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Shippers Grow Rail Competition

January 31,2014:
Western Milling Buying IGM:

IGM -Hanford 2014-01-27 at 11.01.02 AMBefore the turn of the century Valley farmers realized it was in their best interest to  encourage competition shipping and receiving goods to distant markets. Since the late 1880s the Central Valley has had two rail lines who run roughly parallel north and south connecting to their nationwide network of tracks – Union Pacific (UP) and Burlington Northern Santa Fe (BNSF).

Through Tulare and Kings counties the two lines are at most 20 miles apart and often closer (see map).

Even in 2014 grain companies and their local customers who use corn being shipped in from the Midwest for cattle, cows,poultry and pigs as well as ethanol makers – all depend more than ever on nurturing a competitive atmosphere.

So it should come as no surprise that shippers who rely on those 110 car unit trains full of corn might seek whatever advantage they can muster including buying a feed storage location on multiple lines to foster that competition.

Pictured above: IGM feed mill site in Hanford

“It just makes sense to have a presence on both railroads” say Scot Hillman owner of J.D Heiskell company, based in Tulare. “That’s why we bought a feed mill in Guernsey (near Hanford) about four years ago” says Hillman whose other local mills are on the UP line.

IGM Sale Told

Screen Shot 2014-01-21 at 10.11.22 AMThis week the news is that Goshen-based Western Milling, with units on the UP line, will buy Integrated Grain & Milling in Hanford on the BNSF track. Western Milling owner Kevin Kruse says the deal, set to close January 31,“will allow us to choose where we get grain shipped in for our customers” hopefully saving money.

Western Milling would purchase IGM, buying out Zacky Farms but continuing a partnership IGM has with Harris Farms says Kruse. The new unit will no longer carry the IGM name. The mill is located at 10495 Idaho Ave, Hanford, CA, in the Hanford Industrial Park.

According to the IGM website “IGM entered the steam-flaked grain business in 1995 with the purchase of a rolling facility located near Hanford, CA. The Hanford facility sits on the BNSF Railroad.  It handles bulk commodities and can receive 110-unit trains.  There is nearly 45,000 tons of storage capacity at this location.  The rolling operation can produce 2,500 tons of steam-flaked corn per day.  This acquisition allowed IGM to increase its product and commodity offerings to the dairy and livestock producers in our region.”

Fostering more competition for feed figures in the recent purchases by Sanger-based Pitman Family Farms of 2 feed mill sites in Hanford in the past year including the former Cargill plant. On the second site Pitman plans to build a new 110 train car circular track to receive grain for their Valley poultry business. Pitman’s other feed mill was on the UP tracks in Madera.

JD Heiskell’s Scot Hillman says feed savings “get passed onto the customer” and taking advantage of the economics can save $2 to 4 a ton on some shipments of 10,000 tons.

“The BNSF is often less expensive than the UP but lately there has been a shortage of cars with BNSF shipping in all that oil from North Dakota.”

The Zacky Farms poultry empire filed for Chapter 11 bankruptcy protection in October 2012  and blamed it in part on high feed costs following the worst drought in half a century in the Midwest. Some family members retain the company now but will no longer be the feed business, at least in the Hanford area.

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