With storage capacity in short supply and a record corn and soybean harvest predicted this year, Midwest farmers are struggling to move their massive harvest off the farm, leaving some worried that part of the bumper crop will stay outside too long and rot.
The freight trains that typically haul grain away are inundated with shipping orders, and many are having trouble keeping up, thanks to a shortage of rail cars and competition for space on the railways with the energy industry.
“If there is not enough storage and the rail problems persist, grain could be stored on the ground and could run the risk of spoiling,” said Bruce Blanton, director of transportation for USDA’s Agricultural Marketing Service.
U.S. Agriculture Secretary Tom Vilsack said in an interview that the crowded rails could ultimately hurt the rural economy.
“Many producers in the upper Midwest are seeing prices that are probably a little bit lower than they should be simply because there is a concern that they may not be able to get grain to market in a timely way,” Vilsack said.
Blanton said there were only 5,900 railcar loadings of oil in 2007. In 2013, in the midst of the U.S. energy production boom, that number shot up to 400,000. Pair that this year with a bumper harvest, and there’s a lot of cargo with little space to move it.
Deliveries have been delayed and even missed because of the backlog, leaving some farmers scrambling to find new clients.
John Miller of BNSF Railway, which is based in Texas, said the burgeoning oil and coal sectors in the upper Midwest are compounding the congestion problem.
“We’re not real happy about it, but there hasn’t been any one sector that has been disproportionately affected,” he said. “It’s been across all the networks.”
To help mitigate the situation this year, BNSF says it is investing $1 billion to expand its railway network, add 900 rail cars and hire more than 5,000 people. Miller said the railroad has seen a gradual improvement of service with the expansion and will continue to communicate any problems with their customers.
With the rails still crowded, some farmers and grain elevators are turning to barge and truck services to pick up the slack. Barges and trucks typically ship grain shorter distances, so Blanton said some farmers are looking more closely at domestic markets nearby instead of sending their grain all the way to ports for international export. But that could mean they’re getting lower prices for their harvest.
Even backup modes of shipping are becoming pressed by high demand and limited space. The USDA reports barge rates were up nearly 50 percent in September from the previous five-year average. The Missouri Department of Agriculture says the river navigation season has already been extended by 10 days to allow elevators more time to move their crop.
Additionally, Missouri Gov. Jay Nixon recently increased the weight limit by 10 percent for trucks carrying grain in the state to help the state’s farmers ship their harvest more quickly.
But Blanton says he doesn’t know whether the transportation will completely recover in time.
“There’s been a lot of focus put on by agricultural shippers and also by the rail companies to work on this problem as quickly as possible,” he said. “Unfortunately, the rail capacity issue is not solved overnight.”