Railroad Delays Hitting Hard in Minnesota

Railroad Delays Hitting Hard in Minnesota

A high demand for grain shipment caused by a record harvest this year is driving long waits and high prices in Minnesota and across the county, according to experts.

All farmers are being affected by delays in shipping commodities by rail, but some are having a harder time than others, Minnesota Public Radio News reported. Farm groups in western Minnesota, as well as North and South Dakota, are experiencing some of the longest waits and highest prices.

Grain shippers in the northern and western parts of the state have few options beyond rail, said Jerry Fruin, agricultural economics professor at the University of Minnesota. But farmers in southern Minnesota are able to ship by barge via the Mississippi River. Although they have more options for storing or selling their grain locally, waits to move grain can produce added costs that run into the hundreds of millions, according to some estimates.

"When you get into transportation shortages, the price of transportation will probably go up to meet the demand," Fruin said.

When the rail car shortage hit, the cost of shipping more than doubled for many grain elevators. Farmers foot the bill for those increases since transportation costs are deducted from the price per bushels an elevator pays for grain, Fruin said.

"It is generally equal to what the transportation cost is to the market that you are wanting to send it to," he said.

The typical cost of corn is between 20 and 40 cents a bushel. The rail car shortage caused the price of rail shipping, and in turn the price of corn, to skyrocket. Many grain elevators in northwest Minnesota are paying low prices for corn because of the shipping costs, according to Tom Haag, former president of the Minnesota Corn Growers Association.

A recent study conducted by the University of Minnesota estimates the state's farmers have already lost $100 million, mainly because of the shipping shortage.

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Spell Check

Eagan, MN
10/9/2014 01:25 AM

  I would think the Ethanol refineries would benefit with such low corn prices along with meat, pork, chicken producers who could lock them in. China could be trying to drive low prices also with the Syngenta suits going on by farmers over denial of their brand of corn. As I'm old to me the big picture is never never land anyway coming from growing up in the 50's and my grandfathers farm. What you have now is farmers producing an industrial commodity(not direct edible food) controlled by global market players and bankers with farmers as usual trying to survive and doing all the work. The whole Field corn system in the US doesn't make good sense really long term because it doesn't produce calorie value equal to even Vietnamese farms -just ethanol, oils and co-products for animal feed. It may be that using GM seed long term backfires as nature will meet any human attempt at control. Family farming with diversified crops is the best long term solution like my grandparents did. Better food, more protection against relying on just corn and soybeans and the global corporations trying to control prices and the world. Biggest thing I have a huge problem wrapping my head around is seeing all this nice corn growing knowing it isn't edible by human beings! That's it bottom line for me-crazy today but yes I'm old fashioned and sure yields per acre of corn have risen but it isn't people food it's an industrial commodity of questionable food value.


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