Archive for Friday, May 1, 1998

GLICKMAN: U.S. RIPE FOR RAIL SNARL

May 1, 1998

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A bottleneck could especially harm Kansas farmers, who are expecting another big wheat harvest.

Washington (ap) -- The combination of huge grain stocks and forecasts for bountiful harvests this year could produce another railroad bottleneck that would disrupt exports and farm income, Agriculture Secretary Dan Glickman said Thursday.

``They have every reason to be worried,'' Glickman told the Senate Agriculture Committee. ``The ingredients are present for another pileup.''

The chronic problem of rail car shortages during bumper harvests was much worse than usual last year, when snarls in the Union Pacific system reverberated from Texas into the Plains and caused problems along the competing Burlington Northern Santa Fe lines. About 93 million bushels of grain were stored on the ground at one point, Glickman said.

With the winter wheat harvest beginning in Texas -- and much of last year's wheat and corn crops still in storage -- Glickman said another rail gridlock could hurt U.S. farmers because of unreliable export supply. That, he added, would cut into their earnings.

``We will lose market share to our competitors, who are nipping at our heels,'' Glickman said.

More than 40 percent of U.S. corn, wheat and other grains is shipped by rail, or about 4.7 billion bushels a year.

The potential problem is of particular concern in Kansas, the nation's biggest winter wheat state. Sen. Pat Roberts, R-Kan., said the early forecast is for a crop in the 400-million-bushel range, which could tax the rail system as the crop comes in this spring.

``We're going to have a hell of a crop again,'' he said. ``I just hope we can get on top of it.''

Union Pacific spokesman John Bromley said in an interview that the railroad has more than 27,000 cars dedicated to grain shipments and 700 due to come on line June 1. Union Pacific has 500 more locomotives than at this time last year and is spending millions of dollars on car maintenance and track upgrades.

``We think we've turned the corner,'' he said.

But Bromley acknowledged that if the spring or fall grain harvests are coupled with selloffs of the huge stocks, the improvements won't be enough.

``We are concerned about the amount of the grain crop that is still in storage,'' Bromley said. ``If there's an attempt to liquidate, it will be a big strain on the transportation system.''

Glickman said the Agriculture Department and the Surface Transportation Board plan to have an early warning system ready by mid-May to alert shippers and carriers to potential surges in demand and help ward off traffic jams.

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