A new study by the American Bureau Federation (AFBF) shows that America’s farmers would benefit from expanding the nation’s oil and gas pipeline infrastructure.
With the energy boom in the Midwest, rail congestion spiked and freight costs increased effecting farmers in the region and cutting their profits by $570 million during the 2014 harvest. New pipeline infrastructure would relieve the overburdened freight rail network.
“American farmers depend upon rail freight to move their products to market. The surge in rail transportation of crude oil has affected that ability and timing in recent years,” said Bob Young, AFBF chief economist. “Construction of new pipelines would certainly be a more effective way to move that product to market. It would take crude oil off the rails and, in doing so, improve the overall efficiency of the transportation system. Improved pipeline infrastructure will also help enhance American energy security for everyone.”
The AFBF study found that the average North Dakota corn farmer may have received $10,000 less than the traditional market rate for the crop. Increasing U.S. pipeline capacity – particularly in the Bakken region – is a prime solution for adding freight system capacity overall and relieving rail congestion, according to AFBF.
Study author Elaine Kub said farmers face challenges in getting their goods to market that others do not. Read the study here.
“Due to the nature of grain production and use, the industry is fairly inflexible about which freight methods it can use, so any time one of those methods is unavailable, crops are lost or cost more to transport,” she said. “This leads to more expensive food for families and less profitable incomes for farmers. Crude oil, however, can be more efficiently and affordably shipped through pipelines, and can be done without crowding already overstressed railways.”
The AFBF study also featured mathematically simulated scenarios showing how expansion of any freight method – truck, rail, barge or pipeline – can reduce overall congestion and, in certain scenarios, could increase the annual volume of grain moved by as much as 14 percent.