(The following article by Jared Miller was posted on the Great Falls Tribune website on April 14.)
HELENA, Mont. — Burlington Northern-Santa Fe Railway, the shipper of nearly all Montana-grown grain, has agreed to an immediate reduction in transportation rates for the state’s wheat farmers, Gov. Brian Schweitzer announced Wednesday.
Farmers can expect to pay 3 to 4 cents less per bushel on wheat sent to West-coast markets. That should result in a statewide savings of $5 million to $6 million a year, Schweitzer said.
BNSF confirmed it will adjust its rates in a news release sent late Wednesday afternoon.
The deal is part of a larger BNSF plan to temporarily change the way it calculates the fuel surcharge on grain shipments.
The new rate will affect producers in four states: Montana, Minnesota and the Dakotas. The other states will wait until Jan. 1 to see the savings.
“Montana’s rate will go down right now,” Schweitzer said.
Richard Owen of the Montana Grain Growers Association called the reduction “an important first step” to bring Montana shipping rates in line with those of other states.
He noted that the $5 million to $6 million savings from the reduction is about one-tenth of the $60 million overcharge paid by Montana farmers each year.
“They’ve got a long way to go to make it comparable to other states that have competition,” Owen said.
BNSF hauls about 80 percent of the state’s export grain and charges a higher rate than it does in states with more competitive shipping alternatives for grain headed to the Northwest, according to a 2004 legislative report on Montana freight competition. The discrepancy costs Montana growers about $60 million a year, the report said.
Pressure has been mounting for BNSF to reduce freight costs, including a bill in the Legislature that would increase the company’s property tax in accordance with the shipping discrepancy with other states.
Schweitzer said the bill might have played a role in the reduction.
“It could be that they got the message that there is a fairly high level of frustration right now in Montana and they are looking to gain our confidence again,” Schweitzer said.
The sponsor of the rail-tax bill, Rep. Bob Bergren, D-Havre, has succeeded in shepherding the legislation through the House Agriculture Committee and through the House. The bill now awaits action by the Senate Taxation Committee.
“I think (BNSF) never dreamed that (the bill) would come out of not only committee but through the House,” MGGA’s Owen said.
Terry Whiteside, a Billings-based transportation consultant with the Montana Wheat and Barley Commission, said his group has long complained about the fuel surcharge.
The surcharge is calculated as a percentage of Montana’s high shipping rates, and costs the state’s farmers $7 million to $10 million a year, according to Wheat and Barley Commission.
“We still have the highest freights in the nation, and that’s still the issue here,” Whiteside said.
BNSF has agreed to a new method for calculating the fuel charge based on mileage instead of a percentage of shipping rates.
That means farmers in the eastern part of the state will pay more than those in the more westerly regions. The savings should range from $115 to $150 per railcar.