ACUTE GRAIN SHORTAGE SPURS LINKUP OF SHIPPERS, AUTOMAKERS AND RAILS

ACUTE GRAIN SHORTAGE SPURS LINKUP OF SHIPPERS, AUTOMAKERS AND RAILS

Chronic seasonal grain car shortages are more acute this year because of high export demand and a bumper crop, prompting shippers, car manufacturers and railroads to join forces for the first time to find solutions to the problem.

The National Grain Car Council held its inaugural meeting at the Interstate Commerce Commission Tuesday, and about 75 of the nation's top grain and rail industry executives gathered to search for common ground and elect officers for the next two years.Perennial Problem

The meeting was led by the new council's chairman, Richard Davidson, president of Union Pacific Corp.

Ian Muir, assistant vice president for transportation at Bunge Corp. of St. Louis, was chosen vice chairman. All four ICC commissioners, Sen. J. James Exon, D-Neb., and Agriculture Secretary Dan Glickman also participated.

Mr. Glickman told the council that grain car shortages "reflect a cyclical, and perhaps perennial, problem in the industry." He said that as the U.S. government continues to promote grain exports and remove restrictions, like acreage set-asides reducing the amount of land that can be planted by individual farmers, the car shortage issue will become even more pressing.

"Grain prices are likely to be more stable over the coming years than we've seen for the last 30 or 40 years," Mr. Glickman said. "Farmers will be encouraged (by the government) to produce more, and they will be disappointed if they can't move those crops."

Chinese Demand Boosts Exports

Shippers say unusually strong demand for grain from China is helping to boost exports in 1995. Grain producers are shipping anywhere from 10 percent to 30 percent more in 1995 than last year, they said, and railroads are reaping a harvest as well. For example, Burlington Northern transported 54 percent more grain in August than it did in August 1994, Gerald Grinstein, the company's chairman, told the council.

Yet increased demand and the subsequent higher prices for grain are proving worrisome for receivers, said Steve Colthurst, procurement manager for Land O'Lakes Inc.'s Western Feed Division in Seattle.

Mr. Colthurst told the new council that the dairy farmers he works with are seeing grain prices 25 percent to 30 percent higher than last year, as well as problems in getting an even flow of grain to feed their herds.

He said that within the last 45 days, some of his customers have found that the arrival of railcars full of much-needed grain has been delayed by up to a week. Grain suppliers add that some turnaround times of grain cars from short- line railroads have increased from five days to as much as 30 to 45 days

because of the increased demand for covered hoppers.

400 percent Increase in Barge Rates

A 400 percent increase in barge rates in parts of the country this year has placed additional pressure on railroads, as shippers turn to alternate methods of grain transport.

The mood of the dairy farmers that Mr. Colthurst works with, he said, "is somewhere between great concern and hysteria."

Most council members seemed to agree that a shortage of grain cars in the railroad system is not necessarily causing the difficulties.

"It's a capacity and system efficiency problem," said Fred Yokum, president of the Iowa Interstate Railroad Ltd.

According to the Association of American Railroads, the rail industry is investing $280 million in new grain cars this year. The association said that 1,855 covered hopper cars were added to the fleet from January through June, and that railroads expect another 3,300 covered hoppers to be delivered before the end of the year.

The council agreed Tuesday to form groups to investigate ways to improve the system's efficiency and capacity. For example, representatives from the nine Class I railroads that belong to the group announced that they are forming a task force to see how the major railroads can improve their grain car flows.

Seven Class II and III railroads have representatives on the council, as do 10 grain shipper and receivers, including major grain cooperatives in states such as Minnesota and Nebraska. Private car owners and manufacturers have five representatives on the council.