Economics


 
Economic Influence of Railroad Rehabilitation
 
  • The rehabilitation of the railroad between Chamberlain and Presho would have a significantly positive effect on the economies of the surrounding counties
    • Bennett, Gregory, Jones, Lyman, Mellette, Todd, and Tripp counties could all see economic benefit from rail access
  • Total Production of the 4 principal crops in the area (Corn, Soybeans, Wheat, and Sorghum) has increased from 17.2 million bushels in 1979 to 43.4 million bushels in 2009
    • That is an increase of over 160%
 
    • ·        prod.gif
  • Since 1990, there is a strong increasing trend in total crop production in the area
  • The ability to ship grain over rail has several benefits to the local economies
    • Below is a chart outlining the price differences between Highmore, which has access to rail, and Kennebec, which currently does not, for Corn, Soybeans, Wheat, and Sorghum
      • Historical Milo basis data is not available, so a spot price differential is used
 pric.gif
  • Using these price differentials, the economic benefit that can be earned from rail access from 2012 to 2022 can be calculated 
proj.gif
  • Over the next 10 years, rail access could add on average $3 million per year to the economies of the surrounding counties
    • This is assuming that 50% of the grain produced in the area will be marketed across an accessible railroad

·   This is most likely a conservative estimate
    •  At 3% interest, the NPV of the economic impact is $26 million by 2022
 
  • Elevators in the area may raise prices to compete with rail facility prices
    • An increase of $0.05/bu on the other 50% of production in the area leads to an
    • additional $1 million a year of economic benefit
  • More grain traveling by rail will reduce highway damage and repair costs
 
  • Higher prices means increased profitability of farmland, raising land values and leading to more tax revenue for the state
 
  • The rehabilitation of the railroad from Chamberlain to Presho will undoubtedly attract a shuttle train grain loading facility, which will bring jobs and investment into the area