Nearly 90 percent of its proposed bulk-cargo terminal at Cherry Point north of Bellingham is designed for open-storage cargo (coal). But for four hours last Thursday (May 19), SSA Marine held forth on the virtues of using the giant export terminal to ship grain and other agriculture products.

With the focus in nearby Bellingham rapidly solidifying on the impacts of coal and the massive trains bringing it from the Powder River Basin for trans-shipment to China, it was a chance for SSA to talk about the smaller twin in its family.

Agriculture representatives from regional and national organizations seemed supportive of another option to ship product to Asia, but it was clear from their presentations that most of any added export moving through the prospective Gateway Pacific port would come from east of Washington's borders. The state is already a major exporter of agriculture products, but its largest export — wheat — is not among the crops expected to experience a marketing boom in Asia, because neither China nor India is a wheat importer.

At a marketing discussion, SSA executives made a strong pitch to about a dozen agricultural leaders to support the port proposal, and asked for ideas on how to design the project to handle their crops. But Bob Watters, director of business development for SSA, said no agreements have been signed or are being negotiated as was recently announced with Peabody Coal for up to 24 million tons of Power River coal for shipment to China.

Finding an operator for a grain terminal at Cherry Point may not be an easy task, as ports on the Columbia have been expanding to take advantage of a deeper river channel that opened this year; at Longview, a new grain terminal is the first built in the U.S. in 25 years, and some exporters believe the region has capacity beyond demand. That would be in contrast to coal terminals; there are none at U.S. ports on the Pacific Coast and the demand for coal in China has skyrocketed in the past two years.

Gateway Pacific will be designed for enclosed containers (elevators, tanks, etc.) to ship up to 6 million tons of commodities annually of products such as wheat, soybeans, and corn; this compares with 48 million tons of open storage (expected to be coal) when the terminal is fully operating.

It is coal, with its resultant trains of a mile and a half in length of open cars, that has caused the most concern in Bellingham, where railroad tracks bisect some of the city's most coveted property. Because the project is not inside Bellingham — it's 14 miles to the north — SSA has maintained that is not responsible to deal with the impacts of the estimated 18 trains a day (full and empty) the coal terminal will bring. Opponents are hoping to influence environmental studies of the project to include community impact.

But that was not part of the conversation with a friendly audience Thursday; the terms "coal" and "trains" were not used in the same sentence. Burlington Northern Santa Fe representatives talked marketing with peers in the agriculture sector.

The only concern raised was placing agricultural products and open storage of coal on the same site, but Watters said the different commodities would use separate loading equipment and would have covers. Later, U.S. Grain Council trade policy director Floyd Gaibler said he was satisfied there would be no problem.

Gaibler and representatives of inland growers see trade with Asia continuing to grow and there was much emphasis on China's growing middle class, increasingly urban and increasingly looking to American food products. Pacific Northwest ports account for 25 percent of U.S. grain shipments, with most going to Asia. But of the major export commodities — wheat, corn, soybeans and DDGS (animal feed) — wheat and soybeans have been flat for three decades and are not expected to make major gains.

Growth of Asian demand couples with increased farm production in the Midwest, creating a "perfect storm" for exporters, commented Greg Guthrie of BNSF's marketing department. Products would "roll westward" as a result, he said, seeking the Northwest's export terminals. Sixty percent of grain exports go to the Gulf Coast, but opening up a deepwater port such as Gateway Pacific would encourage some to be shipped on "cape-size" ships, largest in the world. SSA Marine emphasizes the depth of the Cherry Point location — up to 80 feet — makes it one of the few West Coast ports capable of taking the massive cape-size freighters.

Gurthrie's "perfect storm" may not apply as to wheat — Washington's major export— as it does to corn, DDGS, and soybeans, however. Although Washington wheat acreage remained about the same in the past decade, production rose in 2010 from 118.7 million bushels to 147.8 million bushels on a higher yield per acre, reflecting a national trend. Substantial improvement in wheat exports would require circumstances that are not likely to occur.

Speakers Thursday noted that in order for wheat to make substantial gains in production, it would be necessary to either take land out of conservation zones or move to a genetically modified strain of wheat. Both options face obstacles; the conservation zones are coveted by sportsman, what Montana grower Lochiel Edwards called the "hook and bullet crowd," and there is major consumer opposition to genetic manipulation of wheat. Corn and soybeans, grown largely in the Midwest, have been genetically modified for some time.

Although the concept of using Gateway Pacific to export farm products would likely be more attractive to terminal critics than coal, as long as existing regional ports have adequate capacity shipping agricultural products the extra miles to Cherry Point could prove to be a hard sell. "We are looking at 10 to 15 years out," said Gaibler, in terms of additional shipping capacity for grain.

Shippers could gain some advantage in price competition if the region adds more capacity, but to be competitive, Gateway would need to negotiate a lease with a large grain exporter. Grain terminals in the Northwest are typically operated by joint ventures of large agri-business firms, such as Archer Daniels Midland, Cargill, Bunge North America, and United Grain. No such agreement appears imminent, Watters confirmed. SSA Marine wants to present its project as a multiple-commodity port, but at this time it is only coal that seems to be a certain customer.

Northwest growers appear to have adequate capacity to export from existing ports without the addition of a new terminal at Cherry Point. This was confirmed by Dan Newhouse, state agriculture director, who said capacity is not a problem at present. Newhouse remains a committed backer of Cherry Point, however, siding with Gaibler and others on the need to have more West Coast terminals for agriculture products grown in the Midwest and shipped by rail to the Northwest.

Existing terminal operators, noting that a large new facility goes online at Longview this fall, are more concerned about supply of grain than they are about capacity. Washington wheat has been flat in recent years; export growth will come from the Midwest, and operators say there is no demand for added capacity with the new Longview elevator coming into production.