Farmers in North Dakota are experiencing millions of dollars in losses as their grain shipments — held up by rails’ prioritization of the transport of oil — have no way of getting to the companies that need them, like cereal producer General Mills. Production at such companies has slowed, and the grain, with nowhere to go, “is simply going to ground and rot,” farmer Bill Hejl told The New York Times.
What’s more, farmers expect that the upcoming harvest will yield a record crop of wheat and soybeans, meaning that this problem is only expected to get worse.
Farmers have long relied on railroads, “the backbone of North Dakota’s transportation system,” to help them move their crops across the country, and abroad.
But lately, the region’s railroads are occupied by shipments of oil, which, along with gas, have become biggest contributor to North Dakota’s gross domestic product. As of August 22, reports indicate that the Burlington Northern Santa Fe Railway (the state’s largest railroad) had a backlog of 1,336 rail cars waiting to ship grain, while Canadian Pacific railroad had a backlog of 1,000 cars.
Companies like General Mills that depend on these shipments have lost at least two months of production time and four percent of its output, while food company Cargill has also reported a net drop in earnings.
Meanwhile, if farmers remain unable to move their crops, studies suggest that they stand to lose $95 million, on top of millions in lost revenue earlier this year.
Although the rail companies have denied that oil shipments have been allowed to replace crop shipments, North Dakota’s agricultural commissioner Doug Goehring says that without major improvements to the rail companies’ infrastructure, the problem will not go away.
“I just don’t see that it’s going to be any better this year,” Goehring told The New York Times. “We’re expecting record crop yields, and I expect we will see more of the same with shipments lagging.”
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Karen Lo is an associate editor at The Daily Meal. Follow her on Twitter @appleplexy.