The cost of food continues to rise, with staples like meat and milk at record highs.
What is leading to the increasing costs of foods at the supermarket and at restaurants across the country?
Unexpected cold weather this winter in the Midwest, heightened demand for railcar space from a variety of competing interests, excessive rail wait times due to volume, and public energy policy are forcing an already stressed railway capacity to make tradeoffs between food and fuel. Specifically, not enough oil is being transported by pipeline which means it’s being shipped by rail. The increased demand on rail shipping is bumping food and food supplies off the tracks. It’s not a stretch to say the failure to build the Keystone Pipeline is boosting your bottom line at the checkout counter.
The Wall Street Journal describes the circumstances facing farmers competing for valuable and timely space via rail to ship their harvested crops to market and to receive the necessary supplies for this year’s deliveries:
Major railroad logjams that have delayed shipments of new cars and coal in the U.S. are threatening to keep some farmers in the upper Midwest from planting their crops on time.
The rail snarls have created a backlog in fertilizer supplies, raising fears that farmers in the Dakotas, Minnesota and Wisconsin won’t have adequate nutrients to sow corn, wheat and barley.
At the same time, farmers have struggled for months to get enough rail capacity to ship grain harvested last year to processing plants. Some worry that even if they are able to plant in a timely fashion this spring, they will be short on storage space when they bring in this autumn’s harvest.
The logjams are exacerbating anxiety that upper Midwestern farmers often feel this time of year as they await a stretch of warmth and clear skies to plant crops that have enough time to grow before cold weather resumes.
No small part of these difficulties has arisen due to the drastic increase in rail volume from ethanol and crude oil, as shipments of both energy sources by rail has exploded, with ethanol soaring after 2005 and crude oil increasing four-fold in the same time frame, overtaking ethanol just last year.
Tradeoffs in the energy sector include public policy drivers that have yielded the train logjam outlined by the WSJ.
Ethanol consumption, instigated largely by public policy designed to push the food-as-fuel gas substitute, has in itself sent food prices skyrocketing, leading not only to pain at the dinner table–and at the pump, given ethanol’s damage to automobile components and greater inefficiency as a fuel–but also contributing to world food prices that have exacerbated political turmoil, particularly in the Middle East, according to research unveiled last year.
Refusing to build additional pipeline capacity for the new glut of oil and gas production, also based in the Midwest, has contributed to the cumulative effect of straining the relatively fixed capacity of rail miles and railcars available for product shipment–food and fuel–alike.
In South Dakota alone, nearly a third of the state’s 2013 corn harvest remains unshipped, and faces spoilage if the remaining inventory can’t ship before the onset of typical summer heat.
Such unnecessary bottlenecking of food and fuel shipments–given the safety concerns of the latter expressed by many politicians, including Colorado’s senior Senator, Mark Udall–should point to a forward-looking public policy solution that alleviates competition for limited shipping capacity via rail.
Meanwhile the grain on the plains will stay mainly off the trains unless additional rail capacity can be freed up in the near term, and the long-term policy looks to alternative methods of energy transportation that does not pit food and fuel against one another.