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Legislative News and Views - Rep. Paul Anderson (R)

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High transportation costs bite ag. industry

Monday, July 14, 2014

 

By Rep. Paul Anderson

 

One hundred million dollars. That’s the amount of money the Dept. of Agriculture figures Minnesota grain farmers lost in the past three months because of the high cost of transporting their commodities to market.

 

The announcement of that figure was made last Thursday by Commissioner Dave Frederickson at a meeting in Alexandria that was devoted to the topic of agricultural freight movement.  Among the reasons given for the higher cost of transportation were congestion on rail lines and a bitterly cold winter that backed up service. Over the past several years, the cost passed back to farmers by elevators to move grain to market has usually ranged from 30 to 60 cents per bushel, depending on the time of year. This past winter and spring, that cost, called “basis,” ranged up to $1 per bushel.

 

One of the speakers at the meeting was Mike Steenhoek, who is executive director of a national organization called the Soy Transportation Coalition. He said the cost of transportation affects farmers directly, as that cost is always passed back to them. Currently, Steenhoek said, the United States is the most competitive country in the world for low-cost commodities because of our transportation system. He compared the cost of shipping a ton of soybeans to China from Minneapolis and from Brazil. With our rail and inland waterway system, the transportation cost from Minnesota amounts to 18 percent of the total cost of those beans in China. From Brazil, because most of their soybeans must be shipped long distances by truck, that transportation cost increases to 25 percent of the cost of those beans.

 

However, Steenhoek cautioned that our country may be losing that competitive edge. He said, “We used to be a country that invested in our future. Today, we seem to be just spending money, with no thought about the return to investment. Our transportation infrastructure needs a lot of work.”

 

John Miller of the Burlington Northern Sante Fe Railroad also spoke to the group. He said growth continues among nearly all commodities, including both coal and crude oil. In 2009, the BNSF shipped 11,000 carloads of crude, while that number grew to 400,000 this past year. The movement of grain has also increased, he said, and the infrastructure to move it quickly has also improved. The first shuttle loading facility on the BNSF was put into operation in 1996, while today the number of shuttle loaders has increased to 223.

 

To help facilitate this increase in traffic, Miller said his railroad will spend $5 billion for capital improvements this year. They are adding 500 new locomotives and will continue “double tracking” their most heavily traveled areas. Having, in effect, two main lines side by side in places like Minot, North Dakota, will help increase the flow of all freight heading west.

 

This past winter’s cold temperatures also cut down on railroad efficiency.  There were only five or six days during January and February when the length of trains was NOT shortened due to extremely cold temperatures. Trains’ air brakes don’t function as well in those conditions, so units that usually were 7,500 feet long had to be shortened to 4,500 feet.

 

Miller concluded by saying, “We are committed and will expand to meet this increased demand.”

 

 

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