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Robert Plucker, 93, out checking on his 2020 wheat harvest operation in Touchet.
Photo by Nick Plucker

WestBred

FARMER'S TOOLBOX

On the move

Rail, river, roads all make movement of products in and out of region possible

November 2020
By Trista Crossley


Although barging and the dams on the Columbia-Snake River System have monopolized the spotlight recently, that’s not the only transportation option that Pacific Northwest (PNW) growers and businesses rely on. Trains and trucks are critical links in a system with lots of moving parts.

Crops and products move both ways in the PNW with most utilizing all three modes of transportation at some point in their life cycle. Crops may go first by truck to a country elevator and then by barge or rail to downriver ports on the coast, while products such as fertilizer are shipped upriver via barge to river terminals and dispersed into the countryside by truck. Lose one part of that chain, and the whole system falters.

“We start with this interesting dynamic, geography, that gives us this balance. We are really close to the coast, we have fantastic river systems, and two Class I railroads run through our footprint. All of that is in balance with a highway system that integrates the two,” explained Paul Katovich, CEO of HighLine Grain Growers. “We have this nice balance of reliability and alternatives. It doesn’t just happen that way. We’ve spent a lot of time and effort supporting and helping people understand that freight balance is important for our farmers. It creates a competitive tension between the two, and that keeps us as competitive as we can be back to the farm gate.”

The capacity of the different modes of transportation varies greatly and can be difficult to put into perspective. One barge has a capacity of 122,500 bushels of wheat. One jumbo hopper rail car has a capacity of 3,500 bushels of wheat, and a large semitruck has a capacity of 910 bushels of wheat. In other words, one four-barge tow has the same freight capacity as 140 jumbo hopper rail cars (that’s one and a third 110-car unit trains) or 538 semitrucks (a line that would stretch more than seven miles long). See comparison chart.

Approximately 85 to 90 percent of Eastern Washington’s wheat crop is exported overseas. In a normal year, the Washington Grain Commission estimates that roughly 60 percent of the crop moves to export terminals in Portland and Vancouver via the river system, and 40 percent moves by rail. Based on the most recent harvest report from the National Agricultural Statistics Service, the 2020 Washington wheat crop is estimated to be 165.6 million bushels. That means that roughly 87 million bushels of wheat will move by barge (710 barges) and roughly 58 million bushels will move by rail (16,570 jumbo hopper cars). Almost all of that crop will start the journey on a truck.

“No one mechanism has the capacity to move the entire (wheat) crop. You can’t do it by rail, by barge and certainly you can’t do it by truck to Portland. This integration builds a network of interdependency. If you lose any one of those legs—think of it like a stool—it doesn’t work without all of the stool’s legs,” Katovich said.

And wheat is only one of many products that moves through the region. Soybeans and corn from the Midwest, wood products, bulk minerals and autos are just some of the major commodities that flow through the Pacific Northwest both by rail and by river.

Some of those bulk products are various fertilizers and nutrients that are earmarked for the ag retail market. The McGregor Company, a family-owned business, is among the largest crop input companies in the Pacific Northwest, serving customers throughout Eastern Washington, north-central Idaho and northeastern Oregon. They rely on all three modes of transportation to bring in fertilizer components to their two river terminals, where the individual components are blended and then shipped to their stores or directly to grower customers by truck. Generally, The McGregor Company will handle roughly two-thirds of their fertilizer business in the fall and one-third in the spring. Because it all happens within a very narrow window, the company has to use every mode of transportation available to them in order to get their product out to growers in a timely manner.

In a typical year, The McGregor Company estimates it will provide fertilizer to more than a million acres of cropland. The company will receive the equivalent of 500-plus rail cars or 1,500-plus trucks of nitrogen solutions via barge each year between their two river terminals. While each fertilizer season may last eight to 12 weeks, approximately 80 percent of that volume goes out in an eight-to-12-day window each fall and spring. Without the high volume capability of barge traffic, that scenario would not be remotely possible in such a short time frame.

Craig Chatterton, director of crop nutrition for The McGregor Company, explained that as yields have increased, so has the volume of fertilizer that is needed. He said that the company can go through a single barge shipment of fertilizer ingredients in just a few days during fall and spring seeding.

“In the world of agriculture, everything is getting bigger and faster. The volume of fertilizer that farmers can go through in a single day has grown exponentially over the course of 20 or 30 years,” he said. “With the bigger equipment out in the fields, I can’t keep up with just a single barge (load). I have to utilize all three parts of the transportation system to keep product flowing and not stop anybody out in the field.”

When employing conservation tillage methods, especially when direct seeding, growers try to keep the number of passes over a field to a minimum. In order to do that, they often apply fertilizer at the same time as they seed. Any delay in seeding could mean a corresponding decrease in yields, so in order to get their crops seeded in time, growers have to have their fertilizer on hand. And seeding, especially for winter wheat, tends to hit all across the region at about the same time, putting a huge demand on crop input companies like McGregor to time their shipments accurately.

“(Under more traditional tillage methods) fertilizer was applied separately, and then farmers would come in and seed. That extended the season about two to three times longer than it is today,” said Alex McGregor, chairman of The McGregor Company. “It has condensed the amount of fertilizer that needs to get to the farm gate into a narrower and narrower window, and you have to hit that window perfectly.”

Chatterton said without a barge option, he’d be forced into much longer supply chains because the same products currently received by barge would have to be shipped via rail out of Canada, the Midwest or the Southeast. Availability of rail cars would also be an issue as the PNW would be competing for the cars against the rest of the nation and Canada. Additionally, the company’s river facilities, which are where most of their product is received and mixed, aren’t set up with the infrastructure or the space necessary to store the volume needed if it came mainly by rail. Chatterton explained that rail shipments have widely variable estimated times of arrival, so the company would need to keep more reserve product on hand, which would dictate a larger footprint and additional rail track and storage at each terminal. That cost, as well as any increased shipping costs due to less transportation competition, would eventually come out of the end users’ pockets.

“When you take one of the choices away and it becomes a situation where you have no more choices, that certainly doesn’t lead to competitive pricing,” McGregor added.

“If we lost access to the barge option, that would put intense pressure on the rails to service our customers in a timely manner,” said Fred Morscheck, general manager of operations at The McGregor Company. “Trucks are absolutely not an option.

It would take so many trucks and so many drivers that don’t exist today to run them to try to replicate what you can move by rail and by barge. If we were down to one option, if we lost barging and 100 percent had to depend on rail…it is very challenging to schedule rail deliveries, more so than barges and more so than trucks. It would be extremely challenging.”

Contrary to how The McGregor Company moves product into the countryside, growers are more interested in moving grain out of the countryside and down to the ports. Generally, grain bound for export takes one of two paths: It is moved by truck to a local elevator or shuttle-loading facility and put on a rail car, or it is moved by truck to a river facility where it is loaded on barges and taken downriver.

(Editor’s note: There are a number of major companies in Eastern Washington that gather grain and other products and ship them down to the coast. The two companies we spoke with are representative of how most of these shippers use the three different modes of transportation available to them.)

HighLine Grain Growers’ footprint, which covers most of the Highway 2 corridor from Spokane to Wenatchee, includes all those options, but for growers farther from the river, truck to rail tends to be the main way of moving grain. Katovich, the CEO of HighLine Grain Growers, said without the rails, growers would have to shift to trucks to get the grain to a river facility or to one of the shuttle-loading facilities (there are five in Eastern Washington: one in Ritzville, one in Four Lakes, one between Rosalia and Oakesdale, one in Endicott and one in Plymouth). That could mean dozens more trucks per hour on the highways during harvest, resulting in an increased safety risk, risk of environmental damage and damage to the highway system.

“It is a scary number of trucks on the roads and miles traveled if we don’t have a balanced, integrated system. That’s in addition to what we already see today,” he said. “If you took one or the other transportation option away, that relative scarcity of transportation would immediately spike the cost of transportation. I would say within a month or two, every bushel would cost at least $.15 more to move to the coast. It’s simple supply and demand.”

The Washington Association of Wheat Growers (WAWG) estimates that the cost of raising a bushel of wheat in Eastern Washington sits at an estimated $5.50 to $6. When that same bushel of wheat is being sold for less than $6, an extra cost of $.15 per bushel could be enough to threaten farmers’ livelihoods.

If HighLine Grain Growers lost any of their transportation options, Katovich said there would be outsized economic impacts in the investment it would take to increase their capacity to move the crop using whatever options were left to them. He believes that neither the rails nor the river is prepared to handle the entire wheat crop over an extended period of time.

“Right now, we are in balance (as far as transportation options go) so relative scarcity is controllable in an understandable way. But if you lose one of the major competitors in our integrated system, we would have to immediately invest a generation’s worth of economic capital. We as an individual company can only withstand that once in a generation. These are farmer dollars we are spending. If we lost one of those options, the cost associated with that, the need to change our capacity to handle it would be astronomical,” he explained.

While Pacific Northwest Farmers Cooperative utilizes all three modes of transportation to move their farmers’ products to export terminals on the coast, they tend to rely on trucks a little more heavily. The company operates 45 facilities throughout Whitman and Spokane counties in Washington, and Latah, Benewah and Nez Perce counties in Idaho. Only three of those facilities have the infrastructure to use the shortline rails, so most of their product is moved by truck from local elevators to a shuttle-loading facility or to a river terminal.

“Since we are using trucks for transfers within our footprint, obviously, trucks are very important to facilitate movement (of product) to market,” said Shawn O’Connell, CEO of PNW Farmers Cooperative.

Trucks also figure prominently for PNW Farmers Cooperative because, in addition to wheat, their footprint includes a large number of pulse acres. Due of a lack of container shipping services in Portland or Vancouver, the majority of pulses are dry bagged and sent by truck to export terminals in Seattle and Tacoma.

“When the steamship carriers pulled out of Portland, using a barge was no longer a viable option,” explained O’Connell. “Using rail isn’t viable for us going to Seattle or Tacoma because of costs, so we utilize trucks.”

But while PNW Farmers Cooperative might use trucks more than other companies spoken to for this article, O’Connell pointed out that losing any of their shipping options would dramatically affect the company and increase storage and marketing costs for their farmers. Once grain is moved by truck to a shuttle-loading facility or to the river, typically 45 percent is shipped to export terminals by rail and 55 percent by barge.

“If we lost one those modes of transportation, that changes our infrastructure completely. The storage that is built at our terminals may not be usable anymore. For example, no one is going to deliver grain down to a barge-loading facility with no rail access and store it, simply to put it back on a truck to take it to a rail-loading facility,” he said. “Shipping grain from here to Portland via truck just is not physically possible. We don’t have enough trucks, enough equipment to move that volume of grain regardless of cost. We just physically can’t do it.”

Besides a lack of equipment, O’Connell pointed out there aren’t enough truck drivers either. He doesn’t believe any one of the available modes of transportation could handle the entirety of the crop, especially as improved genetics and farming practices produce higher average yields each year.

“All three modes of transportation are extremely important to not only us as growers but to the industry itself,” he said. “This year, we’ve seen some of the best yields we’ve ever seen in certain parts of the region. That’s even more reason to utilize all modes of transportation to help facilitate movement of products to marketplace.”