Rail Forces Crop Swap

 
Rail Forces Crop Swap

Farmers adapt to life amid oil boom, big harvests

This spring, some farmers in the Upper Midwest will be switching up their crop mix and digging in their heels as weak basis and a tight railroad car supply persist. 

“I try to pick crops I know we can get rid of, most by truck,” explains Paul Anderson, a central North Dakota farmer, who grows wheat, peas, sunflowers and corn. He won’t plant many soybeans or edible beans, such as pintos, in the near term because they are mostly shipped by rail. 

In many states, farmers such as Anderson are changing their crop mix to ride out the rail crunch. Railroads 
are often tied up by oil flowing out of the Bakken field. Bumper crops haven’t made the situation easier. 

One way to ease the pressure would be to lay down double tracks from Minneapolis to western Montana, 
Anderson says. That would enable faster crop exports via the Pacific Northwest.

“Tax credits for investing out here would be one possibility to build some infrastructure,” he adds. 

A tight rail supply pressures the nation’s already crowded highways. This fall, U.S. sugar beet producers put 3,000 semi loads of the crop on roads to buyers in Chicago and the East Coast—crops that normally would have gone over railroad tracks, says Bill Zurn, who grows soybeans, corn and sugar beets in Moorhead, Minn. 

To protect his margins, Zurn intends to plant more conventional corn and soybeans in 2015. He’ll also consider cutting back on fertilizer and machinery.

Some farmers plan to adapt by staying away from the grain elevator. 

“We’ve got quite a bit of our corn crop piled on the ground, and we’ve got it scheduled for delivery from January through March,” says Mike Appert, a soybean farmer in Hazelton, N.D. He added 330,000 bu. of additional grain storage during the summer of 2014.  

In his region, farmers are optimistic the arm-wrestling between oil and agriculture can be resolved in two to three years, he says.  

 

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