiagrain.com.