What happen to Milwaukee Road?

[MichaelSol]

For those that were compellingly interested in the year 1974, here are specific figures for Moore, Montana. Both MILW and BN served that area. MILW was the rate-maker and BN charged whatever Milwaukee charged. Moore is useful as it has a rate on BNSF today. MILW carried Moore wheat to Pier 86 in Seattle, and BNSF has a rate cite to King Street. So, we have very good data.

I designed a nifty PPI Rail Cost Inflation Calculator (Excel), if anyone wants it, send me an email. I input the data and an interesting result showed up.

The data is this:

1974 actual carload rate: $1,488.
2005 PPI inflation adjusted rate: $2,970.
Actual BNSF 2005 tariff (April 25, 2005): $3,156
Today's rate, Moore to Seattle: $3,271.

The average rate for a comparable shipping distance elsewhere on the BNSF system: $2,550. The lowest rate charged for a carload of wheat the comparable shipping distance: $2,150.

I agree rates have gone "way, way" down for most shippers, and down some for ag shippers, but they have specifically gone up for Montana wheat shippers.

Hopefully that specific data puts to rest Strawbridge's phony argument that rates have gone "way, way" down, the baloney that BNSF has been "generous" with anyone in Montana, or ... that he knows anything about what he is talking about.

[greyhounds]

QUOTE: Originally posted by MichaelSol

For those that were compellingly interested in the year 1974, here are specific figures for Moore, Montana. Both MILW and BN served that area. MILW was the rate-maker and BN charged whatever Milwaukee charged. Moore is useful as it has a rate on BNSF today. MILW carried Moore wheat to Pier 86 in Seattle, and BNSF has a rate cite to King Street. So, we have very good data.

I designed a nifty PPI Rail Cost Inflation Calculator (Excel), if anyone wants it, send me an email. I input the data and an interesting result showed up.

The data is this:

1974 actual carload rate: $1,488.
2005 PPI inflation adjusted rate: $2,970.
Actual BNSF 2005 tariff (April 25, 2005): $3,156

A average rate for a comparable shipping distance elsewhere on the BNSF system: $2,550. The lowest rate charged for a carload of wheat the comparable shipping distance: $2,150.

I agree rates have gone "way, way" down for most shippers, and down some for ag shippers, but they have specifically gone up for Montana wheat shippers.

Hopefully that specific data puts to rest Strawbridge's phony argument that rates have gone "way, way" down, the baloney that BNSF has been "generous" with anyone in Montana, or ... that he knows anything about what he is talking about.

Nope - I won't take unverified data from you. Your numbers change daily. According to you the rate from Great Falls was $1,550 in 1974 or 1980, or $1,600 in 1980 depending on the date of your post. Now it's $1,488 from someplace else.

I'm willing to agree that the rates in the Whiteside & Associates study are accurate and correct. We can go from there. Are you willing to do the same?

Ken Strawbridge

[MichaelSol]

The data comes from station revenue reports, MILW Road, Office of VP Finance, and rail tariffs, BNSF. All published stuff. The point of identifying a single reference to a single year, and pretty much a single elevator, is to standardize the discussion. There's the data, deal with it.

Basically, after stumbling around for ten pages not knowing anything about gateways, and what reporting marks are, then three pages not knowing what inflation indices were, now you want to the change the subject, yet again. I'm tired of it. It's a Milwaukee thread.

You've hashed out your hatred of the Milwaukee, of Montana farmers, of the Governor of Montana and whatever randomly pops into your head time and time again.

You make all this stuff up because you were never involved in the Milwaukee, in the grain industry, or in Montana agriculture. You know zero. You keep proving it.

We know how you "feel." No need to rehash it again. It's the same baloney over and over, thread after thread.

[greyhounds]

Well, I'm convinced that Mr. Sol will not agree to use the rates cited in the Whiteside & Associates study of October, 2005 for three reasons:

1) They are readily available to everybody on the Internet making them readily verfied

2) They won't "move around" at his will - he can't change dates, dollar amounts, and origins at his will.

3) They show that the BNSF has acted in a very responsible manner with regards to charges on wheat being shipped from Montana. Their charges declined dramatically in inflation adjusted terms and those charges tracked the "Rail Cost Adjustment Factor". What BNSF "kept in its pocket" was their efficiency gains. Something perfectly reasonable for them to do.

So Sol's got to get as far away from those numbers as he can as quickly as he can. They're favorable to the BNSF. And we all can check them.

source: "White Paper & Briefing Paper For Governor's (sic) Schweitzer's Meething Witth Vice Chairman Doug Buttrey, STB", Whiteside & Associates, Billings, MT. October, 2005. p. 14.

[MichaelSol]

I have probably three volumes of material from Whiteside & Associates over the past thirty years. Even though they produce good stuff, I rarely cite them because I think they've long needed a good statistician and don't have one.

The paper's earliest data date is 1981. How does that compare anything to competitive rates during Milwaukee Road days? The charts and graphs are only for BN/BNSF and are entirely captive shipper rates. Not a Milwaukee rate in sight. The 1981 rates caused the McCarty Farms rate discrimination case to be filed. What in the h*** do those charts show about anything relevant to this, a "Milwaukee," thread?

This is pathetic, you are now reduced to comparing BN captive shipper rates to BN captive shipper rates to show ... that this "proves" something about the Milwaukee Road? There is no connection whatsoever.

Actually, what it shows is that you lost the point on Milwaukee rates, so you've tried to change the subject again.

Here's the actual link to the paper so readers can see that what you say and what the paper says are two quite different things:

http://rscc.mt.gov/docs/White_Paper_Meeting_10_05.pdf

I don't think you read the paper ... or you didn't understand it.

Another interesting link:

http://governor.mt.gov/brian/surface_transportation_board_04-27-06.pdf

Now, you've repeatedly hijacked threads to deal with your anti-Milwaukee, anti-Brian Schweitzer, anti-farmer obsessions.

We've been through it. You can't support your case because it is based on an emotional pathology, no actual knowledge of the subject matter nor experience in the industry. Get over it and move on.

[n012944]

I read the link to the Montana Gov statement and I have a few thoughts. In the area that I live I am at the western edge of the suburbs, so much in fact that if I go 5 miles east I am surronded by Old Navy's, Wal-Mart's and the like. Now if I go 5 miles west I am in corn country. Now to the west of me there is a large gorcey store, the only one in the area. To the east there is a grocey store owned by the same company, along with several others in the area. The grocery store to the east has MANY sales, many very cheap, with lots of products priced very low to get you in the door. The store to the west has very few sales, its product sells for more, and does not have as good of deals. Now is the store to the west doing anything illegal? NO!!! This is the bases of capitalism and out economy. If these poor Montana farmers are so hard up maybe they should do what many farmers have done around the country and formed a coop, bought the branch lines from the BNSF, and operated it themselves. However I think they know that they would lose money, so they go for a goverment handout.


Bert

[MichaelSol]

The grocery stores are not a regulated industry. Railroad rates to captive shippers are, in fact, regulated by law. That was part of the "deal" regarding deregulation under the Staggers Act. The complaint is that the law is not being enforced, and that the deal is being reneged upon. And its not just Montana wheat shippers: captive shippers of all stripes. The National Industrial Transportation League, for instance, has taken a strong position regarding what it believes to be inadequate regulation to protect captive shippers under the existing law compelling the STB to do so. The Alliance for Rail Competition represents business ranging from wheat and barley growers of several states to Dow Chemical, power companies, glass companies, a very diverse collection of businesses and industry.

When you know more about it, you will understand that a broad section of American industry and agriculture is frustrated by what they see as a willfull violation of a specific law enacted as part of the national agreement to deregulate the rail industry.

The Staggers Act, you should note, had nothing to do with Grocery Stores.

[n012944]

As I said before, don't wait for goverment hadouts, don't complain about the lack of service, go out, buy the branch lines, buy and rebuild the PCE, and all the problems will be "solved." The Iowa Interstate was bought from the Rock Island estate buy a group of online shippers, the Heartland Corp, if I recall and was run for the online shippers. However I think that these shippers will soon find out that rates that they think are "fair" to them will not pay the bills on the railroad. You know I think that gas should cost $1.00 a gallon, it doesn't meen the oil companies will make money off selling it, but I think that that is a "fair" price.


Bert

[Anonymous]

QUOTE: Originally posted by n012944

As I said before, don't wait for goverment hadouts, don't complain about the lack of service, go out, buy the branch lines, buy and rebuild the PCE, and all the problems will be "solved." The Iowa Interstate was bought from the Rock Island estate buy a group of online shippers, the Heartland Corp, if I recall and was run for the online shippers. However I think that these shippers will soon find out that rates that they think are "fair" to them will not pay the bills on the railroad. You know I think that gas should cost $1.00 a gallon, it doesn't meen the oil companies will make money off selling it, but I think that that is a "fair" price.

Bert

I'm curious Bert, do you consider enforcement of the law a "government handout"?

[arbfbe]

I come back to check out this forum after a few months of self imposed exile and I note nothing has changed concerning the MILW or Montana threads here. Michael Sol is doing his best to enlighten the unwashed for which he is berated, called a liar and attacked for nearly every post.

n012944, ever been to Montana, ever looked at a railroad map of the state? Obviously not. Please do about 5 minutes of research and tell me which branchline the Montana grain growers can purchase to move their grain to their markets at Seattle, Tacoma or Kalama. Right, that imaginary branch line simply does not exist. Your proposed solution is nosensical. While pulling such an idea out of your rectal area may prove self satisfactory to you it adds absolutely nothing to the solution to the question and only proves you have failed to read closely any of the 22 pages of this thread as well as more than 40 pages of earlier threads.

I will ask you to please tell my where you have come up with the idea that Montana grain growers are looking for a government handout? This must have slipped out from the same place you were pulling out your branchline solution. All the Montana farmers are asking for is a rate for their grain where the cost to ship a bushel, car load or trainload is lower than the cost to move the same crop from a distance farther away from the markets on the west coast along the same route. They ask, "Why can a grower in Minnesota move a carload of grain from that state to Portland for less total cost while traveling through Montana than a Montana grain grower will pay to move an identical carload a shorter distance on the same tracks." This includes the terminal costs on both ends plus the mileage costs for both moves. Why they ask. They are not asking the taxpayers in Montana to subsidize their transportation fees in any way. They are not asking the BNSF to move their grain at a loss. They are not asking BNSF to require Minnesota growers to subsidize Montana growers rates. What they are asking is that BNSF quit requiring Montana growers to subsidize Minnesota rates. Fair is fair, that is all they are asking. READ the threads before you hit the enter key.

Greyhounds. What a piece of work. You demand more and more figures and when they are provided you trip over them, kick them around and then come to the conclusion that everyone and I mean everyone else is wrong. Stick with your directorship of the greyhound racing group. Now there is an industry with a bright future. Stick around long enough and you will get a feeling of how the thousands of MILW employees felt as their livelihoods slipped away.

There is NO SURPLUS CAPACITY in the Pacific Northwest rail lines at this point. If the PCE were still in operation it could easily handle 5-7 trains a day in both directions. The volume is there and the lines could have handles that level of traffic without any capital investment above just getting the tracks back into mainline standards. I am intimately familiar with the MILW mainlines in the most difficult sections in the Bitterroot mountains. I also know how much traffic can be pushed over an unsignalled helper grade in Nebraska when the coal boom hit. I can see how the MRL mainline over Mullan Pass moves even higher levels of train traffic right now. The MILW was viable when it was assinated and would very much be viable today. Milwaukee management made some incredibly stupid decisions. Building the PCE was not one of them, abandoning that trackage was. It was converse to every conclusion reached by anyone who did a thorough and professional analysis of the situation and seems to have been based upon data 'cooked' to meet the gut feelings of the managers in control. What a shame, what a waste of resources, what a loss to shippers and consumers today. So the counter argument offered here is that the PCE caused the MILW to go bankrupt three times. Which transcontinental railroad did not go bankrupt account building to the west coast? Certainly the UP did, the NP did, the CP did, the CN did, the MILW did. That leaves the ATSF and the GN. I do not know about the ATSF but the GN did not. So there you have it, the first bankruptcy just brought every transcontinental back to an even playing field. How many railroads went bankrupt during the 1920s and 1930s like the MILW did? Few railroads escaped a bankruptcy then so the second MILW bankruptcy was not out of lline given the industry performance of the time. Read the book, "The Nation Pays" to find that was not completely a market driven failure at the time. The final and third MILW bankruptcy is largely the result of poor management at the time. I think Michael Sol has put to rest the falacy the MILW could not attract enough business to keep the PCE in operation. Management squandered nearly every opportunity to keep the line viable and decided to focus on the least viable parts of the railroad in the Midwest. Lines that would require even more capital to bring up to 100 ton car standards, lines that moved even less traffic, lines that faced even more competition and lines that hauled even shorter distances than the PCE. Doesn't anyone even read the 60+ earlier posts on the topic before becoming a MILW PCE 'expert'? Obviously, for some posters, no.

That seems to be about all I have to offer. I guess I will just back away for another three or more months before checking back in. I do admire Mr Sol for spending hours of his valuable time to try to bring light to the darkness. I suspect his billable hourly rate exceeds that of many of the posters here, including mine. As one of my econ professors drille into us, when 'everyone just knows this to be true' then 'everyone' is probably wrong. The alleged fallacy of the MILW PCE has become part of American railroad folklore fostered by people who have never done the research to bring out the truth of the matter. It is just so much easier to just keep saying, "Everyone knows it is true". Here again, 'everyone' is just wrong. This is not a case of can't we agree to disagree? No. When one side is so obviously wrong such positions must be educated to bring about a more enlightened position. Black is black, white is white and those who will tell you it is proper to disagree upon those facts are plainly obscurant.

[n012944]

QUOTE: Originally posted by futuremodal

QUOTE: Originally posted by n012944

As I said before, don't wait for goverment hadouts, don't complain about the lack of service, go out, buy the branch lines, buy and rebuild the PCE, and all the problems will be "solved." The Iowa Interstate was bought from the Rock Island estate buy a group of online shippers, the Heartland Corp, if I recall and was run for the online shippers. However I think that these shippers will soon find out that rates that they think are "fair" to them will not pay the bills on the railroad. You know I think that gas should cost $1.00 a gallon, it doesn't meen the oil companies will make money off selling it, but I think that that is a "fair" price.

Bert

I'm curious Bert, do you consider enforcement of the law a "government handout"?

There are certain laws that the goverment has that I do think are handouts, this being on of them.


Bert

[n012944]

QUOTE: Originally posted by arbfbe

I come back to check out this forum after a few months of self imposed exile and I note nothing has changed concerning the MILW or Montana threads here. Michael Sol is doing his best to enlighten the unwashed for which he is berated, called a liar and attacked for nearly every post.

n012944, ever been to Montana, ever looked at a railroad map of the state? Obviously not. Please do about 5 minutes of research and tell me which branchline the Montana grain growers can purchase to move their grain to their markets at Seattle, Tacoma or Kalama. Right, that imaginary branch line simply does not exist. Your proposed solution is nosensical. While pulling such an idea out of your rectal area may prove self satisfactory to you it adds absolutely nothing to the solution to the question and only proves you have failed to read closely any of the 22 pages of this thread as well as more than 40 pages of earlier threads.

I used the Iowa Interstate as an example before and I will use it again. When the Rock Island shut down the shippers along the Rocks main line in western IL, and Iowa saw that they were going to rail service. They got together and bought the line( they might have leased it, I'm not sure on that) to ensure service.
Now the same option was available to the poor old Montana farmers that would have provided service to the ports that you brought up. They could have bought the PCE, at least the western half of it, and had their own little railroad, which they could have shipped the stuff for free if they wanted too. However because they were not forward enough to think of this, they missed out, and now they wanted the goverment to step in and help them. As for the branch lines you ask about, I was talking about the ones that the Montana Govenor was talking about in the link the Mr Sol gave. One of his complaints was the lack of service on the branch lines, and then the adbandonments of the lines. And one more thing, if all you have to offer to this conversasion are insults, please make it longer than three months until you come back. While I might disagree with some of the posters on this board, I do try to keep my comments civil.


Bert

[arbfbe]

Bert,

We are talking about today's issue here. Coulda, woulda, shoula won't cut it today. The state of Montana, as opposed to the state of Iowa would have had to purchase the MILW line within Montana, Idaho and Washington or entice those states to form a compact to purchase everything west of Aberdeen, SD. That did not happen. One of the results of that not happening is the rate structure in effect now. Rebuilding the MILW trackage would cost billions of dollars. Guess who would own the trackage connection on the east end? Besides, that is not what the farmers are asking for at this point. The farmers might be forced to purchase branchline to serve elevator but who will own the mainlines the branch lines will connect with? Who will set the rate for shipping off the branch lines now owned by the ranchers and/or the state of Montana? Who is encouraging agricultural conglomerates to locate flood loading elevators along their mainlines rather than along branch llines? Who sets the freight rates from flood load elevators at about $300/car less than the rate for loads from older elevators? Who will likely charge an 'interchange' or switching charge for any car received loaded from a co-op owned branchline?

I am reassured you have done the requested research with a Montana railroad map and can answer all the above questions. Hint, all the answers are the same. Can we spell monopoly?

Shippers were promised better under deregulation. BNSF in particular has been unwilling to willfully comply with the spirit of fairness under deregulation and the Montana grain growers amongst other captive shippers are asking for the benefits of deregulation to be fully implemented. At least at this point the Montana farmers have a government their tax dollars support who is listening to them and not some out of state corporation who got huge tax breaks by former administrations who's members sometimes took jobs with that railroad after leaving government service. This includes one former governor who sold voters in the state on the idea that deregulaltion was a good idea for them.

[Anonymous]

Yes, it is disappointing that Raciot turned out to be so naive regarding the motives of BNSF and MPC execs, and the fact that he sold out his state's grain growers to BNSF for a few bucks is unforgivable. There was a time when Raciot could have uprooted Baucus as the junior Senator from Montana if he chose. Now I doubt he could get himself elected dog catcher in Jordan. Granted, most of that is due to the MPC implosion, but the BNSF rate gouging comes in a close second.

This is how Republicans lose their base. You other Republican officeholders out there, take note if you want to keep your jobs past 2006. Not to mention the spector of the anti-West Dem party taking back control in DC.

[MP173]

The fact still remains....

$4.50 per bushel in 1974 is higher than today's price. That is a large hurdle to overcome.

ed

[MP173]

It is a slow day for me, so I went back and took alook at some of the numbers that have been presented.

In 1974 Montana wheat farmers received the following revenue:
26.5 bushels per acres @ $4.24 per bushel = $112.36 per acre
$1500 carload rate/3500 bushels per car = $ .44 per bushel trans cost.
or per acre transportation costs of $ 11.66
leaving $100.70

This figure of $100.70 is the revenue per acre before any other costs. Remember that number.

Today:
28.9 bushels per acre @ $3.60 per bushel = $104.04 per acre

Now, in order for Montana farmers to yield the $100.70 per acre they would need to pay $3.60 per acre in transportation costs or roughly 12 cents per bushel, which would mean the rail rate would be 3500 bushels x 12 cents or $435 per carload...just to be at the same level of revenue per acre as 1974.

THOSE FIGURES DONT EVEN TAKE INFLATION into consideration.

I will not even begin to discuss the inflation rate, because we cannot seem to determine the proper index to use.

But, it is very obvious that BNSF would have to be well below $435 per carload to factor in inflation.

Tell me, is there the same level of anger directed towards Deere, as BSNF? What about the seed companies? Exxon Mobile? Well, probably! How about fertilizer companies? Local taxing authorities?

ed

[MichaelSol]

Well, part of the problem is trying to analyze commodity production by manufacturing production principles. In 1976, 5,580,000 acres in Montana were planted in wheat. In 2002, 5,790,000 acres were planted. In 2005, 5,340,000 acres were planted. These fluctuations exist regardless of market because you plant before you harvest. For commodities, you plant more when the price goes down, to try and earn the same. It's the conundrum.

It's one of the reasons you eat more cheaply today than you did thirty years ago.

Most people would offer a thank you, rather than an attack.

Why the anger?

Well, if Deere, and if Monsanto, and if property taxes and if the Electric Co-op charges had all gone up by as much as BN, then the average wheat farmer would be paying about $8.00 per bushel in costs today, compared to 1974, in order to raise wheat he sells for $4.53.

He isn't.

Indeed, the only significant cost, relative to the price received, that has increased has been transportation cost. Even while the railroads themselves acknowledge that their cost of providing the service has declined dramatically during that period of time.

But there's a little more to it for those of you self-proclaimed "capitalists" who claim the moral high ground on this in the form of the thought that the power to price is the power to destroy and that, in your world, represents an economic "positive".

The idea of deregulation was to lower overall costs to consumers of the product and yet continue to provide a reasonable rate of return to the producer. That's the whole point. The economic theory is that regulation promotes inefficiency and higher costs. Competition promotes efficiency and lower costs.

That is the underlying concept of the Staggers Act.

The weak link in the theory is where competition does not exist. The weakness is when a service provider charges the shipper who has no competitive alternative a premium charge for service, and applies the profit to underpricing its services where it competes, in order to obtain market share.

Those of us who were there, who lobbied on behalf of the Staggers Act, who offered suggestions regarding its construction, and who saw its benefits as well as its possible detriments, understood exactly the problem and the law was, frankly, drafted very well to meet those concerns. Enforcement has been another matter.

One of the inevitable results of lower costs is larger markets. For Portland wheat, the cost of transportation effectively limited the market to wheat west of Mobridge, South Dakota. Lower costs of transportation suddenly opened the market. Wheat from Minnesota, Iowa, Nebraska could suddenly ship to Portland under lower rates. The Portland market, demanding more and more wheat, got it at rates substantially below what had existed under a regulated -- rational -- transportation cost structure.

Well, the market was good, but under deregulation, the supply doubled, tripled, quadrupled. The inevitable happened: the price of wheat began it's inevitable relative decline.

Under deregulation, all of that happened as a result of the well-understood effects of competition and deregulation. Most wheat producers benefitted: larger markets, declining transportation costs, lower costs of other goods and services.

There was only one group of ag shippers who did not get the benefit: Montana and North Dakota wheat growers. Instead of costs going down, their costs of transportation went up. Monsanto's costs of seed and fertilizer went down, but the costs to transport those products to Montana went up. Deere made huge efficiency gains in Combines and equipment costs, but was charged more for combines being shipped to Montana.

Captive shippers gained virtually none of the advantages enjoyed by other shippers, all across the board. Ag products in general benefitted from transportation cost reductions, and relative prices went down. For Montana, prices went up even as the market prices for wheat went down because of the far larger supply available to that market ironically because of lower transportation costs available to other producers, but not to Montana producers.

Well, the Staggers Act was designed to avoid that result. And the ICC, in the McCarty Farms case, followed the Congressional intent precisely. Federal Courts and the power of unlimited attorney fees that BN was willing to spend on the case set the course otherwise.

So, the low commodity prices today are a primary result of the Staggers Act. No need to go "gee, look at how low these prices are, no wonder ...". Anyone who understood the Staggers Act understood that. No one needs to play dumb. The other side of the coin, however, was that the cost of other key services were supposed to decline, relatively, likewise, as those services also benefitted from deregulation. That was the agreement. It was enacted into law.

For a select group of shippers, victims of overt violations of Federal law, the price reductions didn't occur, even though they played their role by being forced to sell at lower prices.

[n012944]

QUOTE: Originally posted by arbfbe

Bert,

We are talking about today's issue here. Coulda, woulda, shoula won't cut it today. The state of Montana, as opposed to the state of Iowa would have had to purchase the MILW line within Montana, Idaho and Washington or entice those states to form a compact to purchase everything west of Aberdeen, SD. That did not happen. One of the results of that not happening is the rate structure in effect now. Rebuilding the MILW trackage would cost billions of dollars. Guess who would own the trackage connection on the east end? Besides, that is not what the farmers are asking for at this point. The farmers might be forced to purchase branchline to serve elevator but who will own the mainlines the branch lines will connect with? Who will set the rate for shipping off the branch lines now owned by the ranchers and/or the state of Montana? Who is encouraging agricultural conglomerates to locate flood loading elevators along their mainlines rather than along branch llines? Who sets the freight rates from flood load elevators at about $300/car less than the rate for loads from older elevators? Who will likely charge an 'interchange' or switching charge for any car received loaded from a co-op owned branchline?

Shippers were promised better under deregulation.

First of all it was not the state of Iowa that bought the old Rock, it was the SHIPPERS, they took it apon themselves to buy the line. Second, the situtation you describe with flood loading elevators on the main line is not a special one for Montana. This happens everywhere, you ship in bulk, you give us less track to maintain, you get a cheaper rate. As for the shippers being promised better, they did get something better, without dereg, there would be a lot less railroads to complain about!!!


Bert

[greyhounds]

QUOTE: Originally posted by arbfbe

I Greyhounds. What a piece of work. You demand more and more figures and when they are provided you trip over them, kick them around and then come to the conclusion that everyone and I mean everyone else is wrong. Stick with your directorship of the greyhound racing group. Now there is an industry with a bright future. Stick around long enough and you will get a feeling of how the thousands of MILW employees felt as their livelihoods slipped away.

(emphasis added by me)

?

Just to correct this one.

I hold no position of any authority as a director or anything else with regards to Greyhound racing. I love Greyhounds and Greyhound racing and I am a member of the National Greyhound Assoiciation, but that's it. The last racing dog I owned, "Waylan The Greyt", was retired and placed as a pet last fall. In 13 years as an owner/breeder I made money one year.

I did it for the love of the dogs and I certainly never expected anyone else to make up my financial losses.

Now, I'll accept your apology.

Just as a note: I also owned "Streamliner" and "Hiballin Z Train".

Ken Strawbridge

[MP173]

I have no anger against Montana farmers, nor at any farmers. I guess you dont get it...I am a farmer, among other things in life, as I have mentioned before.

So, with rail prices roughly doubling in 32 years, you are saying those rates are the only ones that have doubled? I cannot verify that at this time, but my guess is the CO-OP prices electricity has more than doubled. My guess is that diesel fuel has more than doubled. My guess is that Deere is charging much more than double what they were 32 years ago for a 4020 tractor and combines.

I certainly can clarify all of it, pretty easily.

Look, you slipped up when you made the comparison of 1974 wheat prices to today's. We all know that a number of factors in 1974 cause wheat prices to spike and to provide a windfall for producers. Good things are likely to happen today for corn producers, with ethanol production increasing. I hope it happens to your wheat producers.

Montana has little in the form of transportation alternatives. There are an entire chain of events which occured which led to that situation. Had the Milwaukee management made proper decisions, the PCE would have still been in place. Would that have reduced your wheat rates? Possibly. But, I think there is much more to it than that.

The simple fact remains that wheat revenue per acre has dropped and those are main factors in the current situation.

I will get back to you tomorrow on the costs of a combine in 1974 vs today.

ed

[Murphy Siding]

Ed-I'm confused. (not a rare thing, obviously) Who are you responding to, in the post above?

[MichaelSol]

QUOTE: Originally posted by MP173
Look, you slipped up when you made the comparison of 1974 wheat prices to today's. We all know that a number of factors in 1974 cause wheat prices to spike

"Slipped up" eh. Odd given some of the interesting "slip ups" on this thread, you think reality is a slip up.

Yes, there were good prices in 1974. And in 1973. And in 1980. Compared to huge reductions in farm loan interest, there were good prices in 1983, 1984, and 1985. Very good prices in 1995 and 1996. And in 2002. Very good this year too. There were some years of pretty poor prices.

None exceeded the historical parameters of the spot market and therefore do not qualify as "spikes."

That's the commodity game.

The problem is that the rules are different in Nebraska than they are in Montana. Because of the railroad.

Even as Deere, Monsanto and the Electric Co-op pretty much charge the same prices to everyone regardless of what a 4020 cost in 1975, 1985, or 2004 or where the buyer is at.

That is what competition and dergegulated markets are about.

When you get to the point where you can justify why Deere might charge 40% more for a 4020 in Montana instead of Kansas, just because the buyer lives in Montana, let me know. I will be very interested in the competition theory justifying that one.

1974, $4.24
A five year average, 1973-1977, $3.37/bu
1991-1995, $3.65
2000-2005, $3.62.
2006 spot, $4.56

Rate as a % of gross revenue, 1970s five year average, 12.3%
Rate as a % of gross revenue, 2005 five year average, 25.2%

Guess I'm not sure what the "slip-up" is.

[MichaelSol]

QUOTE: Originally posted by MP173
So, with rail prices roughly doubling in 32 years, you are saying those rates are the only ones that have doubled?

Holy cow, the point was that rail costs have not changed by the same rate as many components of the overall economy, such as the CPI relied on by greyhounds. Where do you get this "so you are saying those rates are the only ones that have doubled?" Where do you get these conclusions? There is absolutely nothing to justify that remark.

In indexed terms, rail rates have declined by 50%.

In indexed terms, Montana rates have increased by 52%.

[arbfbe]

greyhound,

It is somewhat easy to be confused when a Yahoo search leads to this:

http://www.gra-america.org/b_kstrawbridge.html

[greyhounds]

QUOTE: Originally posted by arbfbe

greyhound,

It is somewhat easy to be confused when a Yahoo search leads to this:

http://www.gra-america.org/b_kstrawbridge.html

I want the *** apology. The GRA was (is?) basically a group of racing fans. It had (has?)(has?) absolutely no official status vis a vis racing and neither did I. (other than as a licensed owner.) I haven't belonged for quite some time. Do you understand verb tense?

I think it's a nice picture of me though.

But, next time you want to get into my personal life you better GD have the facts right.

Ken Strawbridge

[Anonymous]

It seems to me that some of you have a great deal of time on your hands and don't know what else to do with it.

Larry

[MichaelSol]

Yes, by all means, regarding Ken "get the facts right" Strawbridge, "get the facts right."

This must be where the Irony theme song begins to play ...

[MP173]

I dont think I have any pictures of me on the internet, but if anyone can find one, let me know.

Now, here are a few facts, based on a conversation with a Deere representative today:

In 1974 a Deere 4430 (140hp) tractor cost $14,000.
In 2006 a Deere 140 hp tractor costs $85,000, an increase of 507%

In 1974 a Deere 6 row combine costs $28,000
In 2006 a Deere 6 row combine costs $160,000, an increase of 471%

In 1974 a ton of nitrogen cost $120/ton
In 2006 a ton of nitrogen costs $560/ton, an increase of 366%

In 1974 the freight rate was $1500.
In 2006 the freight rate was $3300, an increase of 120%.

I do not disagree with you that the freight rates are a large percentage of your product revenue. Based on 1974 (44 cents vs $4.50 per bushel) and today of (94 cents vs $4.56) the relative costs have gone from 9.7% to 20.6%.

But, in relative terms in 1974 it cost 3111 bushels of wheat to purchase a 140 hp tractor. Today it costs 18640 bushels of wheat to purchase a 140 hp tractor.

Similarily:
1974 combine - 6222 bushels of wheat
2006 combine - 35087 bushels of wheat

1974 ton nitrogen - 26 bushels of wheat
2006 ton nitrogen - 122 bushels of wheat

1974 carload of freight - 333 bushels of wheat
2006 carload of freight - 723 bushels of wheat

These are relative numbers.

I have not considered the price of fuel for 1974 vs today... no need to.

I asked the Deere representative, who also farms 1400 acres..."how do you survive?" He responded that in 1974 a good yield was 120 bushels/acre of corn and today it is 180 bushels per acre. Their production has increased 50%. Yet, even with those increases, he says the break even on farming and profit based on the government subsidies.

Finally, I am NOT anti - farmer, nor am I anti - Montana, so dont even attempt that. I understand the difficulties of earning a living on the farm...I have chosen not to do that as my main income in my life.

I look forward to your responces.

ed

[arbfbe]

QUOTE: Originally posted by greyhounds

QUOTE: Originally posted by arbfbe

greyhound,

It is somewhat easy to be confused when a Yahoo search leads to this:

http://www.gra-america.org/b_kstrawbridge.html

I want the *** apology. The GRA was (is?) basically a group of racing fans. It had (has?)(has?) absolutely no official status vis a vis racing and neither did I. (other than as a licensed owner.) I haven't belonged for quite some time. Do you understand verb tense?

I think it's a nice picture of me though.

But, next time you want to get into my personal life you better GD have the facts right.

Ken Strawbridge

Well, don't hold your breath for that, you will turn blue and pass out.

Your reply about the greyhound posts are like your replies to the grain rate and MILW posts. Were, was, was not, am, is......no straight line to follow. Makes my head hurt.

So I am gone, again. There are better things to do with my time. Mr Sol has my deepest respect for all the stuff he puts up with here. Those of you who take the time to read and understand his posts will learn from them.

I also found the post about relative farming costs and the relationship between bushels to piece of equipment, supplies and services to be educational as well. Unfortnately to get to the wheat you have to sift through way too much chaff here.

Toodles,
Alan

[MichaelSol]

You are going off in a bizarre direction here.

The costs of farming have gone up. The costs to make a combine have gone up. The cost of nitrogen has varied, although these numbers would be quite different for Heartland wheat as opposed to Montana wheat. Montana soil is more fertile and needs less of any fertilizer.

The overall use of fertilizer as measured by energy inputs, interestingly, has declined by about 50% from use levels in the 1970s.Your extrapolation is probably off by a factor of 2 from that standpoint.

According to the USDA, the cost of a ton of 30% nitrogen solution in 1974 was $136. Over the past five years, it has ranged from $127 a ton to $189 a ton. Urea was $232 a ton in 1974. It has ranged from $191 to $280 during the past five years. Not sure about your friend's numbers there. Looks like relative costs have gone down. Since fertilizer can be between 30-50% of the operating cost for a wheat farm, I would see these numbers entirely differently than you do, and as a big reason why the farm market remained viable over the time period in question.

http://www.ers.usda.gov/Data/FertilizerUse/

We got rid of our combines in 1976. Much cheaper to have a custom cutter do it. It tends to be more common than not these days. You have to be careful in throwing in a bunch of numbers 36 years apart, for two different operating environments. Quite a bit more to the story than those raw numbers.

I suppose we could have a thread about the entire American economy, or about the relative efficiency gains of a combine now compared to a combine then, or a tractor now compared to a tractor then. Or comparing an operating expense to a capital cost.

Combines and fertilizer were never regulated. Competition works as it should

The interaction of deregulation of railroad rates and the impact on ag markets has been profound, not incidental.

The Portland market can now draw from nearly any producer west of Chicago at nearly the same cost of transportation as Montana shippers 32 years ago, when it was just too expensive to ship much further than Miles City or Mobridge. The supply is what, three, four, five times the supply available to that market as in 1974. The market is much larger because of cheaper rates, cheaper rates to all but captive shippers who pay more than they did 32 years ago.

How did that happen? John Deere didn't do it. Monsanto didn't do it. Railroads did it under deregulation by offering cheaper rates to a much broader market area. By one way of looking at it, it wrecked the market. Well, yeah, it's hard to survive for those growers who get the good rates.

So what about the grower who gets stuck with the higher shipping rates?

Deere isn't charging him selectively more. Monsanto isn't charging him selectively more.

Only the railroad is.

And that specifically breaks the agreement that Congress made when it permitted deregulation.

Hard enough to break even in your neck of the woods. On another thread, we looked at wheat transportation costs in Illinois and Iowa, About 12% of the market revenue received for the carload. I assume its similar for your guy. And he just breaks even, and given the high rate of subsidies in your area per acre compared to Montana, he gets a far greater subsidy than the average Montana farm which crops only 800 acres, probably half of that wheat.

Well, if he's having a hard time with 12% shipping cost margin and 8-10 times the amount of subsidy dollars, you can imagine the Montana farmer with a 25% margin and a much lower subsidy.

The fact is, that transportation margin differential is the one cost that makes all the difference. Deere doesn't charge a different price. Monsanto doesn't.

Only the railroad does, that differential is specifically governed by law, and the law is not being applied consistently or fairly. As you eloquently if unintentionally point out, if a guy with the transportation cost advantage can't make it, what happens to captive shipper -- even though he has the superior product, most closely located to the best market, and yet is priced out in favor of other growers by a policy of screwing the captive shippers to subsidize the non-captive shippers?

I look forward to your explanation of why that makes perfect sense.