Railroads lack space to carry harvest

Experts say there may be a bumper crop of corn and beans this fall, at the same time the nation’s railroads are saying they can’t handle the volume of freight they’re being asked to haul. It could add up to a bad situation when the harvest comes in. Iowa State University extension ag economist Bob Wisner says it’s early but he sees signs of trouble stemming from the strong economic recovery. Wisner says some data indicate the economy may be the strongest in 20 years, which means soaring demand to ship both agricultural and nonfarm cargo — putting stress on railroads, especially the Burlington Northern and Union Pacific, big ones that come through the Midwest and handle grain. He says the railroads are the most efficient way of moving grain a long distance, to the nation’s ports. Right now, Wisner says we’re in the wheat harvest and that’s compounding the car shortage here in the Corn Belt, and he says rail-car shortages are chronic during harvest time. Wisner says the USDA is also projecting near-record corn exports in this coming marketing year, if the cars are available to get the grain to the ports. He says we’ve been in this situation before, and farmers have felt the impact of being unable to ship their crop to market. He says it widens the difference between the price paid locally and the Chicago Futures Exchange price for corn, or the price paid for grain at the Gulf of Mexico. Wisner says the usual response of the shipping industry is to store the crop until transportation is available. Farmers will move as much as possible by truck to ports, put what they can into processing plants or sell it for livestock feeding, and the rest will have to wait until transportation IS available. Economist Wisner says the result is likely to be strong demand for more grain storage capacity. He’s hearing reports already of fairly strong demand and construction activity, and if the current crop outlook continues, we’ll probably see a lot more new grain storage going up. The Union Pacific recently reported it can’t handle the freight-shipping demand it has now, and may “regulate the volume of selected agricultural commodities.”