In spite of a record corn crop, some American grain farmers are struggling to get their crops to market due to railroad delays. Farmers in states such as North Dakota, South Dakota and Montana are sitting on millions of tons of grains, waiting for rail cars that are over a month late to arrive and haul their crops to grain elevators and ports in the Pacific Northwest.
With no commercially navigable rivers nearby, these farmers have few alternatives to rail for cost-effective transport, but a harsh winter and an increase in energy commodities have significantly delayed shipments in affected areas.
Oil Transportation and a Harsh Winter Cause Delays well into Spring
Freezing, icy weather slowed rail transportation through much of the winter season, causing backups in excess of 20 days. Even with the arrival of warmer weather this spring, delays continued to be a problem and worsened in many cases. In May, wait times for rail cars increased to more than 25 days in North Dakota and more than 32 days in Montana. For the two states combined, more than 10,000 cars are past due.
New oil production has also contributed to the rail transportation bottleneck. The amount of crude oil shipped on rail lines in this region has doubled in the last year, with little new infrastructure built to handle the increase. Transporting oil via rail also decreases rail speeds, as the dangers of a spill or explosion mandate slower travel.
“Due to poor weather and safety concerns of crude oil transport, rail car speeds have fallen from a year ago,” said Mark Gross, director of the South Dakota Corn Growers Association, at a meeting with the U.S. Surface Transportation Board. “The BNSF (Burlington Northern Santa Fe Railway Company)— South Dakota’s largest rail carrier — has experienced the largest noted speed reduction in the country of 15.1 percent. These slow speeds have made bids for grain in South Dakota far less competitive than a year ago.”
As Grains Pile Up on Farms, Growers Demand Change
As the issues persisted through the spring, grains ready for transport remained in storage longer than expected, taking up much needed storage space. By early March, farmers in South Dakota still had 6.7 million metric tons (265 million bushels) of corn stored on their farms, a 61 percent increase from last year, and 3.9 million tons (154 million bushels) of corn in off-farm storage, up 40 percent from the previous year.
With the 2014 winter wheat and corn harvests quickly approaching, farmers have to decide what to do with grain still in on-farm storage. Some are incurring higher costs by trucking their grain to far-away rail stations that have cars available, and some farmers are changing their spring crops to those with lower yields. Declines in quality due to longer storage times have also become a serious concern for farmers in the area, who wish to maintain the reputation for high quality U.S. grains.
After waiting months for rail delays to improve, farmers in the northern U.S. Plains are petitioning industry associations and government representatives that steps need to be taken by rail companies to make more cars available for grains. Concerned that the growth in oil production will continue to worsen delays, farmers want to see investment in new infrastructure, so that they can continue to deliver a high quality, reliable supply of grains to their customers.