South Dakota agriculture accounts for about 20 percent of the state’s total economic activity. With an estimated annual crop production impact of $13.3 billion and an annual livestock production value of $8.6 billion, there are significant opportunities for increasing producer and state revenues.
Agriculture and transportation are directly related and dependent upon one another. South Dakota will be developing more value-added agriculture over the next eight years in the form of ethanol, soybean processing, milk production, cheese production, animal production and other industries. Our state has made substantial improvements to our transportation system to benefit agricultural products in recent years, and the Marty Jackley Rail Initiative builds on that momentum.
Most transportation of bulk products to markets is provided by rail, and we have 1,839.5 miles of operating rail in South Dakota. Perhaps more than any other development, railroads have grown our rural communities. Small towns along rehabilitated railroads have been revitalized by the development of new industry along rail lines. Producers have also realized a higher price due to reduced transportation costs and competition for their crops. However, South Dakota has lost service on 75 percent of the 4,420.5 miles of rail that used to be in operation. This is a trend we should reverse.
Efficient transportation directly benefits our producers, citizens, industry, and state and local government. Railroads are a critical yet sometimes overlook component of that infrastructure.
TOGETHER, WE WILL:
- Make available more Railroad Trust Funds. The RR Trust Fund is a revolving loan similar to the REDI Fund, but has a rail directive. The demand for these funds is high, and unfortunately greatly exceeds what is available. According to the State Rail Plan, over $500 million in identified projects ranging from new industries, upgrades, repair, maintenance and development could happen if capital is made available.
- Build the RCP&E/BNSF Wolsey interchange. Currently, the Rapid City, Pierre and Eastern Railroad (RCP&E) is shipping product via manifest traffic and unit train traffic from origination points on the RCP&E to Wolsey to interchange with the BNSF railroad. These products travel to both domestic and export markets. The Wolsey interchange was constructed for unit train exchange between shortline railroads and the BNSF. The yard contains two interchange tracks of 8,000 feet, allowing for a “in” and “out” track. These tracks are used for both manifest and unit train traffic which create congestion. To create efficiency, a third 8,000-foot track needs to be built. This will allow for the RCP&E to take manifest cars from industries that do not have unit train capacity and create a unit train for BNSF with a single destination.
- Investment in a third track at the Wolsey interchange will achieve the following:
- Create fluidity in the Wolsey yard.
- Improve efficiency for the RCP&E railroad.
- Allow RCP&E to build unit trains for agriculture product shippers on their line.
- Enable industries east and west of Wolsey to benefit from more efficient transportation.
- Help smaller industries to ship at reduced unit train rates.
- Construct an interchange track at Napa Junction. This interchange will allow shippers on the Napa line to access RCP&E, CN, CP and UP markets. Once this interchange is constructed, rail development going west has the potential to bring further growth and demand for commodities, which creates higher crop prices in our rural counties.
- Encourage, support, and promote state-owned rail lines. Experience shows that when it comes to state-owned lines, the rail improvements of over $60 million created over $100 million of development along the rail line within five years and still continues to create capital investment and high-paying jobs.
- Support improvements to privately owned rail lines. The majority of products shipped in and out of South Dakota by rail originates on privately owned railroads. The Jackley administration will support these railroads by being a resource, a partner, and an advocate to help obtain federal grants.
In addition to providing transportation for products moving in and out of the state, railroads remove many truck miles from South Dakota highways. Better access for producers and manufacturers to transloading sites and terminals will improve productivity and reduce transportation costs. Reducing bottlenecks, adding meet/pass sidings, and adding transloading sites and terminals will reduce highway maintenance costs, provide cheaper transportation costs for agricultural product, and reduce the distances producers must travel to get their product to market. The majority of South Dakota crops are shipped out of state. South Dakota needs more value-added industry that can utilize our products right here, but we must also have the infrastructure to accommodate growth.
The benefit to South Dakota’s producers can be realized in the form of strengthened basis. South Dakota produced and estimated 787 million bushels of corn and 241 million bushels of soybeans in 2017. An increase of $0.01 in cash price would bring an additional $10 million to South Dakota producers. Increasing demand locally will increase the basis and create new jobs and products utilizing South Dakota products—and it all starts with the right infrastructure, leadership, and vision to make it happen.