Rail capacity seems to be in place for this year’s robust harvest, good news for the farmers and agribusinesses needing to get that grain to market.
In contrast to the last two years when grain elevators were short on rail cars and long on delays, Tim Luken reports that this harvest is rolling much more smoothly.
“This year it’s going just fine,” said Luken, general manager of Oahe Grain Corporation in Onida, S.D., which ships wheat, corn, sunflowers and milo out on the Rapid City, Pierre & Eastern (RCPE) rail line.
“There’s an ample supply of rail cars today. There are cars stored all over,” Luken adds, referring to the rail cars the BNSF and the RCPE have stored on siding around the region.
A number of factors are easing up pressure on rail capacity. Lower oil prices have led to less activity in the Bakken, freeing up space on the rail for grain. Also, the lower price of grain is leading farmers to opt for storage at home instead of immediately hauling the crop to town.
If crop predictions continue, that rail capacity will be needed. In its Oct. 9 crop production report, USDA is anticipating a large corn and soybean crop, both nationally and in South Dakota. The South Dakota soybean crop is forecast at a record high 235 million bushels, a 2 percent increase over 2014, at a record average yield of 46 bushels per acre. The South Dakota corn crop is forecast at 797 million bushels, up 1 percent from last year. Average yield is expected to hit 161 bushels per acre, up 13 bushels from last year. The next USDA crop production report is due out Nov. 11.
Scott VanderWal is seeing those excellent yields as he wraps up corn harvest on his family’s farm near Volga, S.D.
“In this area, I’m hearing 200-plus bushel corn or just shy of that,” VanderWal said. “At first I didn’t think we’d hit 200 bushels as an average, but I’m starting to think we might. That would beat our previous record high by 15 or 20 bushels.”
VanderWal, who serves as president of the South Dakota Farm Bureau, appreciates the organization’s involvement in and support on rail issues: “Farm Bureau has always advocated for the railroads to provide service to agriculture, to make it possible not only to ship ag products out, but also to bring inputs like fertilizer in.”
Those fertilizer shipments likely would have been the first ag product affected if Congress had not extended the Positive Train Control (PTC) deadline in the recent short-term extension of the highway bill. A 2008 rail safety bill mandated that PTC systems, capable of automatically stopping a train before certain types of accidents occur, be added to trains by the end of this year. With the extension, now railroads have three additional years—and two more if they are showing progress—to access and adopt this advanced technology.
“Without the extension of the PTC deadline, fertilizer production would have been the first impact that would have been noticeable to agriculture,” says Andrew Walmsley with the American Farm Bureau Federation. “And if those railcars would have been embargoed by the railroads, those fertilizer plants would have been forced to shut down. There would have been dire effects to agriculture from a fertilizer standpoint.”
“We were concerned that fertilizer would not move like it needed to. If they would have had to park the trains like they thought they might, that would hurt agriculture badly,” VanderWal said.
In addition to successful advocacy measures, investments in infrastructure are helping keep the trains on time. More than $12 million in rail upgrades near Philip, S.D., and around Huron, S.D., were recently announced, thanks in part to a $6 million Transportation Investment Generating Economic Recovery (TIGER) grant from the U.S. Department of Transportation. Senator Rounds and Representative Noem joined Senator Thune, who is chairman of the Commerce, Science, and Transportation Committee, in writing to Secretary Foxx on the application’s behalf.
Gov. Dennis Daugaard announced more than $50 million in public and private money for rail upgrades last year, calling them “imperative” because of rapidly growing grain production in South Dakota.