November 4, 2009, 11:52 AM ET
By Michael Corkery
Few states have more at stake in Warren Buffett’s acquisition of Burlington Northern Santa Fe than Montana. The company owns 90% of the state’s tracks, which are the primarily means for Montana farmers and coal miners to ship their goods across the country.
To get a sense of how the deal is being received in the Big Sky state, Deal Journal reached out to Alan Merrill, president Montana Farmers Union, who can watch Burlington Northern’s grain cars rumble along outside his Great Falls, Mont., office six or seven times a day.
For years, Merrill says, the state’s 11,000 farmers have complained about the monopoly that Burlington Northern holds over rail shipping in Montana. He hopes Buffett, who lives in the middle of corn-growing country in Omaha, Neb., will be sympathetic to farmers’ concerns about what they consider to be high rates on their barley and wheat shipments.
Deal Journal: How have farmers reacted to the deal?
Merrill: The farmers want to know if there will be an easying up on shipping rates. They want to know that Burlington Northern is not going to be a dictatorship. We have been a captive shipper for as long as I can remember. They are waiting to see what Mr. Buffett will do.
DJ: Realistically, what can Buffett do? The farmers will still be captive shippers.
Merrill: We’d like it if Mr. Buffett would come here and visit our farms and see what we are doing and then he would understand our issues with shipping rates. Instead of just saying this is what we are going to charge; take it or leave it.
DJ: Has there been any legislation proposed in Congress to break up the rail road monopoly?
Merrill: Yes. But it hasn’t gone anywhere. Everyone wants the government to jump in and help everything. It’s easy to say to Congress get Burlington Northern off our back. But we shouldn’t rely on the government all the time.
DJ: What’s your biggest complaint with shipping rates?
Merrill: Over the past two years, Burlington Northern has raised shipping rates because diesel fuel prices went up (The trains are diesel powered). The prices would go up 20 cents overnight. But when diesel prices went down, it took four months for shipping rates fall only two cents.
DJ: How do wheat and barely prices affect the shipping rates?
Merrill: Last spring, we were getting $10 and $12 a bushel for wheat and farmers were happy campers. A lot of farmers had planted corn and there was a shortage of wheat and barley. Shipping rates went up and so did fertilizer costs. But wheat prices have come down. There were strong crops in Brazil and Argentina and Russia has stopped imports. We have a lot of wheat sitting around on farms here. But the shipping rates haven’t adjusted.
Related Links
Share Investor Blog - Stockmarket & Business commentary
Share Investor New Zealand Business News- Get more business news
Discuss this topic @ Share Investor Forum
Share Investor's Daily Forex Updates
Recommended Amazon Reading
 | Warren Buffett and the Interpretation of Financial Statements: The Search for the Company with a Durable Competitive Advantage by Mary Buffett Buy new: $16.47 / Used from: $13.50 Usually ships in 24 hours |
 | Warren Buffett Speaks: Wit and Wisdom from the World's Greatest Investor by Janet Lowe Buy new: $13.57 / Used from: $4.2 |
Kindle 2/Kindle DX: Amazon's New Wireless Reading Devices (Latest Generation)
0 comments:
Post a Comment