Future of ag rail service is "all about communications"

Ag Rail delays

Former MCGA president Tom Haag (left of speaker) participated in a forum on Thursday to discuss ag rail shipping delays.

By Jonathan Eisenthal

A forum in Alexandria sponsored by the Minnesota Department of Agriculture allowed farmers to share their concerns with railroad companies about the problems created by lack of timely rail service, which reached crisis levels in the late winter and early spring this year, especially for farmers in central and northwestern Minnesota.

Tom Haag, a farmer in Eden Valley and past president of the Minnesota Corn Growers Association (MCGA), participated in a panel discussion: “Limited infrastructure is the bottom line. They’ve still got one line running through our area, the Canadian Pacific line. With only one track, they can only run so many train cars in one direction.”

Haag described for the other panelists and audience how local elevators for some farmers could not move enough product like corn to market because of the lack of grain cars. The full elevators stopped taking delivery on already established contracts. The delays meant farmers couldn’t take advantage of rising prices. The delays caused a substantial volume of grain that usually went to markets in the west to be hauled east by truck to ethanol plants and other local markets, causing the value of corn in those markets to drop.

“The MDA funded a study by the University of Minnesota and found that Minnesota corn farmers lost more $100 million dollars from these delays,”Haag said.

He added that the elephant in the room went unrecognized: “The increase in traffic from oil fields was never brought up. They seemed to want to stay away from that as much as they could.”

A panel composed of railroad company representatives “discussed the challenges that faced the railroads, and all the things they are doing to try to expand for the future,” reported Anna Boroff, public policy director for MCGA. She said, “They predict that by harvest they will be caught up and back to ‘normal.’ The export possibilities are still looking good. Together with rising yields, the rail companies favor increased investment in infrastructure and increasing capacity.”

The companies such as Canadian Pacific, Burlington Northern Santa Fe, and Twin Cities & Western (a short rail company) echoed the farmers’ concern with timely delivery of rail service capacity. They also voiced concerns about the burden of regulatory intervention.

“The railroads said they are building more grain hopper cars, they are getting more locomotives, they are getting more people hired,”Haag said. “To me, still the big problem is that the train tracks have not expanded capacity since it they were first built. Economics is a big part of the picture. We all know the oil companies get their needs met because they have the money to spend, so they can get the cars when they need them. When it comes to grain, or bringing fertilizer, there is not as much profit to be made —they cannot charge as much and still have farmer customers.”

Haag observed that infrastructure is basic to the long-term competitive position of the United States in the global economy. It comes down to jobs and dollars. Haag also believes the state needs to revisit the issue of building up its livestock and renewable fuels industries: bigger local markets for grain would have many advantages, including relieving rail congestion.

Mike Steenhoeck from the Soy Transportation Coalition made an impassioned plea for greater investment in transportation infrastructure, though he said policy makers were timid when it came to the issue of raising taxes to support transportation.

“If you have a transportation system that serves agriculture, it will serve the entire economy,” Boroff reported Steenhoeck’s position. “The reason we do as well internationally as we do is not because of lower cost of production — places like Brazil are able to produce crops more cheaply than American farmers. Brazil has the most navigable waterway system in the world, but it is not near agricultural production areas. Our main waterway, the Mississippi/Missouri River system goes through our most productive farmland.”

Haag noted that farmers within a two-hour drive of the Twin Cities have good access to river ports. However, Minnesota producers face an added challenge that farmers in Iowa and points south do not — the barge shipping industry in Minnesota closes down for the winter.

“The meeting was productive in a way,”Haag said. “Pointing fingers and hollering and screaming doesn’t get anybody anywhere. It only makes more enemies. Instead, it works much better if you try to establish better communications. So that means if you are farmer and you deliver to Elevator A all the time, you’ve got to make sure and talk to them about what they’ve got planned for the fall. Do they have trains lined up so the farmer can count on moving his the product. If not, that farmer’s got to put pressure on the elevator to go talk to someone —to say, I’ve got ‘x’amount of corn and beans coming in, so I need a certain amount of trains to make sure this thing happens.”

“The future of this thing is all about communications,”Haag said. “We (farmers) are going to have to play a bigger part by talking about what we need.”

The forum, called “Envisioning the Future of Agricultural Freight in Minnesota” was supported by the Minnesota Corn Growers Association, Minnesota Soybean Growers Association, Minnesota Soybean Research and Promotion Council, Minnesota Grain and Feed Association and the Midwest Shippers Association.

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