News Column

CP shipments are 5 months behind

September 2, 2014

By Mikkel Pates, Agweek Magazine

Sept. 02--WILTON, N.D. -- Wilton (N.D.) Farmers Union Elevator Co. would like to be empty this time of year, but instead it is plugged with spring wheat.

In a desperate cry for help, the board sent a letter to a catch-all of North Dakota officials and the news media on Aug. 25. They say they're waiting on 525 rail cars -- 21 25-car trains. An order made January for April 8 placement is expected at the end of August.

The co-op, about 20 miles north of Bismarck, N.D., has to handle everything, but it specializes in handling minor specialty crops. It would like to ship those by rail, but often is forced to move them by truck.

But to attract business, the co-op also has to handle major crops such as wheat and corn, and that's only feasible by rail.

"There's grain out on farms yet," says Doug Hruby, the company's board chairman. "I'm getting questions from various patrons: 'When's the next train coming?' They want to get their bins emptied before they get into the fields, harvesting. Now they're worried that when a train does come in, they're going to have to shut their combine down to load grain out of the bin, so they can put new grain in the bin. We're in a desperate situation here."

On the CP line

Wilton is on the Dakota Missouri Valley & Western Railroad based in Bismarck, a shortline that leases track from Canadian Pacific. Typically, trains would go north to the CP branch in Max, N.D., and back to Drake, N.D., to hit the CP mainline.

The Wilton elevator is not large. Wilton has about 400 to 500 patrons in a typical year. Grain comes from a radius of about 60 miles. The Wilton site has 1.1 million bushels of storage and can load 25 cars. The co-op has two truck-only satellite locations in Regan, N.D., with 532,000 bushels of storage, and 226,000 in Washburn, N.D.

Fewer and fewer local co-ops handle the minor crops, Hruby says. Larger co-ops tend to specialize in corn, soybeans and wheat and build 100-car shipping sites to handle them.

Hruby raises wheat, flax, buckwheat, soybeans and pinto beans. He sells his buckwheat on contracts to a processor elsewhere, but the rest of the crop typically goes through the elevator. Hruby has been on the co-op board for eight years. Within his first year, he became concerned about the CP service.

"Every meeting we came to, CP's deliveries were behind," Hruby says. "Cars that were ordered in October for a December delivery usually didn't arrive until February, March, sometimes April. We were finding that we were consistently sitting seven to 10 trains behind, consistently."

General manager Brian Guderjahn says, "If we could have 25 cars a week, consistently, it would be ideal." Periodically, Guderjahn eventually would stop ordering new cars -- not because he didn't need them, but because the shipments got so far behind that it was pointless.

"Right now, we have 29 units (25-car trains) ordered through the end of October, and are we going to see them by the end of the year? Do I start skipping November and December and start in orders for January now?"

Hruby says CP makes an effort to catch up, but then things back-slide. Recently, the CP has blamed a parade of problems -- snow, railbed collapse, wet conditions, flooded tracks, congestion.

Hruby says CP has asked the Wilton elevator to invest in unit-train shipping of larger trains -- say 100 cars. That would cost $6 million to $9 million, he says, and maybe much more.

"I've asked, 'What can you guarantee us for cars in the future, if we did such a thing?'" Hruby says. "Their reply was 100 cars a month -- one train a month. That's what we should be getting right now -- 25 cars a week. We're not going to set something like that up and be confined to only handling three major crops."

CP has claimed that many of its car backlog is "phantom," or a result of double-ordering. Consequently, the railroad is changing its car ordering system. Elevators equipped to ship 100-car or larger trains (shuttles, by some companies' descriptions) have recently been cancelling old car orders to go on the new system. Hruby and Guderjahn worry this will take away from the pool of cars for smaller shippers.

He says he's also worried about CP shifting resources to Canada, where the government has imposed fines for failing to ship enough agricultural-related products.

Hruby thinks the problem also relates to oil and coal.

"There seems be a lot of demand for the railroad now, and it's demand of services that we need here," Hruby says. "I'm very concerned right now that if CP isn't prepared for this, that we're concerned about the future of this elevator right here, and the farmers that are patrons to it. This is our lifeline, our economic lifeline, this railroad. We're fighting for survival, here."

Investing

Despite its challenges, the Wilton Co-op has been profitable every year and hasn't been afraid of investing money, Hruby says. It's invested about $10 million in the past three years.

Last fall, the company revved up a new, 4,000-bushel-per-hour grain dryer, primarily to handle corn and wheat.

"We cannot use that grain dryer now because we have to keep enough space in that elevator to handle it. If there's no place for it to go, we have no use for this grain dryer."

Three years ago, the company put in a bulk loader -- two 55,000-bushel bins. That's used to stage an amount of grain large enough to quickly load 25 cars in about five hours. It weighs it as it goes into the cars.

But it's hard to say how much those ,will help for the 2014 crop.

There's a big crop in the field, but there has been a total of 8 inches of rain in the past two weekends. With Wilton full, patrons will try to truck it to competitors.

"I am thinking we are going to be in the same condition we're in right now," Hruby says. "They have quicker facilities to handle the onslaught, but it involves waiting in line. And if they can't do anything else, they'll pile it on the ground, temporarily. But that's very dangerous to even consider, with the weather we've been having. And you can't pile wet grain on the ground."

___

(c)2014 Agweek Magazine (Grand Forks, N.D.)

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