(The following article by Mike Dennison was posted on the Great Falls Tribune website on July 28.)
HELENA, Mont. — Gov. Brian Schweitzer on Wednesday urged BNSF Railway Co. to rescind newly announced grain-shipping rates he said eventually could bankrupt 52-car grain elevators in Montana.
In a letter to BNSF Chief Executive Officer Matt Rose, Schweitzer said increasing shipping rates for grain elevators serving 52-car trains will drive the elevators out of business, decimate local economies and increase costs for farmers.
BNSF announced the new rates about three weeks ago, saying it will phase in higher rates for grain shipped from 52-car facilities. They’ll start taking effect next month.
The majority of Montana’s three dozen 52-car elevators are in northcentral Montana.
Richard Owen, executive vice president for the Montana Grain Growers Association, said Wednesday that BNSF clearly is trying to route more grain traffic to its new 110-car loading facilities, where the railroad saves money by loading more cars faster.
“It would be OK if they wanted to do that in a competitive environment,” he said. “But when you have a monopoly, we think the ground rules need to be different.”
He also pointed out that BNSF announced a 47 percent increase in second-quarter profits this week, a record for the company.
Schweitzer plans to follow up Wednesday’s letter with a call today to Rose in Fort Worth, Texas.
Gus Melonas, a BNSF spokesman in Seattle, said Wednesday evening that the company would have to review Schweitzer’s letter before responding.
BNSF’s current grain-shipping rates for 52-car elevators are a few cents per bushel above the rates charged at 110-car units. The railroad plans to increase the 52-car rates by at least another 10 cents a bushel, Schweitzer said.
“This (change) raises the distinct possibility that most 52-car (grain) facilities in the state of Montana will be forced out of business over the next few years,” he wrote.
Northcentral Montana towns served by 52-car elevators include Great Falls, Big Sandy, Fort Benton, Carter, Chester, Conrad, Cut Bank, Fairfield, Joplin, Rudyard and Denton-Geraldine, via Moccasin. Many are on branch lines that hook into main rail lines.
Schweitzer said if these elevators are shut down, farmers across the region will be forced to truck thousands of bushels of grain to the larger facilities, increasing their costs and causing more damage to roadways.
The governor and Owen said BNSF should maintain the current rates. They also said BNSF should back off from its decision not to quote rates for elevators that haven’t shipped grain in two years.
“It kind of perpetuates the problem,” Owen said. “How can we ship (the grain) if we don’t have a competitive price?”
Schweitzer said preserving the 52-car elevators is “critical to Montana’s economic interests,” and asked the company to work with the state to preserve them.
Rep. John Witt, R-Carter, who hadn’t heard about the increase Wednesday night, called it “atrocious” and said the change will deal a major blow to farmers in his area of Chouteau County
Carter is home to a 52-car elevator; nearby Fort Benton has two. Farmers could be forced to ship their grain to larger elevators in Great Falls, Havre or Collins, 40 miles north of Great Falls, he said.
“It’s just a monopoly doing whatever they wish,” said Witt, who farms grain in the Carter and Fort Benton-Loma areas. “The elevator is not going to pay (the increase). It’s going to come off the bottom end. It’s going to come off the farm community.”
BNSF is the only major railroad in Montana and ships nearly all of the state’s grain to markets on the West Coast.
Chouteau County Commissioner Jim O’Hara said the increase could bankrupt all three of the 52-car elevators in that county. The economic fallout would be devastating, he said.
Forced to haul grain to elevators in Great Falls or Havre, farmers would have less reason to buy fuel or eat at restaurants in Chouteau County, said O’Hara, who also hadn’t heard about the increase.
“It’s gong to put a hardship on the farmers, the elevators and the communities here in Chouteau County, that’s for sure,” O’Hara said.