National Farmers urges rail priority for grain shipments

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Farm Forum

AMES, Iowa — As another harvest looms on the horizon for Midwest grain producers, talk of rail capacity shortages for grain is heard from rural America’s farm stores to the nation’s capital.

“National Farmers Organization members are facing the uncertainty of grain shipment delays in the Midwest, and we believe it’s not necessarily a shortage of grain cars, but also the fact there aren’t enough crews and engines to pull those cars,” said National Farmers President Paul Olson.

According to the New York Times, as of Aug. 22, the Burlington Northern Santa Fe Railway had a backlog of 1,336 rail cars waiting to ship grain and other products. The Canadian Pacific had a backlog of 1,000 cars, which operates in Maine, Michigan, Illinois, Wisconsin, Minnesota and North Dakota.

“We started realizing the rail trouble coming our way six months ago, and told South Dakota congressional representatives, but the situation is not improving,” said Bill Schuelke, National Farmers Organization South Dakota national board member. “I don’t think officials understand how critical the situation is; there is already wheat piled on the ground up here.”

Meanwhile, farmers contend that crude oil and freight shipping in North Dakota and elsewhere have contributed to the grain shipment delays. Crude oil companies began using rail in 2008, and rail revenue has grown from $25 million that first year to $2.15 billion last year.

In Canada, the government has stepped in and mandated that its two railways ship 1 million metric tons of grain a week through harvest, or be assessed a fine of $91,000 for each violation.

“Farmers deserve better,” said Olson. There will be a substantial amount of harvest grain that will have to be dumped on the ground. There will be a lot of spoilage and the situation could get critical quickly. “Congressional representatives need to contact the Surface Transportation Board and ask that priority be given to grain railcar shipments,” Paul said.

Elevators located on the Ohio River report that barges will be delayed, putting further pressure on basis. Another financial issue concerns the delayed ability for grain producers to move their 2013 and 2014 crops, which could cause severe financial repercussions with farmers’ lenders. Loan paybacks could be delayed or prevented, then putting producers’ credit access for 2015 in peril.

Olson noted the irony of a South American story of two years ago, when Brazil, Argentina and Paraguay farmers grew a record crop, but didn’t have the infrastructure to get all the grain to market. But today in America, because of the rail slowdown, farmers find themselves in a similar situation, he said.

“After harvest, the crops on the ground will rot; oil won’t,” Schuelke said. “Let’s give grain railcars priority to move immediately.”

National Farmers provides marketing and risk management services to the nation’s farmers and ranchers.