Wednesday, August 27, 2014

Fuel for Food in the Upper Mid-West. Caught in the Opportunity Cost trap.

The allocation of scarce railroad track from the transport of food to fuel has created a costly consequence for agricultural interests. The simultaneous boom in energy and food production necessitates choices.  It appears the fossil fuel (oil and gas) interests are winning out.  There is no escaping Opportunity Costs!

Millions in Agriculture Lost as Rails Neglect Grain Surplus (HT Morning Ag Cllips)

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.
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