The Big Back-Up

John Troyer, owner of a grain elevator in southern Illinois, is slowly going broke. Every day, interest on the $550,000 loan he took out last November to purchase 300,000 bu. of corn is mounting, eating away at his 4 1/2-c--per-bu. margin of profit. The grain has already been sold, but Troyer will not be paid until it is delivered--and there is no way to get it delivered. Railroads have promised him 87 covered hopper cars to ship the corn, but the cars have not shown up.

Troyer is only one of thousands of farmers and elevator owners caught in the great rail tie-up of 1973. In Illinois alone, the state's agriculture department estimates, farmers have had 300 million bushels of last year's grain harvest ready for shipment for months, but cannot move it to market. There is a demand for some 12,000 grain rail cars, but only 5,000 are currently available.

In desperation, some elevator owners, like Troyer, have been forced to ship grain by truck, though that method is so expensive that it eliminates all chance of making a profit on their investments. Ultimately, says Robert J.

Wilson, the state's director of agriculture, the rail shortage will be translated into another assault on housewives' food budgets: "We've got a surplus of [old-crop] grain on the farm, but a shortage in the market. This drives up grain prices, which has a direct bearing on livestock feed-lot operators and eventually on consumers." Other commodities are being similarly afflicted; for instance, skyrocketing lumber prices have been blamed partly on a heavy demand for railroad flatcars to haul wood from mill to housing sites.

The congestion began late last summer, after the U.S. agreed to sell Russia 733 million bushels of grain, putting an unexpected strain on railroad facilities. The situation worsened when delays in transferring the grain from railroad cars onto ocean carriers held up Russian shipments until November --just in time to coincide with one of the biggest grain harvests in U.S. history and an unprecedented demand by European countries for American produce. The big surge of new orders further clogged U.S. harbors with ships, delaying unloading of grain-laden hopper cars even more. Then Mother Nature stepped in, sending the Mississippi over its banks and disrupting rail operations throughout the Midwest.

Even without this spring's peculiar catastrophes, there might still have been a rail capacity crisis. Simply put, the roots of the big back-up are a shortage of railroad grain cars and the inefficient methods by which those already in service are operated. The railroads are trying to remedy the first problem by ordering record numbers of grain cars.

Such firms as Pullman Inc. are operating at full capacity for the first time in years, but it will be months before they can catch up with the demand.

Only time will tell what the railroads can do to cut through the maze of Government and union rules (for example, laws that prohibit rail crews from working more than twelve hours a day even with overtime) that prevent the most efficient use of cars. A consortium of railroaders, union leaders, elevator operators and farm economists who met at the Grain Movement '73 Conference in Chicago last week placed most of the blame for the jam on the Federal Government for overloading the rails with the Russian grain. They think new laws are needed to modernize and better coordinate the interlocking parts of the transportation system. But the remedies, even if adopted, will come far too late to unsnarl the present tie-up.

This file is automatically generated by a robot program, so reader's discretion is required.