Grain Country Again Expecting
Railroad, Storage Congestion

WASHINGTON —(AP)— Wheat fills Kansas elevators and is piling up on the ground. The corn harvest is just around the corner and expected to be the second-biggest ever. Rail car delivery is backlogged.

"We're bracing ourselves," said Linda Donovan, co-manager of the Norton County Co-Op in northwest Kansas.

Sound familiar? In farm country, the memory of the congestion that choked shipping throughout the West is only too near.

But this is not the rail crisis of 1997, when gridlock driven by Union Pacific Corp.'s takeover of Southern Pacific Rail Corp. stranded Midwestern grain crops, clogged California ports and forced the temporary idling of some Gulf Coast petrochemical plants, with an economic toll estimated as high as $4 billion.

The biggest difference is that in many cases, the grain has nowhere to go. Abundant global supplies and sagging exports to financially troubled Asia have beaten down already-low prices, forcing farmers to stockpile back-to-back, bumper wheat harvests. The storage shortage appears worst in Kansas and parts of Iowa, Minnesota and Oklahoma.

"The point is, if we moved every car that we had to market, there isn't a market for all of it. That's the problem," Union Pacific Railroad spokesman Ed Trandahl said.

Union Pacific, the nation's largest railroad, was under orders to cooperate with competitors from last Oct. 31 until federal regulators ruled last month they could no longer force UP to keep giving business to other rail carriers. Most agree that while service has not returned to normal, the emergency is over.

"Even if the railroads perform most admirably, there still will be grain on the ground this year," said Bill Brennan of the U.S. Department of Agriculture's transportation and marketing division. "Major export markets are shut down in the midst of a huge economic crisis right now."

Price and lack of export markets are factors, concedes Rep. Jerry Moran, who is in the home stretch of a tour through the 66 counties he represents in western Kansas.

"But every elevator operator tells me he or she has a place to go with the grain, if they could just get the railroads to move it," said Moran, a Republican. "We continue to get calls from shippers saying they can't get any cars."

Kansas as of last Tuesday recorded 430,200 wheat bushels on the ground or in temporary storage. The state agriculture department said the number may soar to anywhere from 75 million to 100 million, more than triple the 31 million bushels Kansas farmers dumped last year.

Corn growers in neighboring Missouri are apprehensive too.

"We have almost no confidence that the railroads are going to be able to provide the type of service that we've had in the past," said Gary Marshall, executive director of the Missouri Corn Growers Association. "With more wheat already in bins, we think it's going to force more grain into the market pool."

Moran, who serves on the railroad subcommittee of the House Transportation Committee, is among a handful of lawmakers who have proposed legislation designed to minimize the chance of another meltdown. Trouble is, Congress plays a peripheral role.

"What it comes down to is the ability of the railroad to operate properly," said Tom White, a spokesman for the Association of American Railroads. "It's hard to see what legislation can do about that."

Congress is not likely to act this year on related legislation, said Moran, who sponsored a measure nudging the federal Surface Transportation Board to make the industry more competitive. Competition has been a rallying cry of shippers and some lawmakers, who blame the STB along with the railroads for okaying the mega-merger in the first place — and for refusing last month to extend the emergency remedies.

Moran wants Surface Transportation Board Chairwoman Linda Morgan to visit the Wheat State to see the railroad woes firsthand. "The lack of rail service could be devastating for the Kansas farmer," Moran wrote in an Aug. 25 letter to Morgan. "The STB needs to see the situation in Kansas."

Union Pacific Railroad has a backlog of a few hundred rail cars, while car delivery from Burlington Northern and Santa Fe Railway Co. is several days behind. But the railroads offer evidence that service has improved.

BNSF had loaded 26,895 grain cars in Kansas through last July, spokesman Jim Sabourin said, compared to 43,989 through July of this year. "Just the fact that we are keeping up with demand and handling more grain tells you that there's some improvement there," Sabourin said from company headquarters in Fort Worth.

Trandahl, a UP spokesman at the railroad's headquarters in Omaha, Neb., said the railroad should be running smoothly by next month.

"We are a few hundred cars backlogged, which is a big improvement over the first half of August, and we think that by mid-September, we basically will not have any backlog," Trandahl said.

The railroad's cycle time for grain cars has improved slightly — less than 1 percent — over July 1997, Trandahl said. He noted one train recently traveled from Kansas to Arizona and back in just over seven days, "and that's on a line where we've had some congestion."

Meanwhile, at the Norton, Kan., co-op, grain isn't yet piled on the ground and shipping has been regular, Donovan said. But she plans to have to pile grain on the ground this fall at another location.

"We're not into harvest yet," she said.