Waiting for the South Dakota wheat to move
By LANCE NIXON
Pierre Capital Journal
PIERRE, S.D. (AP) — The wheat that pours like red gold into the hopper of a combine harvesting a field outside of Pierre could bake the bread that feeds the world - but first it has to get to where millers and bakers can buy it.
And that’s a problem this year. A scale-tipping harvest, a lack of bin space from last year and a shortage of rail cars have some farmers, and some elevators, pouring wheat on the ground because there’s no place to put it, the Pierre Capital Journal reported.
“I’ve been here for five years, and this is the worst I’ve ever seen it,” said Phillip Pease, Pierre terminal manager for Midwest Cooperatives, a part of CHS.
Midwest Cooperatives grain merchandiser Jeremey Frost agreed, noting that Midwest Cooperatives has been running from 20 to 60 percent of historical winter wheat harvest car placements at its various locations - in other words, receiving about one to three grain cars this year for every five cars it received in previous years. But the wheat harvest this year makes the demand for cars greater, not less.
“If I had to guess, our wheat production in our trade area is probably going to be 120 to 150 percent of normal,” Frost said.
Things took a turn for the better at the end of last week when rainfall slowed down the harvest so that not as much wheat was coming in to the elevators; that allowed the railroad to move some grain out and deliver some cars.
So far in August the Pierre elevator is seeing rail car placement at a faster pace than it saw during the month of July.
CHS Midwest Cooperatives has grain facilities in Pierre, Onida, Philip and Blunt that are served by rail; and facilities in Kadoka and Draper that are served by truck. It also has an agronomy location in Highmore than doesn’t handle grain. But producers and elevator personnel said grain storage and transportation are issues across the region, not simply in central South Dakota.
Public affairs manager Jamie Crew of the South Dakota Department of Agriculture said the rail car shortage is a statewide issue, and both Gov. Dennis Daugaard and South Dakota Secretary of Agriculture Lucas Lentsch are concerned about it and at work on the issue.
Miles Mendel, who farms in the Doland area, was in Pierre on Sunday with his combine, helping to thresh Jim Minder’s wheat. Mendel said the situation is similar farther east.
“The elevators are full there, too,” Mendel said. “They’re pushing you from elevator to elevator. We’re hauling a lot of our wheat 60 miles to Watertown.”
Frost said not just elevators, but farmers, too, are facing storage issues.
“The yields this year are probably the best ever for many of them,” Frost said. “It is a very good crop. The crop up in this area is one of the best winter wheat and spring wheat crops we’ve ever had.”
But, he adds, that creates problems when there isn’t space at local elevators or on the farm.
“One farmer told me he had over 100,000 bushels of grain on the ground by Draper,” Frost said. “It’s kind of a good problem, but it’s also frustrating.”
At the Pierre terminal, where there are three piles of wheat on the ground, some of the grain at the edge of the pile is sprouting.
Frost said it’s not as simple as saying it’s a rail car shortage. It’s also a bin-busting crop driven in part by rainfall at just the right time, better wheat varieties, better agronomy and highly skilled farmers who have grown better and better at what they do.
Pease agreed, saying winter wheat yields in the Pierre area have been running from 85 to 87 bushels an acre at the high end, and from 60 to 70 bushels an acre at the low end. Protein has been running at about 11.5 to 11.8 percent, or a little less than the 12 percent numbers buyers would like to see, but still respectable.
But Pease noted that with production like that, rail issues could become an even bigger challenge in harvests to come.
Complicating matters is the fact that there’s a new player in the transportation industry in South Dakota. Genesee & Wyoming Inc. bought 670 miles of track through the center of South Dakota and began operating the Rapid City, Pierre and Eastern Railroad on June 1 of this year. Genesee & Wyoming bought the track — the west end of the former Dakota, Minnesota & Eastern — from the Canadian Pacific for about $210 million, plus about $7.5 million for some inventory, equipment and vehicles.
Jerry Vest, senior vice president of government and industry affairs for Genesee & Wyoming, said the line connects with three other railroads - the Canadian Pacific, the Union Pacific and the Burlington Northern Santa Fe — and part of the challenge of moving grain in the height of harvest is scheduling cars to connect with those other systems.
Milt Handcock, general manager for CHS Midwest Cooperatives, said that adds a layer of complexity.
“The Rapid City, Pierre and Eastern Railroad is doing all they can considering the restraints that they have to work with, that being a bottle neck with the interchange to the Canadian Pacific in Tracy, Minnesota,” Handcock said.
Vest added that the Rapid City, Pierre and Eastern Railroad picked an unusually busy year for grain-hauling to start operating.
“It’s been a major challenge with this crop — a significant bumper crop of winter wheat coming in and unfortunately the elevators are not emptied out from the previous harvest.”
Vest said the transportation issue comes down to three variables: the number of cars, the number of locomotives, and the number of crews.
“We have increased all three of those areas since our start-up beyond our original plans,” Vest said.
Vest said that Genesee & Wyoming has a history of buying short-line and regional railroads to operate them and make them better, and will follow that same strategy in South Dakota. The Rapid City, Pierre & Eastern will be working closely with its customers, and getting through this busy harvest is the first step, he said.
“They want to move the wheat and we understand that,” he said. “We want to move the wheat, too. We’re in it for the long haul.”