Railroads in South Dakota and North Dakota are apparently in much is in much better shape to handle a big harvest and export push than in 2013 when grain backed up on farms and at terminals.
"Through a lot of hard work by the state, Congressional leaders and the Burlington Northern Santa Fee Railroad and Rapid City, Pierre & Eastern railroads, we are now in a much better place than we were even this time last year," said Lucas Lentsch, South Dakota secretary of agriculture, at the recent Governor's Ag Summit. "We have seen significant commitments from state and private resources to make upgrades and investments in rail infrastructure, in the form of tracks, engines, and cars, to prevent a severe backlog and bottleneck like we experienced in 2013 and 2014."
The state has identified four major improvement projects and committed $56 million to complete them. The projects include reconstruction and repair of lines and repair to bridges. This initial investment has also led to commitments to add two additional grain handling facilities in the state, one in Kennebec and another in Britton. Also, BNSF has committed $700 million in the region to expand rail capacity and enhance safety.
"These improvements will especially impact the movement of our ag products to the ports in the Pacific Northwest," Lentsch said.
RCP&E has been working with the state to construct two new sidings at two main chokepoints in the South Dakota -- one in Huron and one in Aurora.
The new siding will reduce bottlenecks and increase the system's capacity.
More than 50% of the commodities moved by rail in South Dakota are ag commodities. Anotehr 10% of the volume is made up by alcohol, mostly ethanol, shipments, Lentsch said.
North Dakota better
Rail capacity seems much improved in North Dakota, too, according to Frayne Olson, North Dakota State University Extension grain marketing specialist.
Oil traffic isn't as hectic. Farmers will likely store as much grain as they can on the farm at harvest in hopes that higher prices or lower basis show up later. BNSF has added sidings to improve the flow of trains on its tracks. Additional cars are crews are said to be standing by. BNSF is looking to complete several projects to improve grain flow to eastern markets next year.
"I'm optismtic," Olson says.
Scott Gauslow, a Coflax, N.D., farmer, North Dakota Soybean Council director and chairman of the Soy Transportation Coalition, expects grain to flow pretty smoothly to the west coast for export this year.
"I less optimistic about rates and basis," he says.
Someone is going to have to pay for the investment BNSF has made in its system. With the slowdown in the oil fields, more of the burden may fall to farmers and grain buyers.
But at least BNSF stepped up and made the investment, Gauslow adds.
If railroads were run by the federal government like the locks and dams on the Mississippi River are, it might be a lot harder to expect any improvement, he says.