Published December 24th, 2014 at 12:00 PM
For the Midwest’s biggest crops, this harvest season was a big one. With winter setting in, the race is on for farmers to ship out their harvest so it’s not left out to spoil. But the giant harvest and a lack of available rail cars have created a traffic jam on the rails and the highways.
Usually, famers store their harvest in silos and grain bins, but this year, farmers brought in so much, there’s just no room. Farmers in Missouri, Indiana, Illinois and South Dakota are all being hit particularly hard by the storage shortage.
Normally, when farmers sell, they truck their corn and soybeans to their local grain elevator where it catches a train to its destination: a big animal feed company or a ship ready to export. But this year, many are having trouble getting it off the farm.
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The freight trains that typically lug grain away have been slammed with orders and are having trouble keeping up. That’s due in part to a shortage of cars and competition for space on the railways from oil and gas companies in the midst of an energy boom.
John Miller of BNSF Railway said the burgeoning oil and coal sectors in the upper Midwest are compounding the congestion problem, even though they use different types of rail cars.
“We’re not real happy about it, but there hasn’t been any one sector that has been disproportionately affected,” he said. “It’s been across all the networks.”
To help mitigate the situation, BNSF says it’s investing $1 billion to expand the railway network, add 900 new rail cars and hire more than 5,000 people. Still, the U.S. Department of Agriculture is worried.
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“If there is not enough storage and the rail problems persist, grain could be stored on the ground and could run the risk of spoiling,” said Bruce Blanton, director of transportation services for the USDA.
He said there were less than 6,000 rail cars loaded with oil back in 2007. In 2013, that number shot up to 400,000. Pair that with a bumper crop harvest and that creates a lot of cargo with little space to move it. With the backlog of railway shipments, deliveries have been late and even missed. That’s why some growers are changing their sales strategy.
“They’re looking for more marketing opportunities domestically – since they are having trouble on the rails – which can be shipped shorter distances perhaps by truck or by barge,” Blanton said.
In fact, U.S. Secretary of Agriculture Tom Vilsack attributes the low prices of grain to farmers selling their grain locally for fear of letting it sit and spoil. But selling locally means farmers might not get the best prices and even truck and barge services are pressured by high demand and limited space. Barge rates are climbing and some states are extending the river navigation season and increasing weight limits for trucks.
For the first time in more than a decade, one company – MFA Agriservices – has put river barges back in service to make sure the grain makes it to its buyer.
On a recent day on the Missouri River in Glasgow, Mo., MFA’s Mike Watring and his team loaded soybeans onto a barge. A large chute fired the beans into holes on top of the barge.
“Our system will allow somewhere around 5,500 bushel an hour to be put on the barge,” Watring said. “It’s going rather well today for as cold as it is.” It takes about eight hours to fill the whole barge.
Watring said the few rail cars up for grabs in the area get snapped up quickly. He’s still waiting for his first set of 25 rail cars.
“Everybody else fights for the remainder of the cars,” he said. “We’re supposed to ship three sets of 25 this fall, and we haven’t even gotten the first set shipped because cars were not available to us.”
Outfitting the barges for service cost nearly $50,000, so Watring hopes the barges stick around to help in the spring and in next year’s harvest season.
“The barges really came in at a great time,” Watring said. “Our numbers are way up on everything that we’ve handled. It will be a challenge to get all of the corn hauled off.”
He says even though the barges help, the grain delay problem won’t be solved overnight. Only an improved transportation infrastructure will ultimately fix the dilemma.