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Grain is moving

Last fall, MFA Incorporated took in a record number of grain bushels, and it’s been quite a job to move it to market. Rail car, truck and barge availability was already tight when harvest hit, and MFA continues to move carry-over this year by all three modes. Fortunately, MFA expects smoother transportation during the 2015 harvest.

“The 2015 soybean harvest looks to be reduced,” said Bill Dunn, director of transportation for MFA Incorporated. Farmers got a late start planting soybeans due to wet ground. In some instances they couldn’t even plant. “But the 2014 carry-over of both corn and soybeans will make the 2015 harvest seem like the 2014 record harvest with regard to bushels we need to move.”

In 2014, the cooperative loaded barges from MFA locations on the Missouri River for the first time in 10 years, despite reduced river draft requirements of 9 feet 6 inches. This year, MFA continues to use barges to keep grain moving, but reduced soybean plantings may lead to limited use of the Missouri River.

“With reduced soybean production, soybean processing plants in Missouri may take most of the beans this year, with less Missouri soybeans moving to the Mississippi River for export to the U.S. Gulf,” Dunn said.

Last fall, MFA loaded more than 1 million bushels onto 20 barges, Dunn said. “Eight barges at Glasgow, seven at Jefferson City and five at Lexington.” MFA made approximately $70,000 in improvements to its Glasgow and Lexington barge loading facilities to allow loading to resume.

In addition, in 2014 MFA added approximately 750,000 bushels of permanent storage at strategic locations in Albany, Maryville and Salisbury, Mo. At the peak of the 2014 harvest, MFA held about 11 million bushels in temporary storage, including ground piles. In addition, Dunn estimates that farmers in MFA country stored as much as 8 million bushels.

Barges helped MFA keep grain moving last year, and the organization continues to fill barges with 2014 grain. “We loaded two barges of corn in May, and we expect to load more through the fall,” Dunn said.

Transporting by barge is more efficient than truck or rail. It costs less and uses less fuel, which is better for the environment. Compared to trucking, barges reduce road congestion and road wear and tear. Barges also save loading time and labor.

“We can move 50,000 bushels in one day by barge,” Dunn said. “That’s equivalent to about 60 jumbo truckloads or 13 rail cars.”

The barges travel along the Missouri River to St. Louis and then on the Mississippi River to Gulf ports. “Loading barges allows MFA to participate in other markets, including the export market in the Gulf, and broadens our ability to serve the producer,” Dunn said.

Inconsistent river levels prevented MFA from loading barges along the Missouri River from 2005 to 2013. Even in good years like 2014 and 2015, the river has a 9-foot draft at best. “When market prices and Missouri River levels allow for it, barge loading will be an ongoing strategy for MFA,” Dunn said.

Most grain moves by rail and truck

With limited access to rivers, MFA continues to move most of the grain it handles by rail and truck. MFA owns a fleet of 200 trucks, and that’s still not enough to transport all the grain that MFA handles. Yes, barges relieve pressure on trucks and railroads, but they won’t solve the the full scope of an ongoing transportation logistics problem.

Dunn reported that overall truck availability continues to be steady, but remains plagued by a shortage of trucks and drivers. Overall rail availability improved somewhat so far this year.

More than 20 railroads operate in MFA country, including the big national players—BNSF Railway, Canadian Pacific, Norfolk Southern and Union Pacific. Kansas City Southern transports a lot of grain in central Missouri, and Dunn predicts that rail car availability will suffer on this line with the onset of a new shuttle loader—a dedicated set of 75 or 100 hopper cars that move as a unit train. But he’s encouraged that KCS will add 300 rail cars in 2015.

BNSF moves more grain than any other railroad in the U.S. John Miller, BNSF’s group vice president for agricultural products, reports that BNSF invested $5.5 billion on expansion and maintenance in 2014, and will spend $6 billion in 2015. In Missouri alone, BNSF will make $150 million in 2015 improvements including surfacing and undercutting track, replacing ties and rail, and upgrading signals. It will add one new siding and extend another to improve capacity. In Kansas, BNSF will spend $100 million on similar improvements, and will expand tracks at the Logistics Park Kansas City Intermodal Facility.

Dunn pointed out that barges are the most efficient way for MFA to move grain, as MFA doesn’t load railcar shuttles. “Each mode has its challenges,” he said. “MFA plans to use all modes to maximize the number of bushels we handle. We’re always looking for the safest and most efficient transportation choices to meet our producers’ needs.”

AGRIServices of Brunswick boosts barge use

In addition to its three barge loading facilities, MFA benefits from facilities at AGRIServices of Brunswick, LLC. MFA Incorporated owns a 50 percent stake in ASB; Brunswick River Terminal owns the other half. ASB loads barges from its Missouri River location, and its towboat, the Motor/Vessel Mary Lynn, pushes barges to port facilities in St. Louis and New Orleans. Hermann Sand and Gravel operates the vessel and handles the logistics and crew.

Lucy Fletcher, ASB business development manager, reported that in 2013, ASB moved 80 barges. In 2014, the number jumped to a record 119 barges of inbound fertilizer and outbound grain. Corn and soybeans transported by barge totaled 2.1 million bushels.

“We were the only facility in 100 miles that didn’t shut down—we continued taking in grain through the 2014 harvest,” Fletcher said. “We spent the spring and summer making room for the 2015 harvest.”

ASB launched its first 2015 barge in March. “By the end of 2015, we will beat our 2014 record for barges loaded,” Fletcher predicted.

Fletcher, a Missouri River advocate, says the river has room to take on more barges, but her facility will also continue to move grain by Norfolk Southern Railway and by truck.

Can we find transportation solutions?

Last year’s record harvest and tight transportation options highlighted the need to improve all three modes—truck, rail and barge. This year, according to Mike Steenhoek, executive director of the Soy Transportation Coalition, transportation improved as a result of several factors.

  • The national slowdown in oil and gas production freed up freight options.
  • Demand for coal diminished, which also expanded capacity.
  • The winter of 2014-2015 was less severe than the previous winter, resulting in fewer weather-induced disruptions.
  • Railroads increased investment in locomotives, new track and additional personnel.
  • Railroads aren’t handling as much corn so far this year, as farmers are holding onto some of last year’s crop.
  • Missouri farmers are benefiting from additional barge traffic on the Missouri River.

Steenhoek believes we’ll see better shipping conditions during the 2015 harvest. “Farmers are planting more soybeans and less corn,” he said. “There’s now close to a 50/50 parity between corn and soybean plantings. Given that corn is a higher volume crop per acre than soybeans, this will result in fewer bushels needing to be transported following the 2015 harvest.”

Steenhoek, whose coalition is funded by the soybean check-off, cites several reasons why farmers are planting more soybeans at the expense of corn. In today’s market, federal support for ethanol, made from corn, is less certain. Ukraine and other countries are dumping more corn on the market. High-fructose corn syrup is viewed less favorably among the public.

Soybeans tend to move within six months of harvest. “More than half of the U.S. soybean harvest goes to export markets, and there’s a lot of competitive pressure from Argentina and Brazil, which harvest soybeans from January to April,” Steenhoek explained. By comparison, corn growers often store corn longer since most goes to domestic markets.

Here are a few ideas that Steenhoek and other experts suggest to ease agricultural transportation.

Trucking needs more capacity and better roads

Raise weight limits. In April, Missouri Governor Jay Nixon signed a bill increasing truck weight limits by 10 percent during harvest on highways other than interstates. The Soy Transportation Coalition argues for federal legislation to increase semi weight limits on interstates from a five-axle 80,000-pound configuration to six axles and 97,000 pounds. Coalition research shows doing so would result in 1.2 million fewer truck trips of soybeans and soy products annually.

Increase the U.S. fuel tax to fund roads and bridges. The Soy Transportation Coalition endorses indexing the federal tax to inflation as it’s not meeting the escalating cost of repairing our aging infrastructure. Currently at 18.4 cents a gallon for gas and 24.4 cents per gallon for diesel, the tax hasn’t been adjusted since 1993.

Boost capacity. Jon Samson, executive director of the Agricultural and Food Transporters Conference, part of the American Trucking Association (ATA), says the recession took its toll on trucking companies in recent years. “But over the past year we’re seeing substantial increases in truck and trailer orders,” Samson said. “We’re increasing our capacity to handle the increased supply.”

Lower the minimum age for interstate drivers. ATA is working to address a driver shortage, including potentially reducing the minimum age below 21.

Railroads need more cars and better tracks

Continue to improve the rail system. Eric Jessup, vice president for Informa Economics, follows grain-shipping issues. “Last year there was a huge backlog of rail cars, but that’s not the case today,” he said. “Class 1 railroads—the largest railroads—made a total of $21 billion in upgrades last year, and that sometimes caused construction delays, but we’re benefiting from the upgrades this year.”

Add covered rail cars that can move grain. According to Ken Eriksen, senior vice president at Informa, the decline in coal shipments, which move in open cars, provides an opportunity. Those cars can be retrofitted to covered cars capable of transporting grain. In addition, railroads need to purchase new covered cars. BNSF is stepping up—it plans to acquire about 900 covered-hopper grain cars in 2015.

Barge system needs upgrades

Add covered barges that can move grain. Until recently, a large number of uncovered barges were needed to haul coal; now they can be converted to haul grain. Informa’s Eriksen says an Informa survey of barge fleet operators reveals that many barges have already been retrofitted.

Upgrade locks and dams. Farmers who live along the Mississippi River north of St. Louis would benefit from improved locks and dams. In the past year, the Soy Transportation Coalition and other groups successfully fought for changes to free up funds for upgrades. First, the federal Harbor Maintenance Tax will increasingly be dedicated to channel dredging and widening. Second, a greater percentage of the federal fuel tax on barge companies will go toward improving locks and dams. Third, the federal barge fuel tax was raised from 20 cents to 29 cents a gallon, which provides added lock and dam funds.

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