Montana Farm Bureau Vice President Bruce Wright recently attended the annual BNSF barbeque and listening session in Fort Benton. BNSF established the event five years ago to talk directly with farmer customers about the general economy, agricultural markets, and rail transportation. Kevin Kaufman, BNSF vice president for Agricultural Commodities, led the discussion with a presentation outlining rail industry trends.
"It was interesting to hear Kevin Kaufman talk to the group about the railroad's challenges and opportunities in 2013," noted Wright. "He explained that while overall carloads remain level and well below the 2006 peak, BNSF is experiencing new traffic patterns with the growing need for shipping crude oil and soft agricultural and coal traffic due to drought conditions and low natural gas prices."
"Growth in crude shipments from the booming Bakken development is driving much of the investment on the BNSF's northern corridor. This is good for ag shippers who share rail lines to the Pacific Northwest," noted Don Karls, BNSF ag ombudsman for Montana. "But like highway construction, it impacts traffic. We do expect short-term challenges that come with track improvements so we are asking our customers to prepare."
Wright, a Bozeman farmer who ships most of his grain by rail from an elevator in Belgrade, said Kaufmann explained that although the BNSF stays busy with the crude oil development and shipping coal, they recognize the major changes ongoing in the agriculture industry.
"They feel they have the capacity to handle current grain production. There are now 21 grain shuttle stations in Montana, up from 13 just a few years ago, which is good news for our grain producers," Wright said. Wright feels farmer concerns about increased coal shipments displacing grain may be misplaced since it's simply not in the best interest of the railroad to sacrifice one part of its business for another. They're both important to the bottom line.
In addition to investments at grain origins, the Pacific Northwest exporters continue to make major investments at destination facilities, adding to the already enormous advantage of U.S. grain transportation capability on the global stage.
"Apparently low natural gas prices coupled with new natural gas development are creating opportunities for commercial fertilizer production. For farmers, an increase in the supply of one of their primary inputs could be very positive," Wright said. "It's good to hear that the railroad is planning to make significant investments for growth in the northern corridor. They acknowledge the growth will come with challenges, but the investments made will continue to build on the supply chain advantage for U.S. grain producers."