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Oil traffic may delay U.S. fertilizer shipments

by

(Reuters) - Increasing use of railroads to ship crude oil could disrupt fertilizer cargo this spring as Midwest farmers prepare for planting, U.S. agriculture leaders warn, even as one railroad said on Monday it will take steps to ensure timely deliveries.

The planting season is nearly at hand in states such as the Dakotas and Minnesota, where soybean, wheat and corn growers will lay millions of tonnes of fertilizers like nitrogen and potash that mostly arrive by train.

Those supplies are not stockpiled near the fields and the farmers rely instead on steady deliveries by rail.

"Since we don't store fertilizer, the next very few weeks are incredibly important for South Dakota farmers," said state Agriculture Secretary Lucas Lentsch.

But fertilizer cargo is being waylaid as railroads are clogged by trains carrying crude and other freight and that could ultimately jeopardize the fall crop, farmers have warned lawmakers and other officials.

"If rails are too congested for fertilizer in the weeks ahead, the problem will solve itself because there won't be anything to harvest in the fall," said Dave Andresen of Full Circle Ag, a farm services company in South Dakota.

BNSF Railway Co said on Monday it had assigned more locomotives and train crews to expedite fertilizer deliveries so nutrients can arrive at delivery points on time.

"We understand the shortness of the season and the necessity of timely delivery," the rail operator said in a notice to farm customers.

CHS Inc, a top farm supplier in the Upper Midwest, expects to help meet near-term demand for nutrients but is concerned supplies could dwindle a little later in the growing season.

"In the early weeks of planting, farmers need a recharge and the fertilizer sheds need to be stocked up before then," said Jeff Greseth, the company's head of crop nutrition.

Supply lines have been snarled in part by clearing grain bins of the remainder of last year's crop and recovering from harsh winter weather.

Barges ferrying dry fertilizer on the Mississippi River and into Minnesota have found some waterways frozen over for longer than normal, Greseth said.

"The ice has some deliveries running a week, 10 days late," he said, but an increase in oil-by-rail traffic has also weighed on the train network.

Rail shipments of crude oil have been on the rise in North Dakota's Bakken energy patch, where production is nearing 1 million barrels per day, and roughly 72 percent of that fuel moves on the tracks.

Last week, farmers beseeched federal officials to make sure rail operators such as BNSF and Canadian Pacific Railway Co were giving them enough access to the tracks.

The Surface Transportation Board, a regulatory agency that arbitrates rail disputes, has heard from farmers across the upper Midwest that a shortage of rail cars and delivery delays were endangering their livelihoods.

BNSF executives have said service will improve in the years ahead along with investment and an expected uptick in farm, crude oil and other commodity shipments. (Reporting By Patrick Rucker in Washington and Julie Ingwersen in Chicago; Editing by Peter Galloway)

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