S.D. growers: Railroads favor oil over agriculture

Farm Forum

BATH — Brown County farmer and self-described rural advocate Dennis Jones says action is needed to alleviate grain transport backups in the Northern Plains and is taking his fight all the way to the top.

Speaking at a news conference Tuesday morning in Bath, Jones and a group of nearly 15 growers and agriculture industry members aired concerns about what they said is a continuing lack of locomotive availability to ship grain to market.

The culprit, according to nearly everyone who spoke at the Northern Electric Community Auditorium: North Dakota’s Bakken oil boom and its need for railroad resources.

“In essence, the crisis is that agriculture has been hijacked by the oil frenzy in the Bakken region,” Jones said. “Even though the agriculture industry has helped to keep the railroads in business over the years, the Johnny-come-lately oil industry is occupying and affecting the ag industry to a crisis level.”

Jones said that growing oil production in the Bakken region — estimated to be at 1 million barrels per day soon, according to the latest numbers released by the North Dakota Department of Mineral Resources — and the main mode of transportation used to ship it has forced grain terminals and ethanol plants into a bidding war that has “basically doubled the cost of freight.”

Jones said the limited availability of trains has led to millions of bushels of standing grain that could go to ruin and a possible fertilizer crunch with spring planting season just around the corner.

“The loss would be devastating,” Jones said. “We’re asking for an immediate executive order from President (Barack) Obama to force the BNSF railroad to return its crews and equipment back to service agriculture in the Northern Plains and also allow competing railroads to service this area on those tracks until things get back to normal.”

“We’re in a crisis situation on the grain handle,” Dave Andresen, CEO of Britton-based Full Circle Ag, said Tuesday. “If there is a conspiracy for less use of ethanol, you’ve got a double-whammy coming here real quick. We have seven or eight fertilizer plants in our company and all those houses are full right now. If Nebraska, Iowa, Minnesota, Indiana, if everybody breaks at the same time this spring, our houses will all be empty in a week. If you want to limit the use of ethanol, you just did it because you’re not going to get fertilizer to raise corn.”

Along with his stated short-term goal of receiving an executive order from the White House, Jones said another avenue to help relieve stress from the railroads would be the approval of the controversial Keystone XL pipeline, which would stretch from Alberta, Canada, to south Texas and has yet to be approved by the State Department.

The Keystone XL, however, is only slated to carry about 100,000 barrels per day of Bakken oil if it does get the eventual green light, raising questions about how much effect its opening would have on rail transport out of the Bakken.

“This is not about free enterprise, like everyone is saying,” Wilmot farmer Orrie Swayze said. “This is about abuse of free enterprise. It’s reasonable to assume that railroad executives knew what was going to happen when you pull cars out of here to serve another expanding market, you’re going to basically abandon adequate service here. That’s what happened, and they knew what that would mean. You have to see the big smile on those executive’s faces. They’re doing some good business, and all they had to do was ship our cars up to a new market.”

Representatives from rail giants BNSF and Canadian Pacific, both of which move products in South Dakota, have said the backlog for agribusiness-related shipments has less to do with a competition between energy and ag interests and more to do with a harsh winter and general congestion along rail lines, including a big backup in Chicago.

“We’ve had an exceptionally challenging winter,” Canadian Pacific spokesman Ed Greenberg said. “Grain is still our single-largest commodity. Grain accounts for about 22 percent of our business, while crude oil only accounts for less than 5 percent.”

BNSF spokeswoman Amy McBeth said recently that crude oil shipments account for only about 4 percent of the railroad’s total traffic. Meanwhile, increased loads of coal and materials used in the oil-extraction process have increased, McBeth said.

The weather rationale for the backups seemed to do little to temper Swayze’s suspicions. “To me, the weather excuse is a cover-up,” Swayze said. “Weather has long been a planning issue for railroads. When they shorted resources for our rail, they knew any weather incident would be a heck of a problem and, sure enough, I think it even outrun their expectations. I think a regulatory solution of some kind must be implemented.”

A farm manager in Pierre, Pat Tracy reported during the news conference that about 11 million bushels of grain are backlogged in his area. Tracy said that Obama should not only approve the Keystone XL, but also require that it have enough capacity to transport a substantial amount of Bakken oil.

“The oil boom is great for North Dakota and American energy needs,” Tracy said. “But it does no good if it strangles agriculture in the process. That makes no sense.”

Follow @bryan_horwath on Twitter.