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Published March 17, 2014, 09:13 AM

SD county eyes $40 million project

PRESHO, S.D. — Get railroad improvements into South Dakota’s Lyman County. That’s dominating the thoughts of Steve Halvorson. If it happens, a South Dakota ag cooperative is prepared to invest nearly $40 million into a grain shuttle loading facility.

By: Marcus Traxler, Forum News Service

PRESHO, S.D. — Get railroad improvements into South Dakota’s Lyman County. That’s dominating the thoughts of Steve Halvorson. If it happens, a South Dakota ag cooperative is prepared to invest nearly $40 million into a grain shuttle loading facility.

Halvorson and his fellow Rails to the Future committee members are convinced that a large 110-car grain shuttle loading facility would make a significant impact on the economy of south-central South Dakota.

“Our goal is just to get rail, and that’s what we’re focused on,” Halvorson says. “We know there’s a need there.”

The line has already been improved from Mitchell to Chamberlain, and it resulted in the construction of a shuttle loading facility between Kimball and White Lake. A legislative effort is under way to secure funding for a rehabilitation of the line west of Chamberlain.

When the improved rail is in place, Halvorson says someone will build a grain facility along the line. Wheat Growers, a grain and agronomy cooperative that has eight shuttle loading facilities throughout the state, has already said its investment is ready if the rail project is completed.

“We believe that heavy rail service west of Chamberlain will provide economic returns that will far exceed the investment in rehabilitation of the rail line,” Wheat Growers CEO Dale Locken says. “It would increase gross incomes back to farmers which will then be re-invested into their communities and the state. It would also reduce truck traffic and truck repair costs in the region.”

Locken indicated in state Senate Appropriations Committee testimony last month that Wheat Growers is ready to take advantage of rail upgrades and the board of directors for the group has unanimously approved plans to build a facility in Lyman County.

“That really is the key part for us,” says Wheat Growers spokesman Bill Pool about the passage of the legislation for state funding. “We would love to be west of Chamberlain, but the rail is the key to make it all work.”

The Wheat Growers plan would cost about $38.9 million to build, based on similar projects the company has done before, according to Pool.

The location of the plant is yet to be decided, but Pool says there are lots of options for a place to put it throughout the county. He says Wheat Growers has not bought any land for the project but does have small parcels of land in Kennebec and Reliance. The company has operations in Chamberlain and Reliance, and a grain handling elevator in Kennebec.

The proposed rail line improvements would give producers access to the grain markets from the Burlington Northern, Canadian Pacific, Canadian National and Union Pacific rail lines. Current estimates are that such a grain handling facility would result in an increase for grain prices of 15 to 30 cents for West River producers. That’s because the rail line is much more efficient, carrying 110 cars instead of a single semi truck load. But it would be a two- to three-year project to get the railroad upgrades done, which would include replacing all of the current 38 miles of track to carry heavier Class I trains.

Pool says the proposed facility would be similar to a site at Roscoe in Edmunds County, which can handle corn, soybeans and wheat, along with agronomy services and a fertilizer terminal.

Halvorson says other businesses are interested in building along the line, as well, but admitted the area probably could only support one facility to start out with. He says there’s 40 million bushels of grain in that part of the state and the facility needs 15 million to make it work.

“Realistically, there’s only going to be one of these built in the short term,” Halvorson says. “From there, private enterprise will dictate whether or not we can add on.”

Halvorson thinks the improved railroad could one day stretch as far as Murdo. But for now, he says it’s important to get as much done as possible. He says steel is affordable right now, approximately 25 percent cheaper than normal.

“Now really is the time to get this done,” he says of the rail line. “We have a great opportunity here.”

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