Farmers Union producers share concerns with feds over rail delays
April 4, 2014
South Dakota Farmers Union members met with representatives from the Surface Transportation Board Office of Public Assistance, Governmental Affairs and Compliance March 27 in Fargo to discuss concerns agricultural producers are facing with the delay in rail service across South Dakota.
"The meeting was very informative and I appreciated the open discussion we had with the federal officials from the Transportation Board (STB) Office of Public Assistance" said Jason Frerichs, South Dakota Farmers Union Roberts County officer and state senator. "They didn't just come from Washington D.C. to tell us something we already knew. They understand the issues agricultural producers are facing and provided optimism for the farmers and stakeholders."
Delays in rail service have been attributed to the lack of infrastructure, an extremely cold winter, and competition with oil, coal and container shipments. Some of the major concerns shared by producers included issues of fairness and commodity priority.
"As agricultural producers, we understand how the extreme cold has affected the rail industry this winter, but weather extremes are part of doing business in South Dakota," said DuWayne Bosse, SDFU Marshall County president. "While the immediate concern is about shipping last year's harvested grain to the coasts, it is important to look at the bigger picture. How will this affect the agricultural commodity markets going forward?"
Farmers Union members are concerned about the potential impact the delays have already had and could continue to have on the agricultural industry in the area. Delays in receiving rail cars have ranged from 17 to 40 days.
"With the current price of rail cars and the high demand for them, our local cooperatives and elevators in Northeast South Dakota are greatly concerned about whether or not they will receive their rail car orders," said Steve McCleerey, SDFU Roberts County Farmers Union president. "When these facilities do not receive the rail cars they ordered, it backs up the whole market. They are forced to store the grain for a longer period of time and producers are not able to deliver any more grain to that facility."
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"The bottom line is that all of the costs associated with the delays and lack of infrastructure eventually fall on the farmer," said Ryan Wagner, SDFU member and Roslyn farmer. "We have already seen how rail delays have affected the basis. The move in the market can be attributed to the cost of transportation. If our commodities are not able to be shipped out on rail before the next harvest, how will it affect our baseline, markets and price?"
The South Dakota ethanol industry has also seen delays and many plants are not running at full capacity.
"This issue isn't merely causing challenges for grain commodities, it is also placing a burden on value-added agriculture, including the ethanol industry," Frerichs said. "Ethanol plants are not running at full capacity and producers have had to delay delivering grain because these plants have maxed out their storage capabilities."
SDFU is already working on the next steps.
"This meeting was extremely valuable and productive for our members," said Doug Sombke, SDFU president. "We have already seen the short term effects from the delays and are legitimately concerned about what this means in six months, a year, or even longer. SDFU will continue communicating with the STB and working towards solutions."
The STB is an economic regulatory agency that Congress charged with resolving railroad rate and service disputes and reviewing proposed railroad mergers. The STB is decidedly independent, although it is administratively affiliated with the Department of Transportation.
–South Dakota Farmers Union