Havre Daily News
BIG SANDY - Big Sandy farmer Darin Genereux said he's tired of hearing sob stories from BNSF Railway officials who make farmers “feel like Burlington Northern is on the brink of bankruptcy” while the railroad is reporting record revenues.
“It's all on the backs of the farmers here,” Genereux told federal Surface Transportation Board vice chair Douglas Buttrey.
Buttrey, along with Gov. Brian Schweitzer, state officials, legislators, county officials and a BNSF representative, attended a meeting Friday morning at Big Sandy High School to hear local producers vent about rail shipping - a crucial aspect of their livelihood they have no control over.
Schweitzer said he called the meeting in order to bring a member of the federal board to places like Big Sandy and Scobey, where another meeting was held Friday afternoon, to look farmers in the eye and lend an ear to their frustrations.
Buttrey said he was there to listen, but added that his board can do little about the issue unless a complaint is filed.
“We decide cases that are brought to us,” he said. The board is an agency that resolves rail rate and service disputes, and reviews proposed mergers.
Dramatic changes in Montana's rail ownership and infrastructure have compounded the pressure on farmers - captive shippers who end up getting squeezed by rate increases, said Montana Department of Transportation official Dick Turner and Terry Whiteside, of the Billings-based consulting firm Whiteside and Associates.
In a state with no large markets, low population and vast distances, rail is the most efficient way for producers to deliver their goods to buyers, said Turner, who heads an MDT bureau responsible for highway and rail planning.
Over the last 50 years, Montana has seen service shift from six major railroads to largely one, he said. BNSF controls 94 percent of the rail in the state, hauls 91 percent of its tonnage and takes in 90 percent of rail shipping revenue, Turner said. Rail lines in the state have shrunk by 2,000 miles in the last 30 years as spur lines have disappeared, he added.
The company's emphasis on loading grain at its 110-car shuttle facilities has endangered more branch lines and smaller elevators across the state, he said.
Producers are put in a difficult position because they cannot pass shipping costs on to anyone else, Whiteside said. Small grain elevators in Montana have some of the highest rates in the country, he said. In Nebraska and other Midwestern states that have rail competition, shipping rates are significantly lower, he said.
Schweitzer said he asked company officials about the rate differences at a meeting several months ago in Whitefish.
He asked officials to explain why it costs less to ship soybeans from Ohio to Portland, Ore., than it costs Montana farmers to send grain to the same destination. He said he never received an answer.
In August, the railroad proposed rate changes that would have made the price of shipping on 52-car trains 15 cents per bushel more expensive than shipping on 110-car trains. After talks with producers and state officials, BNSF lowered the proposed rate increase, creating a difference of about 5.8 cents per bushel. The change took effect Oct. 1.
Schweitzer said BNSF officials told him they were pushing to increase shipping rates in the state in order to reap what they had sowed.
“They explained to me that they had indeed invested $57 million in the Montana rail system ... and suggested that it was fully appropriate that they have an opportunity to get a return on that investment,” Schweitzer said.
He noted that the improvements benefit any producer who ships products from Chicago to Portland.
The Oct. 1 rate increase affected the state's three dozen 52-car grain elevators, many of which are found in north-central Montana.
BNSF government affairs director Pat Keim said the railroad's rates are affected by market conditions it cannot control. Large harvests in the Midwest, along with a string of hurricanes that have strained the barge shipping network, are driving forces behind shipping rates this year, Keim said.
He said grain elevator prices in the state are at their lowest in three years, the shuttle network is keeping Montana grain competitive, and the idea that the railroad is driving small elevators out of business is a “misnomer.”
Keim also said a 2004 study showed BNSF would be bankrupt in a year if it charged the rates it does now and also faced competition in Montana.
According to a BNSF press release, third-quarter 2005 freight revenues increased $480 million to a record $3.22 billion, and the railroad reported record profits for the quarter - $778 million. Operating expenses were $2.54 billion. Revenue for the quarter included $296 million in fuel surcharges compared with $95 million in the third quarter of 2004. BNSF reported a 45 percent increase in fuel prices over the same period last year.
State Senate President Jon Tester, D-Big Sandy, said he has repeatedly heard of a deal between BNSF and Big Sandy elevator owner Archer Daniels Midland-Cenex Harvest States to shut down the line connecting the 52-car facility to the northern main line at Havre, which has a shuttle loading facility.
In September, ADM-CHS general manager Tim Bahnmiller said he had not seen a train come down the spur in nearly two years. He has since declined to comment.
With no trains running out of Big Sandy, the area's growers have been forced to ship their product to rail lines by truck.
That fact was repeated during the meeting, which lasted more than two hours, as residents, county commissioners, legislators and Schweitzer bemoaned the damage done to roadways by the numerous truck shipments of grain that are replacing rail shipments in many parts of the state.
Tester, a candidate for the Democratic nomination for U.S. Senate, said farmers have been pushed around for too long.
“Farmers, over the last 25 or 30 years, have really had the screws put to them,” he said. “The future is very scary. ... We want to make a profit too.”
Many in attendance agreed with him.
Bob Quinn, a local organic farmer, said he has had to make drastic changes to his business in order to continue. He moved 12,000 acres of his operation to Saskatchewan and Alberta, where he can ship his product on the Canadian Pacific Railway to eastern ports for transfer to Europe-bound ships. The arrangement is cheaper and more reliable than shipping via BNSF, Quinn said.
He said he lost one customer in New York after the railroad had problems keeping track of single carloads of his product.
Others in attendance complained of long waits at elevators and poor customer service. Some said the strain put on farmers is keeping young people from getting into the business.
Neal Rosette, National Tribal Development Association chief operating officer, said the proposed ethanol plant project at Rocky Boy's Indian Reservation will be jeopardized if the railroad decides to abandon the Big Sandy line.
“If BN decides they're not going to keep this spur line open, it ruins our financing plan,” Rosette said. The plant would be an economic boost to the region, he said, because it will provide local growers with an additional market - one close to home.
James Mular, state legislative director of the Transportation and Communication Union, said the Surface Transportation Board may have the authority to reopen the 35-year-old merger agreement that created BNSF predecessor Burlington Northern. The Interstate Commerce Commission - a large federal agency phased out a decade ago - approved that merger on the condition that the now-defunct Milwaukee Road would provide competition along the northern rail route.
The board, which holds some of the powers formerly held by the ICC, can open the merger and impose the condition that local trackage rights be awarded to an effective competitor.
“You have the authority to look at the change of circumstances,” Mular told Buttrey. “Why can't we have a competing carrier up north?”