The U.S. House of Representatives on Wednesday voted to approve a bill to impose a tentative contract deal reached in September on a dozen unions representing 115,000 workers. The House also separately voted to require seven days of paid sick leave for rail workers, a measure the White House has not endorsed.

“There is no substitute in the American transportation system for a functioning freight rail network,” Transportation Secretary Pete Buttigieg told CNBC. “It wouldn’t just bring down our rail system, it would really shut down our economy.”

Buttigieg, Labor Secretary Marty Walsh and White House legislative director Louisa Terrell were meeting with Senate Democrats on Thursday to try to convince them to move quickly.

Separate votes are expected this afternoon on the rail and sick leave bills as well as a separate proposal to extend the “cooling off” period before workers could go on strike, aides said.

Senator Bernie Sanders and others demanded a separate vote on the sick leave issue as a condition of agreeing to fast-track consideration of the rail contract vote. He denounced railroad companies for refusing to offer paid sick leave.

“They are maybe the worst case of corporate greed that I have seen,” Sanders said. “That is really barbaric in the year 2022 in America.”

Schumer said he wants to see paid sick leave included in the legislation.

“Senators are working morning, noon and night to reach an agreement for us to act on this measure ASAP,” Schumer said. “The Senate cannot leave until we get the job done.”

Workers could go on strike as soon as Dec. 9, but the impacts in the U.S. and beyond would be felt as soon as this weekend as railroads stop accepting hazardous materials shipments.

A rail strike could freeze almost 30 per cent of U.S. cargo shipments by weight, stoke already surging inflation and cost the U.S. economy as much as US$2 billion per day, and strand millions of passenger railroad Amtrak and commuter rail passengers.

Railroads and the U.S. Chamber of Commerce oppose amending the contract deal that was struck in September largely on the recommendations of an emergency board appointed by Biden. The American Association of Railroads said the sick leave proposal would “undermine bargaining and artificially add to contracts beyond the scope of the Biden-endorsed agreements.”

President Joe Biden on Monday praised the proposed contract that includes a 24 per cent compounded pay increase over five years and five annual US$1,000 lump-sum payments, and had asked Congress to impose the agreement without any modifications.

There are no paid short-term sick days under the tentative deal after unions asked for 15 and railroads settled on one personal day.

Eight of 12 unions have ratified the deal. But some labor leaders have criticized Biden for asking Congress to impose a contract that workers in four unions have rejected over its lack of paid sick leave.

The contracts cover workers at carriers including Union Pacific, BNSF, CSX, Norfolk Southern and Kansas City Southern as well as the U.S. track of Canadian National Railway (CN).

— David Shepardson is a Reuters correspondent covering the U.S. transport sector from Washington, D.C.; additional reporting by Moira Warburton.

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Train and engine service members of the transportation division of the International Association of Sheet Metal, Air, Rail, and Transportation Workers (SMART-TD) narrowly voted to reject the deal. That unit, which includes conductors, brakemen and other workers, joins three other unions in rejecting a deal brokered via a board appointed by U.S. President Joe Biden.

“There’s a lot of anger about paid sick leave among the membership” who kept goods flowing during the early days of the COVID-19 pandemic, said Seth Harris, a professor at Northeastern University.

Labour unions have criticized the railroads’ sick leave and attendance policies and the lack of paid sick days for short-term illness. There are no paid sick days under the tentative deal. Unions asked for 15 paid sick days and the railroads settled on one personal day.

Railroads have slashed labour and other costs to bolster profits and are fiercely opposed to adding paid sick time that would require them to hire more staff. Those operators — which include Union Pacific, BNSF and CSX as well as the U.S. business of Canadian National Railway (CN) — say the contract deal has the most generous wage package in almost 50 years of national rail negotiations.

“The union needs to get this done in advance of the new Congress,” said Reliant Labor Consultants principal Joe Brock, a former Teamsters local president.

Republicans, who historically favour corporations over unions, earlier this month won control of the U.S. House starting in January.

“I see a minimal improvement in sick pay, and huge pressure from the (Biden) administration to accept a deal,” Brock said.

But railroads are also under pressure to wrap up talks. Major U.S. industry groups complain that rail industry cost cuts have hurt service. On Monday, several renewed calls for Biden and Congress to swiftly intervene to prevent a strike or employer lockout ahead of the holiday season.

White House spokesperson Karine Jean-Pierre said a shutdown would hurt American families, farms and businesses. She said Biden is being briefed on the issue and that Labour Secretary Marty Walsh is “very much engaged.”

“We continue to urge both sides to finish their work in good faith and avoid even the threat of a shutdown,” she told reporters. “But like we do for all issues, our team is preparing and planning for all possible outcomes.”

‘Without a strike’

A rail traffic stoppage could freeze almost 30 per cent of U.S. cargo shipments by weight, stoke inflation and cost the U.S. economy as much as US$2 billion per day by unleashing a cascade of transport woes affecting the energy, agriculture, manufacturing, healthcare and retail sectors.

Last week, the U.S. Chamber of Commerce said Congress should step in to prevent any disruption, warning it would be catastrophic for the economy. Automaker General Motors has said a halt would force it to stop production of some trucks within about a day.

“This can all be settled through negotiations and without a strike,” SMART-TD President Jeremy Ferguson said in a statement.

The National Carriers’ Conference Committee (NCCC), which represents the nation’s freight railroads in talks, said the “continued, near-term threat” of a strike “will require that freight railroads and passenger carriers soon begin to take responsible steps to safely secure the network in advance of any deadline.”

The railroads showed no sign of being willing to reopen talks and said, “Congress may need to intervene, just as it has in the past, to prevent disruption of the national rail system.”

The standoff between U.S. railroad operators and their union workers in September disrupted flows of hazardous materials such as chemicals used in fertilizer and disrupted U.S. passenger railroad Amtrak service as railroads prepared for a possible work stoppage.

Unions, including a separately contracted unit covering more than 1,000 SMART-TD yardmasters, have ratified nine of 13 agreements covering about half of the 115,000 workers affected by the talks.

The deal includes a 24 per cent compounded wage increase over a five-year period from 2020 through 2024 and five annual US$1,000 lump sum payments.

Beginning on Dec. 9, SMART-TD would be allowed to go on strike or the rail carriers would be permitted to lock out workers, unless Congress intervenes. Three other unions that rejected the deal have already agreed to extend a strike deadline until early December.

If there is a strike by any of the unions that voted against the deal, Brotherhood of Locomotive Engineers and Trainmen and other rail unions that ratified agreements have pledged to honour picket lines.

The Biden administration helped avert a service cutoff by hosting last-minute contract talks in September that led to a tentative contract deal.

— Reporting for Reuters by David Shepardson in Washington and Lisa Baertlein in Los Angeles; additional reporting by Jeff Mason and Trevor Hunnicutt.

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Biden called the deal a “big win for America” and for tens of thousands of rail workers. Thanking business and labour, the Democratic president promised more worker-company agreements in the future.

“I’m optimistic that we can do this in other fields as well,” Biden said.

“Unions and management can work together for the benefit of everyone,” Biden added.

If they accept the deal that was announced at about 5 a.m., workers whose pay had been frozen will win double-digit increases and will be allowed to seek certain types of medical care without fear of being punished, union leaders said. The agreement includes an immediate 14.1 per cent wage rise, the railroads said.

Unions, whose members bitterly rejected prior proposals, will now vote on the agreement. Even if those votes fail, a rail strike that could have happened as soon as a minute past midnight on Friday has been averted for several weeks due to the standard language included in such a deal, a person familiar with the negotiations said.

Biden’s Labor Secretary Marty Walsh hosted contract talks in Washington that ran for 20 consecutive hours between unions representing 115,000 workers and railroads including Union Pacific, BNSF, CSX, Norfolk Southern and Kansas City Southern, as well as U.S. track owned by Canadian National Railway (CN).

Officials are expected to host a news briefing later on Thursday.

Failing to reach a deal before the deadline would have cleared the way for workers to legally strike.

A rail shutdown could have frozen almost 30 per cent of U.S. cargo shipments by weight, stoked inflation, cost the U.S. economy as much as $2 billion per day and unleashed a cascade of transport woes affecting the U.S. energy, agriculture, manufacturing, healthcare and retail sectors (all figures US$).

U.S. natural gas futures dropped about nine per cent after soaring 10 per cent in the prior session; oil futures fell about four per cent to a one-week low. Diesel and gasoline futures also fell. Investors expected that a rail strike would have threatened coal supplies to power plants and boost demand for rival energy sources.

Amtrak, which runs passenger rail, said it will resume normal service on Friday after cancelling long-distance trains in anticipation of a strike.

The impact of a shutdown also would have stretched beyond U.S. borders because trains link the U.S. to Canada and Mexico and provide vital connections to massive ships that ferry goods from around the globe.

Negotiations between the companies and a dozen unions had stretched for more than two years, leading Biden to appoint an emergency board in July to help break the impasse. Biden personally called Walsh and negotiators on Wednesday evening to prod them toward a deal, telling them “once again to recognize the harm” that a shutdown would have on families, farmers and businesses, according to a person aware of the negotiations.

National Retail Federation CEO Matthew Shay thanked Biden’s administration for intervening, adding in a statement that his group is “relieved and cautiously optimistic.” Emily Skor, CEO of the biofuel trade group Growth Energy, also praised the deal and noted that much of the country’s ethanol moves by rail.

Freight railroads had halted transportation of hazardous goods, including chlorine for water purification and ammonia for fertilizer, as well as shipments of refrigerated food and other goods that use rail and at least one other mode of transport. Their goal was to prevent cargo from being stranded in unsafe locations.

Job cuts

The railroad industry slashed almost 30 per cent of its workforce over the last six years, cutting pay and other costs as they increased profits, stock buybacks and dividends for investors. Profits at billionaire Warren Buffett’s Berkshire Hathaway, which owns BNSF, rose 9.2 per cent in the most recent quarter to $1.7 billion.

The number of U.S. railway workers has dropped from over 600,000 in 1970 to about 150,000 in 2022, according to the Bureau of Labor Statistics, due technology and cost-cutting. The result is that many industry workers are on call at all hours, waiting to respond at short notice to work for days at a time.

The latest deal follows some earlier recommendations of the president’s emergency mediators. It includes a 24 per cent percent wage increase over a five-year period from 2020 through 2024 as well as $1,000 lump sum payments in each of five years.

Biden, who has called himself the most union-friendly president in history and attacked companies for raking in “excessive” profits, praised a deal he said would give workers “better pay, improved working conditions, and peace of mind around their health care costs.”

The president is not yet out of the woods when it comes to supply-chain labour issues. Some 22,000 union workers at 29 West Coast ports that handle almost 40 per cent of U.S. imports are also in high-stakes labour contract negotiations.

Administration officials wanted the disputes resolved ahead of November’s midterm elections that will determine whether Biden’s fellow Democrats retain control of Congress.

Senior congressional leaders had threatened to pass legislation imposing a resolution on the railroads and unions if the negotiations were not successful. U.S. House Speaker Nancy Pelosi praised the tentative agreement and said that Congress was “ready to act” but that “thankfully this action may not be necessary.”

— Reporting by Trevor Hunnicutt in Washington; additional reporting by Lisa Baertlein in Los Angeles, Steve Holland, David Shepardson and Susan Heavey in Washington, Stephanie Kelly in New York, and Jahnavi Nidumolu, Aishwarya Nair, Bansari Mayur Kamdar and Kannaki Deka in Bangalore.

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With farmers starting to harvest autumn crops that are shipped to meat and biofuels producers, the shipping disruptions could add to already high inflation. Farmers also plan to add fertilizer to fields after the harvest, and shipments of fertilizer are being delayed.

Max Fisher, chief economist at the National Grain and Feed Association, which represents most U.S. grain handlers, said rail customers reported at least one railway would stop taking grain shipments on Thursday morning.

Most major U.S. railways have already stopped accepting new shipments of ammonia fertilizer and other potentially hazardous materials, said Justin Louchheim, senior government affairs director at The Fertilizer Institute, an industry group.

Louchheim said fertilizer producers are now evaluating how much storage they have for ammonia that cannot move by rail, and whether some can move by truck.

The potential rail shutdown looms just six weeks before most Midwest farmers would begin applying fertilizer, said Josh Linville, fertilizer director at StoneX Group. About 40 per cent of the U.S. fertilizer supply is on a rail car at some point before arriving on a farm, he said.

Railroads have until a minute after midnight on Friday to reach tentative deals with holdout unions representing about 60,000 workers.

Worries about service interruptions boosted prices for corn-based ethanol at several hubs and kept sellers out of the market, said Josh Pedrick, a managing editor for S&P Global Commodity Insights.

The Association of American Railways (AAR), which represents railroad companies, did not immediately respond to request for comment on grain transportation.

The work stoppage would be keenly felt in states like North Dakota, South Dakota, Minnesota and Nebraska, from which grain is hauled via rail to ports in the Pacific Northwest for export, said Thomas Lahey, domestic freight manager at grain merchandiser Columbia Grain International. Grain elevators in the upper Midwest move soybeans to the PNW mostly via BNSF, Canadian Pacific Railway and Union Pacific, he said.

U.S. Class 1 railroads transported nearly 1.5 million carloads of grain in 2020, including 691,000 carloads of corn, 340,000 carloads of soybeans and 248,000 carloads of processed soybeans like soymeal and soyoil, AAR said.

Enough feed?

U.S. chicken producers rely on about 27 million bushels of corn and 11 million bushels of soymeal every week to feed their birds, the National Chicken Council said. Much is moved by rail.

“Any disruption of service could negatively impact the welfare of the birds, and ultimately impact production at a time when Americans are already dealing with record food inflation,” council spokesman Tom Super said.

In North Carolina, a pork and poultry producer, local grain growers do not produce enough corn to feed all the farm animals, said Bob Ford, executive director of the North Carolina Poultry Federation.

“We’d be in trouble if they went on strike for very long,” Ford said. “We’d run out of corn.”

Wayne-Sanderson Farms, a Georgia-based chicken company owned by Cargill and Continental Grain, is working with local corn producers to augment feed supplies if needed during rail disruptions, spokesman Frank Singleton said.

The beginning of corn harvesting in the southern United States, a main poultry region, “will relieve some of the pressure” on feed supplies, he said.

Some rail customers that feed livestock do not have enough soymeal, said Fisher, of the National Grain and Feed Association. In a worst case scenario, that could force some producers to cull animals.

Railroads also ship hexane, a chemical solvent that crushers use to extract oil from soybeans, said Mike Steenhoek, executive director of Soy Transportation Coalition.

“Any slowdown or stoppage of rail service — especially on the eve of harvest — would significantly impact farmers’ ability to meet customer demand — both domestically and internationally,” Steenhoek said.

— Reporting by P.J. Huffstutter and Tom Polansek in Chicago; additional reporting by Karl Plume in Chicago, Rod Nickel in Winnipeg and Stephanie Kelly in New York.

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The potential shutdown, which could come as early as Friday, could freeze almost 30 per cent of U.S. cargo shipments, stoke inflation, impede supplies of food and fuel, cost the U.S. economy about US$2 billion per day and cause transportation woes.

Railroads including Union Pacific, Berkshire Hathaway’s BNSF, CSX and Norfolk Southern have until a minute after midnight on Friday to reach tentative deals with three hold-out unions representing about 60,000 workers.

If agreements are not reached, there could be union strikes or employer lockouts. But the railroads and unions also could agree to stay at the bargaining table or the Democratic-led U.S. Congress could intervene by extending talks or establishing settlement terms.

The Biden administration’s push comes as food, energy, automotive and retail groups implore Congress to intervene, saying a rail shutdown could threaten everything from global grain supplies to shipments of goods related to Christmas holiday shopping.

White House press secretary Karine Jean-Pierre said the administration is asking truckers and air shippers to assist should rail service cease and also is considering invoking emergency authorities. Jean-Pierre added that the administration is hosting daily interagency meetings to assess which supply chains and commodities are at highest risk.

The White House has told railroads and unions that “a shutdown is unacceptable and will hurt American workers, families and businesses, and they must take action to avert it,” a White House official told Reuters, speaking on condition of anonymity.

One key issue is ensuring “continued distribution of vital hazardous materials that depend on rail transport, such as chlorine for water treatment plants,” this official added. Railroads on Monday stopped accepting shipments for hazardous materials such as chlorine and chemicals used in fertilizer so they are not stranded in unsafe locations if rail traffic stops.

The U.S. energy sector relies on railroads to move coal, crude oil, ethanol and other products.

Some railroads plan to impose additional restrictions that could impact food suppliers and online retailers that use intermodal services that connect ships, trains and trucks. BNSF, which serves the western U.S., said it will stop accepting refrigerated intermodal cargo. Norfolk Southern, which serves the eastern U.S., said it will stop accepting all intermodal shipments.

U.S. passenger railroad Amtrak, which uses tracks maintained by freight railways, is facing growing disruptions. Amtrak said it will cancel trains on seven more long-distance routes on Wednesday after it began canceling trains on four long-distance routes on Tuesday.

High stakes

The stakes are high for Biden, who has vowed to rein in soaring consumer costs ahead of November elections that will determine whether his fellow Democrats maintain control of Congress.

Biden appointed an emergency board in July to create a framework for settlement terms.

That has not happened since the early 1990s, when Congress sent the parties into final and binding arbitration.

Unions in the current talks have been offered significant pay increases. Three of 12 unions, representing about half of the 115,000 workers affected by the negotiations, have yet to sign deals. They are grappling with railroads over working conditions that they have said worsened after the industry slashed its workforce by almost 30% during the past six years.

Rail customers have said a shutdown will send them scrambling for alternative transportation and storage for everything from ammonia and fuel to cars and chicken feed.

It takes about four trucks to handle cargo in a single rail car. The United States does not have the estimated 467,000 trucks or the necessary labour to support such a shift. Beyond that, some cargo is too heavy or large to travel over the road.

A rail work stoppage could strike as U.S. farmers harvest corn, wheat and soybeans for export around the world, according to the National Grain and Feed Association.

“The economic damages across the food and agricultural supply chain would be swift and severe,” the group said.

Justin Louchheim, senior director of government affairs at the Fertilizer Institute, which represents companies that rely on ammonia supplies, added: “When you contemplate global food security, I’d say it’s a crisis right now.”

Automakers worry that a disruption could empty dealer showrooms by stranding cars in the wrong places. Toyota said it would have to store vehicles and “many locations would run out of storage within two to four days of production.”

— Reporting for Reuters by David Shepardson and Lisa Baertlein; additional reporting by Ben Klayman, Joe White, Laura Sanicola, Stephanie Kelly, Arathy Somasekhar and Tom Polansek.

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The order came ahead of a deadline next week to intervene in nationwide U.S. railroad labor talks covering 115,000 workers, or open the door to a potential strike or lockout that could threaten an already-fragile economy and choke supplies of food and fuel. Read full story

If the president had not created the Presidential Emergency Board (PEB) before 12:01 a.m. ET on Monday, the railroads and unions could have opted for operational shutdowns or strikes, respectively. The order becomes effective Monday.

The board “will provide a structure for workers and management to resolve their disagreements. The board will investigate the dispute and, within 30 days of its establishment, deliver a report recommending how the dispute should be resolved,” the White House said.

Talks between major freight railroads, including Union Pacific and Berkshire Hathaway-owned BNSF, and unions representing their workers have dragged out more than two years.

The order triggers a “cooling off” period so the two sides can work toward settlement.

U.S. business groups representing retailers and food and fuel producers in letters to Biden have warned that failing to appoint a PEB would be “disastrous” for the softening economy.

Railroads move everything from Amazon packages to fuel oil and soybeans, and a shutdown of any kind could send prices for necessities higher and upend battered supply chains.

— Reporting for Reuters by Chris Sanders and Lisa Baertlein.

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The Minneapolis company said Tuesday it plans to spend US$350 million to build an integrated crush plant with capacity to handle 1.1 million tonnes of canola per year and is “engaged in discussions with other interested financial and industry players to fund the project.”

The plant, expected to be up and running by summer 2024, would be adjacent to the company’s grain terminal near the U.S. border at Northgate, Sask., about 60 km southeast of Estevan.

Ceres’ proposed crush plant would have capacity to refine over 500,000 tonnes of canola oil per year to supply the food and biofuel markets, the company said.

“While there are multiple drivers contributing to this demand, the most important is the movement towards green energy and the need for vegetable oil as feedstock for the production of renewable diesel,” Ceres CEO Robert Day said in a release.

“We have been analyzing canola crush at Northgate for several years as its location along the Canada-U.S. border is ideally located to originate canola seed from our farmer partners, and with a direct connection to BNSF Railway, it provides the most efficient access to the U.S. market and U.S. ports.”

Ceres’ Northgate grain terminal already includes a 2.7 million-bushel shuttle-loading grain elevator and two 120-car loop tracks, which provide it with “construction-ready” infrastructure and shorten the new project’s timeline, he said.

Ceres said it expects the plant to lead to the creation of over 50 full-time jobs in Saskatchewan — where it will enter an increasingly crowded playing field for canola processing.

Winnipeg grain handler Richardson International, for one, announced in March it plans to about double the capacity of its canola crush plant at Yorkton, Sask. to over 2.2 million tonnes per year.

Last month, grain handling heavyweights Cargill and Viterra separately announced plans to build major canola crush plants at Regina, and Federated Co-operatives (FCL) announced a deal to buy the assets of renewable diesel processor True North Renewable Fuels.

FCL had said it was interested in processing renewable diesel next to its its major fuel refinery complex in Regina. However, that city’s land deal with Viterra for its crush plant site stands to break up the available land for such a project.

Major markets

Jim Titsworth, Texas-based BNSF’s director of agricultural development, said in Ceres’ release Tuesday that demand for renewable diesel feedstocks is “rapidly growing” and the Northgate site has “a unique location, both in Canada’s canola-growing region and with direct rail access to the major renewable diesel and food processing markets via BNSF’s network.”

The same rail network, he said, “also results in advantaged animal feed market access for canola meal.”

Ceres’ grain terminal was developed as part of a larger hub the company operates at Northgate, where it also handles commodities such as fertilizers and propane.

U.S. grain firm Scoular had planned in 2013 to build and operate the grain facility within the larger Ceres hub, but Ceres in 2014 cancelled that arrangement and moved to build the grain facility on its own.

Ceres — which already had set up a 2.3 million-bushel capacity grain terminal on the Welland Canal at Port Colborne, Ont., at a former Robin Hood flour mill it bought from Cargill in 2009 — has since expanded further into Prairie grain, oilseed and special crop handling and processing.

Its Prairie assets include the grain handling and soybean crush assets of Manitoba grain firm Delmar Commodities, which it bought in 2019, and a former Cargill grain elevator it bought last year north of Tisdale in northeastern Saskatchewan.

Other related Ceres assets include a 25 per cent of Saskatchewan shortline Stewart Southern Railway; a 17 per cent stake in Canterra Seeds; a Lake Superior terminal at Duluth; and grain terminals at Minneapolis and Shakopee, Minn.

To raise funds for the Northgate crush plant, Ceres said it will work in tandem with its own shareholders including New York-based firms VN Capital Management and Highbridge Capital Management and Minneapolis-based Whitebox Advisors. — Glacier FarmMedia Network

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In letters to the CEOs of the railroads, dated Friday and posted Monday on the U.S. Surface Transportation Board’s (STB) website, the regulator requested locomotive and employee numbers, and asked whether the railroads have sufficient numbers of each to meet demand.

The STB said last week it would start meeting with customers next month, signaling the agency could be open to new paths to relieve shipper pain.

The letter signed by STB acting chairman Ann Begeman and vice-chairman Deb Miller cites the regulator’s “increasing concerns regarding service across the rail network,” and asks for a service outlook for the near term and for 2018.

“Please discuss your expectations for service demand in 2018, ability to serve this demand, and whether internal projections for demand in 2018 have been accurate based on actual volumes year-to-date,” the letters said, among other requests.

The letters were sent to the CEOs of Union Pacific, BNSF Railway, CSX, Norfolk Southern and Kansas City Southern. They were also sent to the CEOs of Canada’s two major railroads, Canadian National Railway and Canadian Pacific Railway, which have significant U.S. operations.

A spokesman for CN said the railroad has “acted aggressively to address service issues… that have developed in the face of significant volume increases across our business.” It said those included leasing locomotives and raising planned 2018 capital expenditures by $500 million, to $3.2 billion.

A Norfolk Southern spokeswoman said the railroad would “respond directly to the STB.”

CSX has been reporting weekly service data to the STB since August following disruptions last summer and a spokesman said the railroad has consistently shown “significant improvements across all key metrics.”

The other railroads did not immediately respond to requests for comment.

As U.S. economic growth has revved up, railroads and truck fleets have not expanded capacity to keep pace — a decision applauded by Wall Street.

The drive for cost cuts and higher margins at U.S. trucking and railroad operators is pinching their biggest customers, forcing the likes of General Mills and Hormel Foods to spend more on deliveries and consider raising their own prices as a way to pass along the costs.

— Nick Carey is a Reuters correspondent based in Detroit.

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Pipeline Foods — which has hung out its shingle as a buyer of organic, non-GMO wheat, pulses and oats for food and feed — announced Tuesday it has bought a CHS elevator at Lignite, N.D. The community is about 17 km south of the Canada/U.S. border crossing at North Portal in southeastern Saskatchewan.

The Lignite elevator, which has capacity for 3,500 tonnes, “will supplement Pipeline Foods’ storage and origination program in Saskatchewan, which will increase efficiency and allow Pipeline Foods to grow its volume and customer base in the region,” the company said in a release.

The company previously noted organic grain production has “grown steadily” in southern Saskatchewan in response to consumer demand.

Pipeline CEO Eric Jackson said the North Dakota site gives the company its “first primary collection point for organic grain, and the capability to connect this grain supply with food companies and manufacturers across the U.S.”

The company, which set up earlier this year with backing from players such as New York agribusiness investment firm Amerra Capital Management, announced last month it had bought its first elevators at Wapella and Gull Lake, Sask.

The Lignite elevator, which has access to both BNSF and Canadian Pacific Railway (CP) track, is expected to run throughput of 25,000 tonnes of grain during 2018, the company said.

U.S. agriprocessing co-operative CHS had been handling malting barley at Lignite and operating the facility as part of its CHS SunPrairie division.

“The elevator at Lignite is an old facility which is too small and inefficient for conventional crops in today’s market, and most similar elevators have already been closed and torn down,” Dan Folske, North Dakota State University’s extension agent for Burke County, said in Pipeline’s release.

Shifting the elevator to handle organic grain, he said, “should mean that it has a viable future for years to come, with corresponding jobs and property taxes for the city of Lignite and Burke County.”

Pipeline reiterated Tuesday it will commit between $300 million and $500 million over the next three to five years “to build a better, more sustainable supply chain in agriculture.” Terms of the Lignite deal weren’t disclosed. — AGCanada.com Network

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Regina-based Viterra said Monday it has closed its acquisition of Omaha-based Gavilon’s Grand Forks site for an undisclosed sum, and plans “immediate capital upgrades” for the elevator.

The Grand Forks site, which was part of the Peavey Co. grain handling network before it became part of Gavilon in 2008, today has about 140,000 tonnes of storage capacity and two truck receiving pits, plus a grain dryer.

The elevator also includes a 110-car rail spot, served by BNSF Railway.

Glencore-owned Viterra’s other assets in the North Dakota market include special-crop handling facilities at Minot and Ray, about 150 km west of Minot.

The company also has a joint venture stake in a General Mills facility at Northgate, N.D., just south of the Saskatchewan border near Estevan.

Gavilon, owned by Japanese trading firm Marubeni since 2013, has limited operations in Canada, including two feed transload and storage sites in Alberta and one in Quebec. — AGCanada.com Network

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