Farmers in Yuma County, Ariz. are sleeping with one-eye-open following a Union Pacific announcement in early May that the railroad is, for now, abandoning prospects to bid on a mega-railroad project that could connect a proposed port at Punta Colonet, Baja Calif., Mexico, to the United States through prized Yuma County farmland.
About 85 percent to 90 percent of the nation's winter vegetables are grown in Yuma County fields on 75,000 to 80,000 acres.
Chris Peterson, Union Pacific's director of government affairs, told Western Farm Press the railroad and Hutchinson Port Holdings have decided not to participate as a consortium in the bidding process for the port and rail line in Mexico.
“For several years now, we've been evaluating the project as partners with Hutchinson. For strategic reasons, we've decided to end our partnership and no longer jointly pursue the project.
“We have suspended our feasibility study activity, so we are no longer working to identify viable routes in Yuma County and Imperial County, Calif. We're just going to wait, watch, and see how things unfold in Mexico.”
Yuma farm leaders expressed skepticism as to whether Union Pacific is fully withdrawing from the potential moneymaking opportunity, and whether potential agricultural routes are out of the woods.
“As a businessman, I think it's illogical that Union Pacific is completely pulling out, especially with the improvements they are making to their Sunset railroad route, and what they could potentially gain by having a share of the port/rail business,” said John Boelts, president of the Yuma County Farm Bureau and himself a grower.
“I think they would be business fools to turn a blind eye to it. Union Pacific is the most viable partner to service the Punta Colonet port. They may be telling the Honest Abe truth and pull out of this — it's possible, but business-wise it's not logical.”
The railroad has no plans now to pursue bidding alone, Peterson said, noting that Hong Kong-based Hutchinson Port Holdings is the world's largest independent port operator, with about 40 ports in 19 countries, including several in Mexico.
“Union Pacific is a railroad; we don't have experience operating ports,” Peterson said. “We will monitor the bid process in Mexico. We don't have any plans to pursue the project on our own and we don't have any other partners or potential partners that we're looking at.”
But he didn't rule out potential involvement down the road.
“There are ways to proceed with the project without Union Pacific, but we will continue to monitor the process. If someone approaches us to be a part of a bid, or if a winning bid approaches us to consider a commercial opportunity, then we will evaluate the opportunity.”
The Mexican press has speculated that several railroads, including the Burlington Northern Santa Fe and the Kansas City Southern Railway Company, could be interested or involved some way in the Punta Colonet project, Peterson noted.
Boelts' skepticism centers on Union Pacific's power in the railroad marketplace.
“I'm not closing out the idea of watching Union Pacific, because they could jump back in and say this is a good deal and do it after all. If it's as good a deal as they said it is, I don't see them totally discounting it. The railroad never said totally they would never do it — they said they would reevaluate it.”
About 200 anxious landowners, including farmers, attended a public information meeting in September, 2006, at Yuma after Union Pacific's interest in the port/rail project was made public. Farm Bureau pressured Union Pacific for more details, but Boelts said information has been limited.
If built through Yuma and at full build-out, some estimates are that 50 to 60 100-car trains could chug through farm fields daily in each direction, moving foreign-made goods eastward.
Rick Rademacher, a Yuma vegetable grower and Yuma Fresh Vegetable Association president, was surprised by Union Pacific's announcement. A railroad route through farm ground would be detrimental to the area's vegetable industry, he said.
“If the route entailed cutting through farmland in the Yuma Valley, it would be a devastating blow. Traffic would be clogged up at crossings every two to five miles. It would be hard to work the land. The impact of railroad construction on streets and canals would be destructive. Any Yuma Valley route would be bad.”
Rademacher is fond of railroads — his grandfather worked for the Kansas City Southern in Oklahoma. A railway built in the desert away from agriculture and people could work, he says.
“We don't have any gripe against the railroad. We really don't. But their proposal through the valley would really hurt us.”
One of the considered routes through the Yuma area could carve up the Spencer family's 1,500-acre fruit farm on the Yuma Mesa into thirds. Trains would run less than a mile from his home.
Mark Spencer, chief executive officer of Associated Citrus Packers, said any route through southwest Yuma County would dissect agricultural areas and increase problems in transporting farm products and labor.
“The railroad protocol is to allow a crossing every two miles — imagine having a railroad going through a 40- or 80-acre farm. To move from one side of the farm to the other could mean driving four to five miles. The railroad idea doesn't lend itself to an agricultural area like ours.”
The Spencer family grows, packs, and ships lemons, tangelos, and grapefruit, plus packing and shipping 2,000 additional acres of fruit.
Union Pacific's Peterson said, “Hearing from the community was an important part of the process for us to identify a viable route. We were working aggressively to identify a route that would not cross the Yuma Valley, and were closing in on several options that would have significantly reduced the concerns of the farming interests.”
Based on community input, including feedback from agriculture, Peterson said, one option would have stretched from the state of Sonora, Mexico, into Yuma County, running east of the planned second border crossing at San Luis and avoiding the Yuma Valley, he said.
A second “promising” route was in eastern Imperial County near Pilot Knob, Calif.
Boelts is trying not to be a “conspiracy theorist,” but just doesn't think Union Pacific is fully pulling out.
“Maybe Union Pacific has done a business deal in the backrooms. Maybe it won't be a yellow Union Pacific engine adorned with a red, white, and blue logo on the engines running down to Punta Colonet. They have the closest proximity rail line; maybe they started a Mexican company.”
Southern Arizona residents should be awakened to the potential that transportation increases through the area are real and will happen as long as markets continue to expand and goods continue to move offshore for production, Boelts said.
If Union Pacific had bid on the new rail line, the bid would have been very strong, Peterson indicated, because of the railroad's position in the U.S. marketplace and Union Pacific's Sunset Line and its proximity to Punta Colonet.
Products made in China are shipped here from somewhere, Boelts said. There are ports, rail lines, and pollution because the U.S. is still a petroleum-based society. The port will most likely be built, he predicted.
“A railroad company will service the port because any other way to transport the goods is too inefficient.”
“I think they should repaint the sides of Union Pacific engines from ‘Building America’ to ‘Building America?’ Are they building America? No,” Boelts said. “They're consolidating America and pushing small operators out.”
While fruit grower Mark Spencer is pleased with the railroad's announcement, he too is sleeping with one eye open.
“I'm a little concerned that this may not be the end of the story. It doesn't mean that Union Pacific couldn't come back as a sub-contractor and attempt the same goal. I don't think it means they are necessarily out of the picture altogether, but at least it's momentum in the right direction to keep a new rail line out of southwest Yuma County.
“A new railroad through the Yuma area would have created a lot more problems than economic benefit,” Spencer said. “The experience has left a bad taste in the mouths of Yuma County residents because Union Pacific has not been upfront with them.”
When asked what message Union Pacific would like to leave with Yuma residents, Peterson said, “Union Pacific regrets any bad feelings and concerns in the community. If we had reached a point where several more certain routes could have been discussed with the community, we would have had support and a project like this could have created economic results (benefits).”
So what's next for Union Pacific?
Peterson said the railroad has major infrastructure projects planned in the U.S., including the completion of double tracking its Sunset Line that runs from Los Angeles, Calif. to El Paso, Texas. Over the next three to five years, the railroad will double track the remaining 380 miles.