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Poultry Farm Says Millions of Chickens Could Starve From Rail Delays

The Wall Street Journal · 01/07/2023 08:00

By Esther Fung

Service problems at Union Pacific Corp. have sparked a dispute between the railroad and one of the country's biggest chicken processors, which says the lives of millions of birds are endangered by repeated delays in the delivery of corn.

California-based Foster Farms has asked for regulatory intervention for the second time in six months, saying delayed shipments from Union Pacific have dwindled its corn inventory. The company said it has diverted feed from dairy cattle to the chickens, which are susceptible to quicker death.

"The point has again been reached where hundreds of thousands of dairy cattle are not being fed, and when millions of chickens will starve to death because of UP's service failures," Foster Farms said in a Dec. 29 filing with the Surface Transportation Board, the economic regulator overseeing the country's freight railroads.

The STB on Dec. 30 directed Union Pacific to deliver five trains between Dec. 31 and Jan. 3 on a schedule set by the railroad, to avert significant loss of livestock in California.

Union Pacific said weather problems across the country have affected its service but that it was able to deliver the five trains to Foster Farms in the past week. Foster Farms said only one of the five trains arrived as scheduled, and it could face corn shortages again as soon as next week.

"Union Pacific continues to work closely with Foster Farms, providing daily updates and delivering the trains addressed in the order," said a spokeswoman from Union Pacific.

"We continue to experience significant weather delays, including washouts in California, blizzards in the Midwest and rockslides in Nevada, and again, those are communicated directly to Foster Farms," she said.

Freight rail service has largely improved over the past year, after pandemic disruptions to supply chains, staffing shortages and spikes in demand caused bottlenecks and widespread disruptions to the flow of goods across the country. The total volume of goods transported in 2022 via freight railroads fell 2.8% to 25.4 million carloads, according to the Association of American Railroads.

Foster Farms said its facilities in the California cities of Traver, Turlock and Delhi have been affected by Union Pacific delays since October. While the privately held company has sought alternative sources of corn as well as trucks to alleviate the shortage, it says these are insufficient because about 400 trucks are needed to transport the volume of corn that one train would carry.

"While Foster Farms concedes that weather played a part, it also believes this failure is indicative of systemic problems within UP that will persist," Foster Farms said in a filing with the STB published Thursday, after four of the five requested trains arrived by Jan 4.

The rail customer previously said Union Pacific could do more to improve its allocation of crews and locomotives. Foster Farms said Union Pacific could use alternate routes, especially when it has advance notice of severe weather and that it should grant access to its tracks to its competitor, BNSF Railway, in emergency situations. Union Pacific declined to comment on Foster Farms' suggestions. However, in a filing to the STB, Union Pacific said it would voluntarily submit daily reports of its rail service for Foster Farms to the regulator until Jan. 17.

In June, Foster Farms said it was on the verge of euthanizing millions of birds because of delays in feed shipments, and it received a rare emergency service order from the STB to alleviate the crisis. This type of order was the first in more than a decade, resulting in Union Pacific prioritizing more trains and crew for Foster Farms, replenishing the processor's stocks within several weeks. Last week, Foster Farms asked the STB to issue a second emergency order.

The STB said Dec. 30 it would consider a second emergency service order depending on daily updates from Union Pacific.

"We appreciate the consideration of the STB and will continue to work with Union Pacific to ensure the timely delivery of grain," Foster Farms said in a statement.

In December, Union Pacific executives were called to an STB hearing about its frequent use of embargoes to ease bottlenecks in its network. Rail customers such as Cargill Inc. and other agricultural companies testified that the Union Pacific's restrictions on shipments resulted in them making frantic changes to their operations, including curtailing production and engaging costlier shipping alternatives.

Write to Esther Fung at esther.fung@wsj.com

(END) Dow Jones Newswires

January 07, 2023 08:00 ET (13:00 GMT)

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