Railroad Looking to Roll Again

Apr 11, 2012

It’s been seven years since folks around Forest City, Iowa, have heard a train whistle on the nearby tracks. But Iowa Northern locomotives will soon be switching railcars alongside the towering grain silos at the town’s co-op elevator.

"We’re very excited to be in that part of the state,” said Amy Homan, director of carload marketing for Iowa Northern Railroad. “The people there are excited to have us back in the area, and they love seeing our engines going up and down that line.”

The railroad is partnering with some farmers and businesses to operate 22 miles of track being abandoned by the Union Pacific Railroad.

Randy Broesder, general manager of the Forest City Co-op Elevator, said retaining the trains is critical for the area.  

“People know if the rail leaves, it never comes back,” he said. “And they’ve seen a lot of it happen in the area because we’ve had other tracks that the lands went back to the farmer. And you look at neighboring elevators that used to be good size – they just don’t have many employees anymore because they don’t do a lot.”

Broesder said the track cost about $1.9 million, but federal and state grants covered about $1 million. The balance came from investors, including the Forest City and Garner grain elevators, along with recreational vehicle manufacturer Winnebago Industries.

The rail is expected to open up options for corn growers.

 Broesder worries about losing the ethanol plant in Hanlontown, a small plant that grinds 50,000 bushels a day.

“We need to have someone who has a big appetite for a couple hundred thousand bushels,” he said.

The big appetite is Archer Daniel Midland’s huge corn processing plant in Cedar Rapids, nearly 200 miles away.

The revival of the rail track provides a more economical connection.

“Today, we can move corn from Forest City down to Cedar Rapids by train, it’s costing us about 19, 20 cents a bushel,” Bruesder said. “If I go to Lakota, which would be about 45 miles, that’s costing me about 12, 13 cents (by truck). So we can go a lot further with train.”

And that’s the business plan: Ship corn half-way across the state by rail at almost the same cost per bushel as by truck to nearby ethanol plants.

The investors feel like they can’t lose. After 10 years, the Iowa Northern Railroad has agreed to buy the 22 miles of track. Before that time, if things don’t work out, investors say they can recover their money by selling the track as scrap metal.