(The following story by Karen Ogden appeared on the Great Falls Tribune website on November 13.)
DENTON, Mont. — Despite rumors to the contrary, directors of Montana’s only farmer-owned railroad — the Central Montana Rail — say it’s going strong.
The Denton-based railroad is enjoying a stellar year, shipping more grain in the first six months of 2004 than it shipped in all of 2003, General Manager Carla Allen said at the railroad’s annual board meeting in Denton this week.
The short-line railroad hauls grain to the Burlington Northern-Santa Fe main line at Moccasin for roughly 100 producers in the Geraldine and Denton areas.
“What we’re trying to do here is ensure that we’re here another 20 years,” Allen told more than 50 farmers at the meeting, which last year drew about a half dozen people.
REPORT RAISES CONCERN
Many of the producers grew concerned earlier this fall, when the CMR was listed among Montana’s 10 branch lines at risk of abandonment in a report issued by the Montana Department of Transportation.
But Dick Turner, chief of MDT’s multi-modal planning bureau, acknowledged at Wednesday’s board meeting that the study didn’t consider all of the CMR’s revenue sources, most notably the Charlie Russell Chew-Choo dinner train and contract railroad maintenance work.
Although a spreadsheet in the study showed negative financial prospects for the railroad, the study says elsewhere that the CMR is in “excellent shape” and not at immediate risk.
“CMR is viable into the future as far as we can see,” Turner said.
THE RAILROAD THAT COULD
The CMR was established in 1985, during a wave of branch line abandonments much like those the state is trying to stave off today.
In that era, lines were abandoned as the railroad offered discounts for 26-and 52-car unit trains, putting older elevators that couldn’t handle those volumes out of business.
Today the 52-car elevators are shutting down as the railroad offers discounts to high-speed “shuttle loader” elevators capable of loading 110 cars in 15 hours or less.
Then, as now, producers feared the impacts of hauling the grain by truck — both the hardship on farmers and wear-and-tear on county roads.
“All that grain had to go out of there,” said Gene DeMars, a Coffee Creek-area farmer who was instrumental in the fight to save the railway. “With that much grain going to Geraldine and Denton, which is a terrific amount of grain, there would not be much road left after a few years.”
DeMars took his concerns to then-Gov. Ted Schwinden. The state, led by the Department of Commerce, ultimately filed suit against Burlington Northern, reaching a settlement in which the railroad donated the 84-mile branch line to the state.
Central Montana Rail, a farmer-owned nonprofit, was created to run a short-line rail service on the tracks, which it leases from the state.
The railroad had an operating budget of roughly $550,000 in the last two years, Allen said.
Fifteen percent of its revenue is earned from contract work for BNSF; another 10 percent comes from running the engine for the popular Charlie Russell Chew-Choo dinner train, Allen said.
The Lewistown Area Chamber of Commerce owns the dinner train cars, and the Yogo Inn handles operations and marketing.
The CMR saw roughly $68,700 in revenue from the Chew-Choo in 2003, running 48 dinner trains with 5,680 passengers, according to the state report.
Drought did take a toll on the railroad’s business, dropping carloads from 2,027 in 1995 to 1,147 in 2000 and finally to 577 in 2003.
The federal Conservation Reserve Program, which pays producers to take farmland out of production, also took a bite out of business.
But “our operation is fairly small,” Allen said. “Even last year, with our reduced car loadings, I still met my budget.”
The turnaround came in 2004, when the Denton and Geraldine areas harvested their best crops in the last decade, Allen said.
In the first six months of 2004 the CMR shipped 662 cars, more than its car loadings for all of 2003.
FUTURE STILL UNCERTAIN
But the railroad’s future isn’t guaranteed for farmers, who sell their grain to the Central Montana Cooperative, the railroad’s main customer.
“It will take a continued effort on their part to ensure the future of the cooperative and the rail,” Allen said.
Of key concern is a 110-car elevator opened at Moccasin in 2001 by United Harvest, a joint venture between CHS and the United Grain Corp.
The United Harvest shuttle loader at Moccasin offers farmers higher prices for their grain, compared with the Central Montana Co-op elevators at Geraldine and Denton, according to the state report.
That’s in large part because the railroad gives the elevator freight discounts for loading 110-car trains.
“We can’t compete price-wise the majority of the time with the shuttle loaders,” said Bruce Udelhoven, of Winifred, who chairs the Central Montana Co-op board.
But the co-op has been able to stay competitive because it caters to the domestic milling market, whereas the United Harvest elevator ships grain to the West Coast for export, said.
Ninety-nine percent of the co-op’s grain goes to mills in Great Falls or elsewhere, said Paul Clark, grain merchandiser with the Central Montana Co-op.
LOOKING AHEAD
The CMR is interested in linking its track into the United Harvest shuttle loader at Moccasin, which would require access to 0.2 miles of Burlington Northern Santa Fe mainline track.
But after two years of trying, the short line has encountered only “hurdle after hurdle and obstacle after obstacle,” from BNSF, Allen said.
It’s not cost effective for the Central Montana Co-op to ship its grain into the United Harvest shuttle loader elevator via the CMR short line, because United Harvest would charge handling fees in addition to the co-op’s handling fees.
But Allen said she wants the CMR to have the option to link into the shuttle loader.
“There is occasion when they do need to move grain from this facility to the facility in Moccasin,” she said. “We just want to be able to do that if we can do it cost effectively.”
Another concern is BNSF’s move toward 286,000-pound rail cars.
Many small wooden trestles on the CMR line are 90 years old and unable to handle the heavier cars.
The CMR is gradually replacing the trestles with culverts, however there is concern that the CMR would someday not get empties from BNSF if it can’t upgrade the entire line before the heavier cars become the standard.
But for now, the CMR is holding its own, a success story where other branch rail lines have vanished or are in immediate danger of disappearing.
Although the Central Montana Co-op ships 5 percent to 10 percent of its grain by truck, the railroad remains its lifeline.
“We’ve been trying to maximize it to the best of our potential for 20 years,” said Allen. “We do have a lot of loyal producers yet who still want to market their grain through us.”