The agriculture industry in South Dakota relies heavily upon railways to ship grain, fertilizer, and other products. But for the past several months, a shortage of crews and locomotives has created what some are calling a crisis situation.
Travel along any highway in northeast South Dakota, and you’ll find yourself in a string of small towns. One feature dominates the landscape of many of these communities: the local grain elevator, positioned right next to the railroad tracks. One arm of the Burlington Northern Santa Fe line runs along Highway 12 in northeast South Dakota. It crosses under an overpass in Selby, where Mike Raush works as the grain merchandiser for Northern Plains Co-op.
While a train passes by to some unknown destination, another row of cars sits idle on the other set of tracks.
“Back here in the background, you’ll see this here’s a train that we loaded, and I believe this one’s been here a week already. And I guess I’m not sure when they’re going to pull it out of here and deliver it to market,” Raush says.
Raush says last year, trains were usually picked up within a 24 hour period.
“This year we’ve seen trains sit around here for a week to two weeks,” Raush says. “Besides sitting around here for one to two weeks, we’ve seen trains anywhere from 30 to 60 days behind their delivery time. Right now I’m currently waiting for a February train. It’s about 60 days late.”
Raush says his co-op used to load four to six trains a month. Lately it’s been loading about three to four instead. And when each train carries about three million dollars worth of grain, the transportation delay cuts into the bottom line pretty quickly.
It’s a similar story at many co-ops across the region. Dave Andresen is the CEO of Full Circle Ag, with administrative offices in Britton.
“We’re currently seven shuttles behind. Approximately two and a half months behind from the time, they call it a want date, when they’re supposed to place it,” Andresen says.
That means Andresen’s co-op is millions of bushels and millions of dollars behind schedule. He also says producers have no place to take their grain because bins are full. That soon becomes a problem, because farmers need room for this year’s harvest.
Farmers also need fertilizer. Andresen says his plants are filled and emptied two to eight times each year. And if there aren’t enough crews and engines to pull rail cars and bring more fertilizer, producers may have to re-think their plans.
“If this does not get resolved on the agronomy side, on the fertilizer side in the Northern Plains, I would deem this as a crisis, because producers will not be able to put in the crops that they want to put in,” Andresen says. “And that may come around back where they don’t make as much money. On the grain side, if this is not resolved by the end of May, the first part of June, anybody that has grain stored in temporary storage, yes, this will be a crisis.”
And he’s not the only one who feels this way.
“We’re way beyond crisis. We passed crisis with the New Year,” Brad Schultz says.
Schultz is Director of Commodities and Risk Management at Glacial Lakes Energy, an ethanol co-op with plants in Watertown and Mina.
“This is the thing,” Schultz says. “I typically come to work thinking about ten different things I come to work now thinking about one thing, and that’s logistics and how to participate in keeping our plants running as efficiently as we possibly can.”
Schultz’s job has been more challenging since this fall, when a variety of factors combined to create rail delays across the system.
“A train of ethanol from Mina, South Dakota to Texas normally takes 17 to 18 days,” Schultz says. “Transit times have increased to 21 days or more, or even to 27 days or longer. And ethanol plants are set up on pretty much a just in time inventory for both their distiller grains and for their ethanol. Consequently we do have to shut down or slow down to try to keep going. In the winter that compounds the problem because if you shut an ethanol plant down in the winter you may never get it started again because it will freeze up on you.”
Ethanol plants are designed to run at 100 percent, all of the time. So when facilities are forced to slow down, the plant loses dollars that can never be regained.
There are different ideas as to what’s causing the rail delays. Many say it’s because of an increased demand for hauling oil out of the Bakken area in North Dakota. A spokesperson for BNSF says the railroad isn’t favoring crude oil shipments over other products, and the strain is due to growth of several commodities using the rail system.
Ed Greenberg is a spokesperson for Canadian Pacific.
“It is a combination of extreme winter weather and the lingering impacts from the winter as well as the ongoing situation in Chicago with the extensive transportation congestion,” Greenberg says. “Those are the two main factors. We take all of our lines of business very seriously and we have a responsibility to everybody to treat equitably which we believe we are.”
Spokespeople for both railways say the companies are taking the problem seriously and working to restore normal operating levels as soon as possible.
For South Dakotans involved in agriculture, as soon as possible can’t come soon enough.