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Grain, fertilizer rail shipments ‘on track’ for this spring’s planting


By DOUG SCHMITZ
Iowa Correspondent

ANKENY, Iowa — Although winter weather, a sizable 2013 harvest, the transportation issues that plagued Minnesota and the Dakotas and competition from other industries severely limited rail service early in 2014, experts predict rail systems will be on track for delivery of grain and fertilizer for spring planting season.
“It was well past spring before railroads started to catch up,” said Mike Steenhoek, executive director of the Soybean Transportation Coalition. “From an inland waterways perspective, we witnessed how a disruption in one mode of transportation (rail) results in additional demand pressure for alternative modes, like barge.
“Barge rates have been high this fall. It’s quite plausible that rates could escalate during the spring. April is the top month for barge deliveries of fertilizer. Given our experience last year, we should be well advised to be concerned about a repeat performance this year.”
But despite ongoing efforts to improve railway service in light of the transportation issues in Minnesota and the Dakotas, Midwest farmers still may be wondering if their own shipments of grain and fertilizer will arrive on time for spring.
“It’s always a card game for shippers to get products where they need to be by spring, making sure crops make it to the right place and are not sitting out in New Orleans,” said Jerry Mohr, an Eldridge farmer and president of the Iowa Corn Growers Assoc. (ICGA).
Clarke McGrath, Iowa State University extension field agronomist and a seasoned co-op dealer, said right now many areas are caught up, with fall’s extended harvest helping to a degree.
“The other thing helping (which is also a frustration for us) are the stagnant grain markets,” he said. “A lot of guys are storing their grain, so not as much is moving, lessening the grain pressure on trucks and rail systems for the time being.”
According to a recent study by the Minnesota Department of Agriculture, Minnesota corn, soybean and wheat farmers lost an estimated $100 million in revenue between March-May 2014 to transportation delays. In April 2014, the Federal Surface Transportation Board (STB) ordered the Canadian Pacific Railway Co. and BNSF Railway Co. to provide weekly status reports on fertilizer shipments and the transportation of grain on their networks.
On Oct. 8, the STB also required all Class I railroads to publicly file weekly data reports to promote “industry-wide transparency, accountability and improvements in rail service.” (In September, South Dakota received $12 million to fix about 42 miles of railroad for grain shipments.)
While this action helped refocus efforts to address delays and provided much-needed transparency to shippers, The Fertilizer Institute (TFI), which supported STB’s new orders, is concerned the required reporting on certain commodities doesn’t also require separate reporting for fertilizer shipments.
“These products need to be in place at warehouses and other distribution points across the country, prior to the narrow 60- to 90-day planting season,” said Kathy Mathers, TFI vice president of public affairs.
So far, Steenhoek said, rail service for the 2014 harvest has been “a pleasant surprise ... We haven’t witnessed any exorbitant service delays that were pandemic earlier this year. There are a number of reasons why rail service has been better than expected, but one of the contributing factors has been that farmers have been storing their grain, waiting for prices to become more favorable.
“That is a rational reaction by farmers, but the concern, from a logistics perspective, is when farmers do eventually deliver their grain, will railroads be able to accommodate it,” he added. “When farmers do sell their grain, that could coincide with severe winter weather, which will reduce rail capacity and velocity. This could have a ripple effect well into the spring season.”
1/7/2015