(The following article by Karen Ogden was posted on the Great Falls Tribune website on July 30.)
HELENA, Mont. — Gov. Brian Schweitzer and top railroad officials “agreed to disagree” in a meeting on new grain shipping rates that critics say would shut down Montana’s 52-car grain elevators.
BNSF Railway executives show no sign of budging on the new rate structure, which according to Schweitzer, would increase rates for 52-car elevators by at least 10 cents a bushel.
“We agreed to disagree, but I told them that I don’t think the people of Montana ought to subsidize their railroad,” said Schweitzer, who met in Kalispell Wednesday evening with BNSF Chief Executive Officer Matt Rose and Kevin Kaufman, vice president for agricultural products.
The change comes as BNSF reports a 47 percent increase in second-quarter profits and is charging Montana farmers more to ship their grain to West Coast ports than it charges producers in the Midwest, who are farther away.
The new rates, effective Aug. 15, mean 52-car elevators will pay about 15 cents per bushel more for freight than the new and bigger 110-car elevators. The difference is now roughly 4 cents.
The 52-car elevators would have to pass that cost on to farmers by paying correspondingly less for their grain.
Farmers, in turn, would have little choice but to bypass the 52-car elevators to get the better price offered at one of the larger 110-car facilities.
Unable to compete, the 52-car elevators eventually could close in towns such as Big Sandy, Fort Benton, Cut Bank and Chester, say Schweitzer and farm organizations.
Montana has roughly 10 shuttle loaders.
Northcentral Montana is home to the bulk of Montana’s three dozen 52-car elevators.
“The more of these stations that they close, the larger distance the grain has to travel over Montana highways to reach the terminal,” Schweitzer said. “That creates added wear and tear on our highways. I told them that that means that the taxpayers of Montana are subsidizing Burlington Northern.”
Rose and Kaufman were unavailable for comment.
BNSF spokesman Dick Russack said the railroad is favoring the 110-car elevators because they are simply the most efficient method for transporting grain.
Montana is producing more grain for the export market, which is best served by the 110-car trains, Russack said.
“It’s a discussion that’s gone on for years, but if you look at what’s happened across the country, not just in Montana, but in Texas and California, there are a growing number of 110-car elevators.”
In regard to Montana’s higher freight rates, Russack noted that the state grows some of the nation’s highest quality grain.
“The transportation rates are based upon market demand, and certain products have greater market demand,” he said.
But Schweitzer said Montana’s high rates boil down to a lack of competition.
BNSF operates 90 percent of the railroad miles in Montana, according to a study commissioned by the state Legislature.
Schweitzer said he asked BNSF to provide a list of freight rates for all locations from the Midwest to Montana. He plans another meeting with BNSF officials in mid-August to review them.
But he expressed no optimism that BNSF will reverse the new rates.
“A lot of governors have come and gone in Montana, and BN has survived them all,” he said. “My singular focus will be representing the people of Montana. We just want a fair deal. We don’t want something for nothing, but we don’t like subsidizing the railroad.”
Big Sandy farmer Dan Kidd is appreciative of the governor’s efforts.
He hauls some of his grain to shuttle loaders but also relies on 52-car elevators closer to home.
“Chouteau County currently doesn’t have a shuttle loader facility, being one of the largest wheat producing counties in the United States,” he said.
Though he’d like to see Schweitzer succeed in swaying BNSF, he isn’t counting on it.
“We’re hoping that he’ll get the respect he deserves being our governor and making (BNSF) sit down and work this out,” Kidd said. “That would be the best solution to this problem. But history isn’t in our favor there.”