World Grain - January 2018 - 63

Table 1: IEPC and IDOT Branch Rail Line
Preservation Programs, 1974-2005
Miles of line upgraded
Total actual cost
Average cost per mile

IEPC
271

IDOT
1,713

$6,198,523

$150,676,157

$22,873

$87,960

Total cost paid by
Shippers

$1,341,000 (22%)

$35,008,506 (23%)

Railroads

$1,497,917 (24%)

$52,221,459 (35%)

State of Iowa

$3,359,606 (54%)

$27,705,241 (18%)

$0 (0%)

$35,740,951 (24%)

159

243

Shippers

$11,973

$23,815

Railroads

$13,374

$35,525

State of Iowa

$29,996

$18,847

Federal government
Miles abandoned
Percent abandoned
Cost per mile preserved by

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with 112 pounds per 36 inches of rail.
Class I railroads have made major progress in upgrading their track. Only 484 miles of Iowa rail lines
are unable to carry 286,000-pound cars. Seventy one
percent are located on Class I railroads while the remaining 141 miles are located on Class II and III railroads. Class I railroads are generally considered capable of funding their own capital projects. However,
self-funding is more challenging for Class II and III
railroads. Two Iowa ethanol plants are located on Class
III rail lines that are not capable of carrying these heavy
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money to the railroads to upgrade the track. The railURDGVFRXOGXVHWKHHI¿FLHQF\JDLQVWRUHSD\WKHORDQV

CONCLUSIONS
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companies mean that it is unlikely that government
Table 1 compares the results of the IEPC and IDOT procedures.
programs are or will be needed to preserve branch rail
Source: Iowa Department of Transportation. Iowa Rail Assistance Project Status Report. 2005.
lines in Iowa and probably in other Corn Belt states. If
100 miles or more. This enables farmers to bypass local exports become the major market for corn, and if Class
grain elevators located on branch rail lines, and haul ,,DQG,,,UDLOURDGVDUHXQDEOHWR¿QDQFHWKHXSJUDGLQJ
their grain directly to ethanol plants, feed mills and to of their lines to carry 286,000 pound loaded cars, altergrain elevators on main lines.
native sources of capital include:
Iowa grain cooperatives have under gone mega
x Shippers located on those lines could loan the
mergers. As of April 2016, there were only 55 grain
needed funds to the railroad. Class II and III railcooperatives in Iowa, down from about 300 cooperaURDGVFRXOGWKHQXVHWKHHI¿FLHQF\JDLQVIURPWKH
tives in 1980. This means that most cooperatives own
upgrading to repay their loans.
and operate multiple grain elevators. The largest Iowa
x Short lines could try to become part of a holding
cooperative operates 65 grain elevators and is served
company.
by seven railroads. Its 7,000 members can choose to
x Short lines could be repurchased by Class I
deliver grain at any of the 65 elevators.
railroads.
Grain bids vary among the elevators depending on
If these alternatives are impossible, these lines
the available markets. Some of its elevators without should be evaluated to see if they are economically virail service have expanded their receiving and storage able. Improved economic models should be developed
facilities to enable them to serve nearby markets. The so that no lines upgraded with government funds would
function of the new addition is to offer grain storage to likely be abandoned.
farmers and provide corn and soybeans to local truck
If upgrading is uneconomic, the line should be
PDUNHWV7KXVJUDLQHOHYDWRUVFDQIXQFWLRQSUR¿WDEO\ abandoned.
without rail service and there is no need for governA longer version of this article has been published in the
mental programs to preserve rail service to grain shipJournal of the Transportation Research Forum.
pers in Iowa.
On the other hand, railroads are shifting to
We want to hear from you - Send comments and inquiries to
286,000-pound cars that can only move safely at stanworldgrain@sosland.com. For reprints of WG articles,
e-mail reprints@sosland.com.
dard operating speeds over 112-pound rail. Increasing
shipments of ethanol and DGS (dried grains from the C. Phillip Baumel is a Charles F. Curtis Distinguished Professor and Emeritus
production of ethanol) by rail have partially offset the
Professor of Economics at Iowa State University. He may be reached
decline in corn shipped by rail. Ethanol and DGS are
at pbaumel@iastate.edu. Craig O'Riley is retired after 35 years as a
transportation planner at the Iowa Department of Transportation.
increasingly shipped in 286,000-pound cars, which
Federal government
Total

$24,313

$55,344

$102,501

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