USDA: Railway Tie-Ups Cost Farmers $570 Million

Mar 9, 2015

Soybean, corn and wheat farmers in the upper Midwest lost about $570 million last winter, thanks mostly to transportation tie-ups.

That's according to a report from the U.S. Department of Agriculture.

With record grain harvests in 2013 and a nearly exhausted railway network, farmers in Montana, Minnesota, North Dakota and South Dakota lost roughly 3 percent of the cash crop receipts, a USDA report found. Low grain prices, a harsh winter and stiff competition on the railway all exacerbated the problem.

Charlie Kuskie, an agriculture commodity broker in Nebraska, says the burgeoning frack sand and oil industries were snapping up space on the rails making it more difficult for farmers to grab a spot.

“It wasn’t necessarily that we didn’t have the rail cars, it’s that we didn’t have the engines to pull them all. So when the engines are all pulling oil tankers, we don’t have them to pull grain trains,” Kuskie said.

Cold temperatures last winter also forced railway operators to trim train lengths by as much as half. 

Wheat prices dropped about 18 cents per bushel, corn by 17 sents and soybeans by 11 cents in 2014, the USDA report said. But U.S. exports weren’t negatively affected and shipments were actually above the three-year average, the report said.

The harvest of 2014 saw a lot of railway hang-ups, as well. During the record year, farmers and grain elevators had to turn to barges and trucks to move their grain so it wouldn’t sit on the ground too long and spoil.

Since 2013, railway companies, such as BNSF Railway, have added millions of dollars worth of railcars, engines, staff support and infrastructure.

Read the USDA's full report here.