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North Dakota is a vital hub for agriculture and rail

Feb 27

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Historically, human societies have relied upon waterways for trading agricultural goods. Since the dawn of the railroad era and modern transportation, however, that behavior has shifted.

Straight Arrow News contributor Peter Zeihan argues that North Dakota boasts “the world’s deepest rail connection system” to ship out freight and agricultural goods entirely without waterway transportation. One of the trade-offs of that system is that it sometimes clashes with or relies upon other systems—namely, the U.S. energy system.

For all those with an aversion to woodchippers…today’s video is for you. That’s right, I’m in Fargo, North Dakota and we’re discussing the state’s agricultural prowess despite a lack of water access.

While most Midwest states rely on river systems for shipping, North Dakota has built an extremely robust rail system that facilitates the transportation of their agricultural products. These railways connect to both the Mississippi River and the Pacific Coast, which broadens and diversifies market access.

As impacts to global agricultural markets increase, the importance of North Dakota foodstuffs will only grow. However, the shale revolution has introduced some competition for rail space between the agriculture and energy industries, but that’s a story for another time.

I go, you go, we all go to Fargo. Peter Zeihan here coming to you from Fargo, North Dakota, where I’m about to give a presentation. But I thought I’d sneak away and give you guys a little bit of a lesson as to why North Dakota really matters. Is it because I’ve never had a bad meal here? No. Is it because I’ve been here nine times in February, and it’s been above freezing every single time? No. It’s because it is the only American agricultural state that does not have water frontage.

 

Now, as you guys know, moving things from A to B on water is pretty easy. It’s about one-twelfth the cost of moving it by truck. But if you don’t have water access, you have to come up with another option. So in the case of North Dakota, they have built out the world’s deepest rail connection system, you’ve got more miles of freight railway per square mile of land than anywhere else in the western hemisphere. And there’s only a few specific zones and places like Germany that even come close. Now, pros and cons, most U.S. agriculture in the Midwest, basically it’s about getting to the Missouri-Ohio-Tennessee-Mississippi system and then shipping your product down the river to New Orleans, where it’s repackaged and sent out to the wider world. North Dakota can do that. There is a real connection here from Fargo that goes down to the Quad Cities on the Illinois-Iowa border that does exactly that, in fact, but it doesn’t have to. It can also go west to Montana, and then ultimately to the West Coast. And that allows, if the market is right, for North Dakota to be really the only farm state to easily reach the Pacific Rim. Now, under normal circumstances, this is kind of a rounding error. But between climate change, which has allowed more soy and corn to be produced in North Dakota, and more recently, problems with say, I don’t know, Houthis going after the Red Sea, or problems in the Black Sea, the global market for agricultural commodities has shifted quite a bit. And then Panama went offline. And so if you’re in Iowa or Illinois or the rest, you’re trying to ship your product, you discovered it’s basically trapped in the Atlantic basin. And the general position for folks here in North Dakota is [sic] because they can go wherever they want to.

 

Now, all is not copacetic up here in the state of Bismark, because there’s a different problem, That’s actually from an opportunity. It used to be that farmers in North Dakota would have that rail system all to themselves, it would obviously surge in the fall, but rates were reliable. But in the last 15-20 years, we’ve had this little thing called the shale revolution. And one of the four large producing zones in the United States for oil and related liquids is the back end, which is in western North Dakota. Well, there’s not enough pipeline capacity. And the regulations and the times that are required to get new pipeline capacity put on line is onerous. And so everything just gets shipped by rail. So seasonally, when the farmers need all of it, they’re discovering that it’s not all there. And so we have this irresistible force of the agricultural system meeting the unmovable rock of the energy system, and the two of them are duking it out in ever more dramatic ways here in North Dakota in order to get control of what access there is. The only solution to that, of course, is to build another damn pipe, but that’s going to have to be a topic for another day.

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