(The Associated Press circulated the following article on October 26.)
SIOUX FALLS, S.D. — Gulf Coast storms and higher fuel prices are driving up the cost of using railroad cars to ship South Dakota grain to market.
Back-to-back bumper corn crops compounds the problem.
“In general, because South Dakota is producing more and more bushels, it stresses the infrastructure we have in place … especially the railroad,” said Brian Woldt, president of the South Dakota Corn Utilization Council. “This has been brewing.”
Elevator managers and farmers with home storage who still have last year’s crop on hand and are waiting for market prices to improve are hard-pressed to find more storage room.
“We only have so much storage,” says Mark Stoller, general manager of the Madison Farmers Elevator, which already has grain on the ground. “We have to move the grain by horseback, truck or rail. Rail seems to be the most efficient for moving grain in bulk quantities.”
Farmers who store grain on the ground risk losing some of it to spoilage.
Sen. Tim Johnson, D-S.D., asked the Federal Trade Commission to investigate sharp increases in railroad fuel surcharges and the cost of renting grain cars.
He says transportation costs have risen to 65 cents a bushel this fall — from about 10 cents in recent years.
The closure of Gulf Coast ports after hurricanes is putting pressure on the nation’s rail car supply. Grain that would have been moved by barge is now forced onto railroads, said Lisa Richardson, executive director of South Dakota Corn Growers.
“Little of our corn goes through the Gulf. The problem is somebody else is taking our trains,” she says.
Supply of cars, however, is always an issue in the Dakotas during grain harvest, said Kevin Schieffer, chief executive officer of Cedar American Rail Holdings, which includes the Dakota Minnesota & Eastern Railroad.
“Cars are like everything else in the railroad business — locomotives, people. You never have the right number,” Schieffer says. “You either have too many or not enough.”
The hurricane complicated rail shipping, Schieffer said. Many grain cars were in the region when the storm hit and were flooded past the wheels, he says. Because of the fear wet wheel bearings have been damaged, the Federal Railroad Administration requires all such flooded cars to have their wheels changed.
“That has an impact on the availability of cars and on their locations,” Schieffer said.