For Immediate Release:  Thursday, Oct. 7, 2010

Contact:  Kristi Sandal, Public Information Officer, 605-773-3265

Farmers to Profit from Changes in Central South Dakota Rail Service

Harrold, SD - Central South Dakota farmers selling their corn and soybeans at the Harrold and Highmore elevators could pocket an extra 15 to 25 cents a bushel, starting this week, due to a major improvement in rail service.

Multiplied by thousands or tens of thousands of bushels, the change could mean extra annual income of hundreds or thousands of dollars for individual grain producers in the region.

The change, which is a provision in the sale of South Dakota’s 369 miles Core Line railroad track to the Burlington Northern/Santa Fe Railway (BNSF) in 2005, means grain shippers at Dakota, Minnesota and Eastern Railroad/Canadian Pacific Railway (DM&E/CP) stations can access BNSF’s shuttle program.

Under the program, DM&E/CP crews pilot 110-car trains from Wolsey to Highmore or Harrold, load the grain and transport the cars back to Wolsey. At Wolsey a BNSF crew  takes over for the long haul to the Port of Seattle. The port serves Asian markets, which historically pay higher prices for corn and soybeans.

"Between a better price for the crop, more jobs at the elevators, and the trickle-down to support-businesses, this is very positive for the rural economy," said Todd Yeaton of Highmore, chairman of the South Dakota Railroad Board.

On Saturday or Sunday, the first BNSF train for the BNSF shuttle program will pull into Harrold with 110 empty grain cars, allowing farmers and central South Dakota communities and agribusinesses to begin harvesting the economic benefits of that provision of the Core Line sale agreement.

Additional proceeds will come from both lower long-haul costs and higher prices shippers will get from Asian markets served by the Port of Seattle.

Until now, grain from central South Dakota farmers generally went to Chicago, where they received lower prices, or they trucked grain to the BNSF-served facility at Wolsey at a considerably higher transportation cost.

Lower shipping costs for grain and higher prices farmers receive are expected to have a broad economic impact in the center of the state.

Given the more profitable marketing opportunities, farmers are expected to switch some acreage in central South Dakota from wheat and sunflowers to corn and soybeans.

"Corn and beans are higher-management crops, and we are seeing more agronomy businesses already coming to town in anticipation of the growth,” Yeaton said.

The railroad change could mean higher prices per bushel for wheat and sunflowers, too, but not as much as for corn and soybeans.  Canadian Pacific already provides good access to domestic markets for wheat and sunflowers.

In southeastern South Dakota, two short-line railroads already use the haulage provision in the Core Line agreement. The Dakota Southern, which runs from southern Charles Mix County to Yankton, has been taking cars to Mitchell for BNSF to deliver to the Union Pacific in Sioux City. The D&I Railroad, which links Canton to Elk Point, also routinely interchanges traffic with the Union Pacific in Sioux City.

The South Dakota Department of Transportation was the lead agency in the negotiation of the Core Line sale agreement with BNSF.

“It will be great to see South Dakota’s farmers reaping the financial benefits of one of the many provisions the state was able to negotiate in that agreement, which was difficult to obtain,” said State Secretary of Transportation Darin Bergquist. “This also takes heavy grain trucks off our roads and more fuel-efficiently transports grain.”

For more information, contact Bruce Lindholm with the South Dakota Department of Transportation at 605-280-5624.

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