As BNSF railroad benefits from increased oil shipping contracts from controversial Canadian tar sands to travel over rail to southern refineries, North Dakota grain farmers are finding it increasingly difficult to get top dollar for their crops due to shipping delays.
Farmers dependent on timely shipments of grain
Farmers in North Dakota, dependent on the timely shipment of grain from silo to market, are losing almost 40 percent when they go to sell because the BNSF shipments are increasingly late, say those representing the farmers. Supporting this claim are documented prices at commercial grain silos in North Dakota who are offering farmers in the region $2.70 per bushel for corn – fully $1 less than benchmark prices – primarily due to the costs of late shipments, agricultural groups were quoted in the Financial Times saying.
North Dakota Public Service Commissioner Julie Fedorchak said farmers in her state are “captive shippers with a perishable product and no other rail options” who are being harmed by delays on the BNSF network, an Ohama World-Herald report noted. Unlike agricultural commodities, which can decay in value with time, other commodities such as oil holds its value to a much greater degree should it be hampered by transportation delays.
Fedorchak’s blunt assessment came at a Surface Transportation Board (STB) hearing in Fargo, North Dakota. The STB has in place orders to the railroads they must provide plans for shipping delays.
BSNF caught off guard by oil shipments
In April, a New York Times article noted how BNSF may have been caught off guard by the increased oil shipments from Canada to the southern U.S. “We never thought we competed with pipeline until four years ago when we moved our first unit train of crude by rail,” Dean Wise, a vice president for BNSF Railway, was quoted as saying. “Now BNSF is moving eight trains a day.”
BNSF’s bounty comes as delays with the Keystone pipeline construction have only benefited Buffett and BNSF. Construction standstills means more shipping by rail, which is considered a riskier mode of transportation than a pipeline, more prone to accident with contaminated spills disrupting the environment.
In Texas, where the railroad is headquartered, the crude-by-rail transportation bonanza has led to boom at BNSF, which is involved in construction of facilities to help deliver the product to Gulf Coast refineries. However, a report on the New York Times web site this has raised concerns regarding moving such volatile materials throughout the state, in light of a spate of recent accidents.
While the railroad caters to oil interest during boom times, the North Dakota farmers, who will always be a freight customer, fume. What upsets Fedorchak most is how Warren Buffett, whose firm controls BNSF, bragged about the rail carrier at Berkshire Hathaway’s annual meeting regarding BNSF’s profits and foresight. “I do not think our shippers would agree,” Fedorchak said.