ELGIN — Harlan Klein of rural Elgin was down on his knees Friday morning filling the tires on his combine header with a liquid seal product.
He could just as well be pra-ying that regional grain terminals get train service this harvest instead of the runaround from the railroad and the pro-spect of dumping valuable pro-duct on the ground, or relying on heavy white plastic grain bags that look like fat sausage casings for excess wheat.
Besides farming, Klein is a board member for Southwest Grain Cooperative, with satellite elevators and three main terminals with combined 6 million bushels storage.
A backlog of trains is making it difficult to move grain through the system and too much ends up being stored at Southwest, in bins at the farm, or at worst, in plastic.
It isn’t good for Southwest, the farmer or the end user.
BNSF Railway says it’s more than 3,000 cars behind standing orders and with harvest coming on next week, it’s being chastised by state officials who say the problem, now going into the second year at a time of peak harvest demand, is going on too long.
“All our terminals should be empty, but we’re not going to get there. The combines will be starting up and with the crop as good as this one looks, there will be wheat on the ground,” Klein said.
When farmers can’t sell wheat, because the terminals can’t ship it, it’s not good for their cash flow or for Main Street.
Over in Elgin, banker Aaron Levorsen said some of his customers are feeling the pinch.
They’re sitting on grain that’s tied to operating loans that have since had to be converted to inventory notes.
“Those are usually due in the summer and now they’ll be extended even longer,” he said.
That’s affecting about half the bank’s customers with inventory notes, who are paying interest even though they have grain to sell.
“The bigger problem is what to do with the new crop — it’s a beautiful crop. That’s a huge issue,” Levorsen said. He said the railroad isn’t the only problem; farming’s too complicated for a one-size-fits-all explanation.
Jeff Anderson of South Heart said he’s not expecting storage problems, mainly because he couldn’t plant more than half his ground this sodden spring.
He delivered some contract grain Friday and said the sluggish railroad meant he had to stretch out his delivery schedule. He was in a steady line of grain trucks filling the terminal the same day a grain train was scheduled to arrive but was 24 hours late and counting.
Anderson said he’s got neighbors with hundreds of thousands of bushels still in the bin. “Those are the ones that are scrambling for room. I think it’ll be tough come harvest,” Anderson said.
Brian Fadness, commodity risk manager at Southwest, said rail cars are at such a premium that shippers are bidding up to $4,000 a car on the secondary market, a fee the railroad also collects in addition to regular freight charges.
He said the co-op turned to using semi trucks late this spring, because millers in North Dakota, Minnesota and Missouri were short grain.
“The buyer paid for the trucking and that added a lot — about $1.50 a bushel,” Fadness said.
He said the cooperative will continue to look at trucking options, even though it’s expensive, for fluidity and flexibility. Fadness said the same oil boom that’s putting pressure on the railroad system with hundreds of Bakken oil tankers crowding the tracks also puts a lot of potentially available semi trucks into the market.
Southwest grain manager Jim Bobb said it wouldn’t hurt the railroad to lose some market share of grain shipping, since it’s taking a back seat to coal and oil anyway.
“It costs more, but it’s a better alternative than the railroad right now. They’ve got to learn they’re not the only game in town,” Bobb said.
(Reach Lauren Donovan at 701-220-5511 or firstname.lastname@example.org.)