Train traffic jam hurts grain, soybean growers in Midwest

08/15/2014 6:38 PM

08/15/2014 6:39 PM

With the start of the spring wheat harvest in Arnegard, N.D., a week away, the bins on Bob Wisness’s 11,000-acre farm are still half full with last year’s crops that have been stranded by a train traffic jam.

“With the railroad situation the way it is, it almost looks hopeless as far as catching up,” said Wisness, the president of the North Dakota Grain Growers Association.

Fort Worth-based BNSF Railway, owned by Warren Buffett’s Berkshire Hathaway, and Canadian Pacific Railway have struggled with “greater-than-normal” demand from shippers of coal, oil and Midwest crops, the U.S. Department of Agriculture said last week in a report. Record-high grain and soybean harvests anticipated this year may exacerbate the squeeze in silo space.

Railroads in 2013 transported 75 percent of the wheat crop and more than half of the corn and soybeans from elevators in the Dakotas, Minnesota and Nebraska, according to a report by the Upper Great Plains Transportation Institute. This year has been an “exceptional” one for shipping hurdles, said Kurt Lensing, an assistant vice president and industry specialist at AgStar Financial Services in Waite Park, Minn.

This week, about 2,700 rail-car orders were running an average of less than 17 days late in the U.S. compared with a peak in early April of about 16,500, said John Miller, BNSF’s group vice president for agricultural products, said in a telephone interview.

“We’ll be down to less than 2,000 past due by the middle of September,” he said. “We’ll have covered virtually all of the old crop over the next several weeks and then the work flow becomes simply new cars. We think that’s a tremendous improvement.”

At Berkshire’s annual shareholder meeting in May, Buffett acknowledged the jams on BNSF’s network triggered by a boom in shipments and harsh winter weather.

“BNSF has made steady improvements in service and is expected to work through its grain-car backlog by October,” the USDA said. “CP, however, continues to experience problems and may not be ready for the upcoming harvest”

The U.S. spring-wheat crop will rise to 572.4 million bushels this year, a four-year high, the government said in an Aug. 12 report. The majority of the grain is grown in the Dakotas, Minnesota and Montana.

“You’ve got to be in a position where you can let customers know that you’re going to be a reliable, timely source of wheat, and that’s our concern going forward,” said Jim Peterson, marketing director of the North Dakota Wheat Commission. He said 10 to 15 percent of last year’s crop remains stored on farms in the state.

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