(The following article by Chris Clayton was posted on the Omaha World-Herald website on July 30.)
NEBRASKA CITY, Neb. — Farmers and grain dealers want to know whether major railroads have fixed kinks in their systems that led to weeks of shipping delays last year.
Access to rail shipping will be a growing question as fall approaches, because record corn and soybean harvests are expected throughout the Grain Belt.
“There’s a lot of muted concern,” said Pat Ptacek, executive director of the Nebraska Grain and Feed Association.
“What scares me is I don’t think anybody reckoned we would have this kind of a bumper crop for corn and soybeans.”
Eighty-four percent of the corn crop is rated good or better, the highest ranking this late in the season in a decade. Soybean ratings are comparable.
“These are some of the best conditions we’ve seen in our nonirrigated crop since 1994,” said Mark Harris, director of the Nebraska Agricultural Statistics Service.
Grain dealers from across the state got an update on rail issues Thursday during their summer convention at the Lied Lodge & Conference Center here.
Tom Caron, senior business director for Union Pacific Railroad, told the group that his company is focused on meeting the expectations of its customers, workers and shareholders.
“I would be remiss if I didn’t say that this year we have fallen rather short on all of those,” Caron said.
U.P. last week announced a 43-percent drop in quarterly earnings from a year ago.
Agricultural products make up about 15 percent of Union Pacific’s shipping mix. Access to rail shipping is critical in states such as Iowa and Nebraska, which ranked second and fifth nationally in agricultural exports last year, according to the U.S. Department of Agriculture.
One factor affecting railcar availability is the expansion of ethanol plants in states such as Nebraska, Iowa and Minnesota. Not only are more plants being developed, they are producing two or three times as much fuel, which is increasingly shipped by train.
“We’re certainly seeing fairly large plants being constructed throughout the system,” Caron said. “In Iowa, about every morning, you wake up and there’s a new plant or one doubling in size.”
Al Vergin, general director for feed grains at Burlington Northern and Santa Fe, said the biggest challenge now is dealing with increased demand.
“Our business is booming and it’s not just in agriculture but in all business units,” Vergin said.
At BNSF, agriculture shipping has increased by a third over the past year, Vergin said. The volume of coal, industrial products and consumer goods also has increased by more than 10 percent in each sector, he said.
In planning for the Midwest harvest, BNSF plans to increase its 100-car shuttle trains, which railroads consider the most efficient way to handle grain. Shuttle trains for BNSF’s 27,000-car fleet will increase 30 percent.
But Vergin cautioned that for the grain cars, it will be a case of use them or lose them. “If not used in agriculture, those locomotives are going to go away very quickly.”
To respond to shipping pressures, Union Pacific will add 5,000 workers over the next year, as well as 6,250 additional freight cars, Caron said.
Rob Robertson, vice president of the Nebraska Farm Bureau, said there is a lingering belief among farmers that mergers in the railroad industry have resulted in a lack of competition and are partly to blame for the annual harvest logjams.
The steady flow of coal through Nebraska also raises suspicions, he said. “We always wonder if coal doesn’t sometimes take a priority in terms of shipping.”