by Jack Greene
On February 3rd, 2023, a Norfolk Southern Train carrying hazardous materials Derailed in East Palestine, Ohio. This created a major issue for a state that exports billions of dollars worth of soybeans to China, among other agricultural goods. The Department of Transportation must implement change in its railroad procedures so that farmers are able to produce, and export their goods effectively, and keep the economy running.
China is one of the largest export destinations for soybeans from Ohio, with 30% originating from the region where the derailment occurred selling to China. The derailment has not only masked the town with a rumor of hazardous materials across their crops, but also resulted in a blockage of the railway, making it nearly impossible for farmers to distribute their soybeans to the various processing plants throughout the state.
The United States government has stated that there haven’t been any leaks of hazardous materials, but China is still skeptical. China has expressed concern over the safety of the goods they are receiving from Ohio. Additionally, they are unsure whether they can trust the U.S. to fulfill their imports in a reasonable time, considering how congested railroad transport is following the derailment.
As the U.S. has seen, China is not afraid to implement tariffs on the U.S for soybeans. In recent years, China has implemented a 25% tariff on soybean imports from the United States. This hurt the U.S significantly being that its soybean exports to China was valued at $12.22 billion in 2017 and accounted for 57% of all US soybean exports. Such tariffs could mean a steep decrease in the demand for U.S. soybeans in China, making it difficult for farmers in Ohio to compete with other soybean-producing countries.
If China were to stop its import of soybeans from Ohio, it would have detrimental effects on the state’s residents. In Ohio, soybean farmers make up just under 13,000 of the state’s jobs, but generate around $5.3 billion a year in state revenue, .65% of the U.S. total GDP, and 9% of Ohio’s GDP. Such a loss in revenue and jobs would cause a negative output gap, and lead to a significant reduction in the state economic activity.
Unfortunately, the Department of Transportation doesn’t seem to be taking this issue as seriously, however. Just recently, only a month after the derailment in East Palestine, another Norfolk Southern train derailed in Springfield, Ohio. It is concerning to see that the proper actions are not being taken by the state and federal officials to further regulate train transportation. These derailments are causing immense back-ups in the transport and export of soybean crops creating massive logistical and economic hardship for farmers.
If the state is to continue being a top exporter of soybeans to China, it must take strategic measures regarding railroad safety in order to meet its obligations with China. This includes implementing regular maintenance, inspections, and providing better training to railroad companies. The closure of railways due to preventable train derailments has been a major economic disaster in Ohio. The state will continue to face challenges in meeting export obligations to China. The shortage of supply with no available transport has and will cause a shortage in the supply and increase the price of soybeans.