Union Pacific’s Woes Put Damper on Record Harvests

Bumper harvests in several farm states have forced elevators to dump grain on the ground, and now a rail-car shortage is keeping it there.

Blaming the problem on Union Pacific Railroad’s problem-plagued merger with Southern Pacific, Midwestern lawmakers are asking federal officials for priority status for their states’ elevators and export stations to allow shipments to port facilities.

“Grain cars are not being delivered, locomotives are in short supply, and grain is stuck in various bottlenecks,” Kansas Sen. Pat Roberts and Rep. Jerry Moran wrote to the U.S. Surface Transportation Board.

“Kansas had a record wheat harvest of 506 million bushels, and 366 million bushels of corn,” the lawmakers wrote. “These financial windfalls shrink daily because of the inability to move grain on Union Pacific lines.”

Sen. Bob Kerrey, D-Neb., has also appealed to the agency, saying the backlog is “especially troubling since the harvest season has barely begun.”

Union Pacific has been experiencing severe growing pains in its year-old merger with Southern Pacific, failing to deliver a variety of goods on time. Southern Pacific had a reputation for less than perfect service, and the effort to combine the two giant systems has failed to ease the situation.

In Missouri, corn farmers are facing a loss of at least $20 million, not including the cost of terminals and elevators dropping cash bids to discourage delivery, the state growers’ association said.

Corn is being stored on the ground in Kansas and Nebraska, and next hit will be Missouri, Iowa and Illinois, said Gary Marshall, executive director of the Missouri Corn Growers Assn. Farmers nationwide are expected to harvest record soybean and corn crops.

Surface Transportation Board officials have scheduled a public hearing on rail issues for Monday. Agriculture and grain groups from California, Colorado, Kansas, Minnesota, North Dakota and Oklahoma are expected to testify.

Marshall said the crisis was driven by the railroad merger. The Union Pacific merger, coupled with the 1995 merger of Burlington Northern-Santa Fe, gives the two companies control of 90% of freight west of the Mississippi River.

Union Pacific spokesman John Bromley said the shortage is due partly to elevators holding last year’s grain in hopes of better prices and partly to congestion at Southern Pacific.

Bromley said the railroad sees signs of progress already and expects most areas to be fluid by early November and back to normal by the year’s end.