USDA chief says urged Buffett to ready BNSF for record crops

Washington | Reuters — U.S. Agriculture Secretary Thomas Vilsack met with Warren Buffett last week to urge the billionaire investor to make sure his BNSF railroad is ready for an expected record corn and soy harvest this year.

Vilsack said on Tuesday that Buffett, who heads the sprawling conglomerate Berkshire Hathaway, recognized the challenge and indicated his company was taking steps.

“I said, ‘Warren, you’ve got to make sure that your railroad understands what’s going on here,'” Vilsack said he told Buffett during a 45-minute conversation. “There is pressure now, but as soon as this crop is harvested, there will be more pressure.”

Speaking at a conference sponsored by Growth Energy, a biofuel trade group, Vilsack said BNSF was making “significant” investments. “It’s a long-term issue.”

Backlogs along U.S. rail lines became a major concern for a number of commodities markets this year.

In June, for example, U.S. officials ordered BNSF and Canadian Pacific Railway (CP) to report their plans to clear a backlog of grain cars after months of service delays blamed on harsh winter weather and high freight demand.

BNSF is a unit of Berkshire Hathaway. The railroad, which was struggling from the Great Recession when Berkshire bought it for US$26 billion in 2010, returned a $3.8 billion profit last year.

One major source of profit, oil by rail, has become controversial, with some commodities producers saying railroads, including BNSF, are prioritizing the shipments of crude at the expense of other cargo. This has been denied by BNSF.

Berkshire Hathaway did not immediately reply to a request for comment on Tuesday.

Vilsack on Tuesday praised BNSF for its work to improve service for farmers this year.

“If we had made as much progress with Canadian Pacific, we’d be in a little bit better place than we are today,” he said.

In an email reply to Reuters, CP said it was investing in infrastructure and hiring employees to meet growing demand.

“CP is disappointed with the Secretary’s comments as they do not reflect the facts that CP moved record amounts of grain in the Midwest last week and expects to be current with demand heading into the fall harvest.”

The statement said CP was changing its car supply system “to give clients more control, consistency and transparency in the process. This will also promote better alignment between the marketplace and railway service expectations.”

— Reporting for Reuters by Ayesha Rascoe in Washington; writing by Luciana Lopez in New York.

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