Economic Tidbits

Highways Critical for Agriculture

Highways are a critical link in the transportation of agricultural goods, providing first and last mile connections to rail, barge, ocean vessels, as well as processors, feeders, and other end users. A USDA study on the importance of highways to agriculture found trucks accounted for 83 percent of agricultural freight movements by tonnage in 2018 (Figure 2). Nebraska is home to several of the most important agricultural highways, High-Volume Domestic Agricultural Highways, the USDA defines as “the most important for moving the largest volumes of agricultural freight produced in the contiguous United States.” Figure 3 maps these highways in the U.S.

However, the nation’s highways are beginning to show their age. USDA reports 14 percent of the nation’s rural roads have pavements in poor condition and 9 percent of rural bridges need repair or replacement. Nebraska has over 1,125 miles of highway in poor condition and 1,302 bridges in need of repair or replacement. And the demand for trucking is only expected to grow in the future.

The Infrastructure Investment and Jobs Act recently passed by Congress and signed into law seeks to address the nation’s deteriorating infrastructure. The legislation directs $1.2 trillion towards infrastructure, but only $550 billion is new spending. The remaining funds were already slotted for highway and other projects. Of the new money, 52 percent will go to surface transportation improvements. This includes roads and bridges, rail, and ports and waterways. Estimates suggest Nebraska could receive more than $2.5 billion from the package. The Nebraska Chamber of Commerce says $2.2 billion would go for roads, $225 million to replace and repair bridges, and $358 million for water infrastructure. Other dollars will go to broadband ($100 million in Nebraska), energy and power grid improvements, and other infrastructure.

U.S. agriculture is competitive in world agricultural markets mostly due to relatively low transportation costs. Low transportation costs allow U.S. producers to compete with producers in other countries who have lower land and labor costs. Maintaining the country’s highways is essential to keeping freight costs low.

Figure 2. Mode of Transportation of Ag Commodities by Tonnage, 2018

Source: USDA, The Importance of Highways to U.S. Agriculture, 2020

Figure 3. High-Volume Domestic Agriculture Highways

Source: USDA, The Importance of Highways to U.S. Agriculture, 2020, from the Volpe Center analysis of 2018 HIS Markit Transearch data

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