Grass & Grain

09-09-2014

Agricultural Newspaper

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By Donna Sullivan, Editor The transportation in- dustry is as bound by the principle of supply and de- mand as any other, and an anticipated bountiful fall harvest coupled with a shortage of rail cars will put that principle front and cen- ter as elevators and grain terminals are forced to pay more to transport grain and pass that cost on to the pro- ducer in the form of lower prices. While transporting oil in the Dakotas is a significant contributing factor, Josh Thelen, manager for the Scoular Company in Over- land Park, says that's just part of the problem. "Because the economy is doing better, all sectors are transporting more freight," he said, adding that the heat and drought in this area two years ago kept the agricul- ture sector from feeling the pinch for a while. "The amount of trains the ag sec- tor needed was greatly re- duced while the trains need- ed in oil were increasing," he explained. "Now with a good crop, prices are down and exports are up, so more trains are needed. Every- thing that can cause con- straints has and is occurring and there's not a quick fix." In addition to the avail- ability of rail cars, their cost has skyrocketed to as high as $5,000 on top of the pub- lished freight rate, although $2500 to $3,000 has been more the recent norm – a price still hard to stomach for those in the ag industry, who had been used to pay- ing $400-$600 per car. "A fine example is what happened last fall," said Palmer Grain manager Rich Arpin. "There was a good export market for milo and Gavilon in Abilene was paying a nickel over for milo picked up at Palmer. Soon after that the rail val- ues shot up to $5000 and their bid went from 5 over to 55 under. That's sixty cents that the elevator doesn't get and sixty cents that the producer doesn't get." "Rail car values have al- ways gone up based on de- mand, but never to this ex- tent," Arpin continued. BNSF Railway, which operates 32,500 miles of rail in the western two- thirds of the country, is ad- dressing the problem with a $5 billion capital plan in 2014 that includes increas- ing capacity by adding peo- ple, locomotives/rail cars and track. They have added over two thousand rail cars and 326 locomotives to date in 2014, as well as more than 4,000 employees. In Kansas they are investing approximately $145 million on expansion and mainte- nance projects this year. "We are focused on hav- ing the current agricultural demand moved and be in position for new crops this fall," said Amy Casas, di- rector of communications for BNSF. "We expect sub- stantial volume improve- ments as we will offer more shuttles and rail cars this fall than we did in 2013 and believe our performance will be better than it was last year. Across the net- work BNSF has seen signs of service improvement. In agriculture we are seeing improvements in our past due orders and velocity. We have made significant progress on reducing past- due orders. While we are not there yet, we've seen a more than 80 percent reduc- tion in past dues across our system since the high point in March and will continue to make steady progress into September." Heading into fall har- vest, Thelen doesn't expect much to change in terms of the cost of rail cars. "It will be expensive and it will be volatile," he said. "The volatility will continue until they get more streamlined. It will take multiple years of investment by the railroads or for the economy to slow down. Or we could just have another drought – that would take care of it, too." By Donna Sullivan, Editor Department of Homeland Security Science and Technology Directorate (S&T) undersecretary Dr. Reginald Brothers hosted a tour of the future home of the National Bio and Agro-Defense Fa- cility (NBAF) on the Kansas State Uni- versity Campus on Friday, August 29. Joining him were Sens. Pat Roberts and Jerry Moran and Rep. Tim Huelskamp, as well as DHS S&T deputy undersecretary and Dr. Ron Trewyn, assistant to the president/NBAF liaison, Kansas State University. Brothers emphasized the importance of the facility in terms of helping to se- cure the nation's food supply and was pleased with both the progress being made on the central utilities plant as well as design elements that address safety concerns. "This is designed according to princi- ples developed in the nuclear industry," he said, adding that the design standards are beyond what was recommended by the National Academy of Sciences after their risk-assessment study. With con- cerns of tornadoes in Kansas, appropriate support structures have been put in place that are wind-resistant up to 230 mph, ac- cording to Brothers. The risk of human error is minimal, according to the Science Foundation, but impossible to eliminate completely. "I understand the concern," Brothers said. "But we are currently operating the Plum Island facility, which has been in operation for fifty-nine years. So we're using lessons learned from that facility to gauge how to develop our operating prin- ciples." The age and degradation of the Biosafety Level 3 Agriculture facility on Plum Island, New York precipitated the need for NBAF, which will be a Biosafe- ty Level 4 laboratory studying zoonotic (transmitted from animals to humans) and foreign animal diseases. Roberts stated he first recognized the need for this type of research when dur- ing a trip to Russia he visited a city near Moscow that had "vast amounts of bio- weaponry aimed at the nation's food sup- ply." "As chairman of the intelligence com- mittee, I kept saying, 'Where does this rank on the list of top ten things that keep you up at night?'" Roberts said. "If you take away the nation's food supply, not only for one year but two or three years, you're really in a lot of trouble." He added that modeling exercises indicated all exports would stop in the event of an anthrax attack. "So to safeguard our na- tion's food supply, that's why this is here," he said. As a member of the Senate Appropria- tions Committee, Moran says the appro- priation for NBAF has been authorized. President Obama's 2015 budget proposal includes $300 million to advance con- struction of the project. "We now just need the appropriations process to work, and this should be concluded," he stated. "If we can get that final appropriation in place by March, this project will remain on schedule. "This has been a Republican/ Democ- rat effort, an Administration/Congress effort," Moran pointed out. "The prob- lem is not with NBAF and the amount of money that needs to be spent. That conclusion has been reached. The issue that remains is whether Congress can function in a sufficiently workmanlike manner to get the appropriations process done." Huelskamp said he has been behind the project from the beginning, adding that the escalation in price to $1.2 billion was due largely to a site-specific bio- safety and biosecurity risk assessment DHS was ordered by Congress to conduct after an evaluation by the Government Accountability Office raised safety con- cerns. "We need additional research to pro- tect America's food supply, and that's why not only do you see support in the re- search community, you see support in agriculture," Huelskamp said. "We want to protect America's food supply and protect the number one economy in Kansas." Senator Pat Roberts, left, joined Department of Homeland Security Science and Technology Directorate (S&T) undersecretary Dr. Reginald Brothers, Rep. Tim Huelskamp and Dr. Ron Trewyn, assistant to the president/NBAF liaison, Kansas State University, on a tour of the central utilities plant at the National Bio and Agro-Defense Facility. Also on the tour was Senator Jerry Moran. DHS undersecretary pleased with progress and safety of NBAF A shortage of rail cars, driven largely by the oil boom in the Dakotas, has caused a dramatic increase in the cost of leasing the cars. Above, a train is loaded at the Scoular facility in Downs. Photo by Doug Lantz Rail costs volatile going in to fall harvest

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