Farmer, 50, will take over as president and CEO at the start of next year, replacing Carl Ice who will retire at the end of the year and remain on the railroad’s board.
"Carl has been critical to BNSF's success for a very long time. I thank him for his leadership and his accomplishments," Buffett said in a statement. "We look forward to Katie's leadership and more success. She possesses all of the qualities that make us excited about the future."
Farmer, who has worked at BNSF for 28 years, will become the only woman CEO leading one of the four biggest North American railroads.
Under Ice, BNSF has been the sole holdout among major U.S. and Canadian railroads in adopting an efficiency strategy called Precision Scheduled Railroading, Bloomberg reported, which emphasizes moving railcars instead of entire trains and sets a more rigid schedule for customers.
With these techniques, railroads such as Union Pacific (UNP) - Get Report have been able to reduce the number of locomotives and switching yards needed to move the same amount of cargo, driving up profit margins.
“Our BNSF railroad and Berkshire Hathaway Energy - the two lead dogs of Berkshire’s non-insurance group - earned a combined $8.3 billion in 2019, an increase of 6% from 2018,” Buffett wrote in his annual letter to shareholders.
While its profit has been hit by the coronavirus pandemic, the railroad generated nearly 21% of Berkshire’s operating earnings in the second quarter.
Headquartered in Fort Worth, Texas, BNSF owns and operates one of the largest rail networks in North America with 32,500 miles of track in 28 states and three Canadian provinces.
Berkshire acquired BNSF in 2010, paying $26.5 billion for the 77.4% it did not already own. It was at the time Buffett's largest acquisition.
Class B Shares of the Omaha, Nebraska, conglomerate and holding company were up slightly to $221.