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Green Acres Guy

Posted 5/13/2025 21:14 (#11224035)
Subject: Marketing crops by rail.

Latimer, Iowa (north central)

Going to post in market talk instead of crop talk, hope this doesn't go off the rails too much, literally****

What experience do you guys have loading trains and marketing your crops directly onto trains?

We have a short line railroad (recently acquired by the CN) that runs through our area, it crosses 3 of the majors and there are multiple good markets on the line. They charge a low demurrage and switching fee to go onto those other railroads. Several of these markets are in Cedar Rapids, (a city with good markets but is a pain to get into, the soy and corn plants frequently have multiple hour wait lines, the oat plant hasn't dumped a semi of Iowa oats in 37 years, etc), other potential markets are on the coasts and south of the border. For example, I have a buyer for 7 rail cars a week of corn in New Jersey that is grown with a cover crop, among several potential buyers, with significant price premiums.

The case in point is oats to Cedar Rapids.
The shipping cost of going 125 miles by rail is 37.5 cents per bushel. We have to load our own cars and the grain market wants crops in 125,000 bushel or greater contracts. The railroad is willing to let us load reasonably slow for the rail world. (25,000 bu a day). I figure its costs us about 40 cents to truck the grain to Cedar Rapids or about 20 cents to get to the rail yard and loaded on the train, but they won’t dump a truck in CR anyway so not a real option.
On oats we can basically get a 1.10 cent a bushel gain. (1.30 premium - .375 for rail+.20 for trucking savings)($3.70 a bushel to $5.00 a bushel on sale price) because we can sell to a market that we haven't been able to before. I am loading our first shipment of oats from our farm, and few other friends farms, of 125,000 bushels right now. In 2026 many of the oats will run through our own farmer owned mill, but we need a market for 2025 crop and potentially additional bushels beyond the 4M bushels that will be processed in Albert Lea.

A soybean market is willing to pay more for a 125,000 bushel increment of non-gmo beans then receiving them by truck. The premium only amounts to about 40 cents a bushel after adjusting for freight costs. Should we be considering selling the soybeans on the rail? It amounts to about a 50,000 higher selling price for a trainload. It does put some stress on me to load a train in a week, but also means we don't have to truck beans a distance all winter though...

Corn is similar, especially on non-gmo corn. It does get complicated crossing the southern border or switching several carriers, but still a nice premium to local markets.

Is shipping by rail just the next step for farmers? Most farmers in our area have already switched to delivering direct to an ethanol plant by truck instead of the local elevator on corn. A 10-20% increase in gross income through higher prices by shipping on rail, while not increasing costs, significantly increase net income per bushel. Example would be we are making 20 cents a bushel profit selling corn to a local e-plant and 60 cents a bushel railing it out. The premiums seem to be for commodity crops grown with differentiating factors into food markets. We are considering building a transloading facility for our bushels at the rail yard to streamline delivery. I know this was the original goal of coops but their mission seems to have become blurred.

Is anyone else marketing or experimenting with marketing their crops direct from farm to rail? What have been some pitfalls that have been encountered? Isn't there a farmer out in Colorado that built a rail facility and owns part of a shortline railway?

Basis is the only only thing I am concerned about because crops are always marketed on the board and then sold to the best basis. Don't want to get into the hedging debate on this thought thread...

Edit to add pictures from my phone: Right now we are low budget with 10,000 bph conveyors but will have to upgrade if volumes increase or winter shipping gets involved.

2nd to last picture is progress on the Green Acres Milling site in Albert Lea: We should get grading completed this week and start pouring foundations for the concrete slip-form mill.

Last picture is a green oat field today of mine with more of our groups oat fields further on horizon.

Edited by Green Acres Guy 5/13/2025 21:55