Tens of millions of dollars in rail upgrades across the state are supporting business growth and creating significant development along rail lines in South Dakota, according to officials and agricultural businesses.
Recently announced public and private funding for about $12.4 million in additional upgrades near Philip and around Huron are expected to significantly boost transit times and train speeds and could help spread growth elsewhere. Gov. Dennis Daugaard, who announced more than $50 million in public and private money for rail upgrades last year, said rail upgrades are imperative because of the rapidly growing grain production that South Dakota is experiencing.
The upgrades announced last week will allow trains to pass each other near Philip and will make improvements to about 10 miles of tracks near Huron that will allow travel speeds to increase dramatically.
"This kind of investment reassures existing businesses that they can invest in expansion projects because the rail is going to be not only there, but better for them as their demand increases for shipping," Daugaard said. "This siding alone will allow up to 100 more trains a year to make that trip just because of the ability to pass."
About 42 miles of mostly derelict tracks from Chamberlain to Presho are under restoration with the help of a roughly $12 million federal grant the state received in 2014. Rehabbing that stretch of railway will open up grain-shipping opportunities for farmers in south-central South Dakota who currently must use trucks to transport their grain to faraway railways.
The roughly $28 million project comes as the region sees significantly increasing crop yields. The rail redevelopment has also attracted a roughly $40 million Wheat Growers grain facility on the line.
Steve Briggs, senior vice president of agronomy and corporate marketing for Wheat Growers, said the facility is partially operational. He said the track upgrades were key for the investment to move forward.
"It's an awesome thing when you drive by Kennebec and you look up on the hill and see that huge facility," said Steve Halverson, a farmer south of Kennebec who helped in securing the 2014 grant.
Without nearby rail service, producers have to move grain to rail lines by roads, which is costly and destroys infrastructure in the region, Halverson said. He said using rail transportation adds up to a quarter per bushel to a farmer's bottom line.
Millions of dollars of state and private funds for rail line upgrades to the state-owned Britton Line in northeastern South Dakota and construction of a grain terminal near Britton are also moving forward. Work on the Britton Grain Terminal broke ground earlier this year, and it's expected to be completed in August 2016.
"As soon as the state made a commitment on rail rehabilitation, then we were able to make a commitment on a $30 million facility," said Philip Deal, general manager of Wheaton Dumont Co-op Elevator.
South Dakota U.S. Sen. John Thune, who helped secure the most recent $6 million in federal grant funding, said the improvements near Philip and Huron will support job creation and attract future business development.
Rapid City, Pierre and Eastern Railroad, which mainly ships grain, clay and cement, is also funding the upgrades along with the state. General Manager Todd Bjornstad said the upgrades will allow the railroad to improve transit time.
"It's basically going to help our current customer base to grow their businesses in the future because it will allow us to move cars more efficiently as a railroad," he said.