(The Associated Press distributed the following article on December 22.)
MITCHELL, S.D. — The Burlington Northern and Santa Fe Railway will raise its grain shipping rates early next year due to the harvest, a spokesman says.
“This is market-driven. Current conditions and near-record harvests have put pressure on the entire grain transportation network,” said Gus Melonas, director of public affairs for the railroad, a subsidiary of Fort Worth, Texas-based Burlington Northern Santa Fe Corp.
Existing rates don’t reflect current marketing conditions, Melonas told the Daily Republic of Mitchell.
Domestic rates for wheat and corn will increase $100 per train car and soybeans will increase between $200 and $260 per car next month, he said. Corn will rise by another $100 per car in February, according to Melonas.
Bob Way, a Mitchell grain merchant, said he hasn’t seen a shipping increase that big in a long time. “We see it fluctuate up and down a little bit, but this is a big one.”
The increases come as livestock and grain farmers finally can make some money, Sen. Tim Johnson, D-S.D., told The Associated Press on Saturday.
“This is just enormously frustrating,” Johnson said. “I’m going to be talking to the Surface Transportation Board about this.”
Johnson said he doesn’t know the legal options yet but that the federal Surface Transportation Board has some regulatory oversight, “and we need to do whatever we can do try to at least moderate, if not eliminate, these price increases.”
According to Way, the increases mean freight costs will rise about 8 percent for corn and 7 percent for soybeans. For farmers, the increases will mean about a nickel a bushel less on corn and soybeans, he said.
“Through February, we will see an increase in freight of 5 cents a bushel on corn and 6 cents a bushel on soybeans,” he said.
The railroad blames part of the increase on investments in new cars and locomotives to haul the bumper crops.
“We have made significant investments to best serve the ag market,” Melonas said. “That also includes new rails and ties across (the Midwest).”
It’s bad enough that there’s a rail car shortage, Johnson said. “To add on top of that higher rates seems to me to be just unfair.”
He said he will talk to the president of the Burlington Northern Santa Fe as well.
Oversight is needed, Johnson said, because South Dakotans are captive shippers.
“This may be supply and demand, but where you’ve got a monopoly or near-monopoly situation, where no one else can haul the grain, then you’ve got the potential for some gouging to go on.”
Still, it’s too early to label the increases as price-gouging, he said.
The BNSF badly needs equipment upgrades, Way said.
“The service was really poor and the quality of cars that we’re getting is bad,” he said. “I know that they’re short of equipment. I don’t know if the harvest has anything to do with it.”
The increases already have been added to December grain prices at the Mitchell grain elevator because that grain won’t be shipped until next month, Way said.